SPECIAL REPORT
Djibouti acknowledges the crucial need for foreign investment to
encourage economic development. The country’s assets include a strategic
geographic location, tax incentives favourable to business, Free Zones,
an open trade regime, and a stable currency. The government of Djibouti
has recognised a number of priority sectors for investment, transport/
shipping, services (logistics and port-related), energy, tourism, and fi shing.
By Kanchi Batra*
D
jibouti may be one of the tiniest and the youngest
states in Africa, but it might also be the most talented
in business development and investments. While its
larger, more infl uential neighbours are involved in a never-
ending border quarrel, Djibouti stands out as a haven of
solidity and neutrality. The country is strategically situated at
the mouth of the Red Sea, along the shipping route between
the Mediterranean and the Indian Ocean.
Djibouti has an established status as a trading hub and
a gateway to trillion-dollar markets. Djibouti is preferably
centered to simplify trade fl ows between Europe, Africa, and
the Middle East. Expectedly, the logistics industry plays a sig-
nifi cant part in its economy, with free zones key among these.
Djibouti’s economic outlook is also favourable; most
assessments expect growth to continue at unparalleled rates.
The government has been trying in recent years to reduce the
structural obstacles to adequate electricity and water supply
that handicap growth of the private sector.
Djibouti has pursued a moderate foreign policy. Djibouti’s
population is estimated at more than 890,000. French and
Somali are the main languages used in government, business
and daily activities. English is becoming more widely spoken
due to increased American presence and more English-
speaking foreign investors.
Economy & Trade
Djibouti has been trying to make the most of its strategic
situation and wants to make its port the biggest trans-shipment
hub for the Common Market for Eastern and Southern Africa
(COMESA) – a trade bloc grouping of around 20 countries.
Djibouti is trying to transmute itself into a regional trade,
fi nance, and telecommunications hub. Djibouti hosts France's
largest military base in Africa as well as a major US base.
Its port is used by foreign navies guarding busy shipping
lanes off the coast of Somalia to fi ght piracy. For Africa in
general and the region in particular, Djibouti is an important
free trade zone.
Djibouti’s macroeconomic environment has enriched
signifi cantly over the last few years.
Djibouti’s main economic activities are focused on the
Port of Djibouti, the banking sector, the airport, and the
operation of the Addis Ababa-Djibouti railroad, in addition
to a small tourist industry. Its strategic location on a busy
shipping route is considered one of its most important
economic asset. The service sector accounted for nearly 80
percent of the country’s GDP in 2010 (including commerce
and trade ‘trans-shipping’), while industry accounted for less
than 20 percent of the GDP.
Djibouti provides services as both a transit port for the
region and an international transshipment and refuelling
centre. Imports and exports from landlocked neighbour
Ethiopia represent 70 percent of port activity at Djibouti's
container terminal. Augmented investment, particularly in
construction and port operations, has led to relatively high
economic growth in 2010. With regard to manufacturing,
Djibouti’s main industrial activities include a mineral bottling
plant, leather ta nning, construction, a pharmaceuticals factory,
abattoirs, salt mining, and one petroleum refi nery.
* The author is a Business Editor at Diplomatist Magazine
COMESA• 2018 • 45