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Benefiting from several years of consistent macroeconomic stability and the roll out of more business-friendly regulation, Djibouti has attracted a rising amount of investment – equivalent to as much as 52% of GDP – with the vast majority directed towards capital projects. This in turn is having a noticeable impact on Djibouti’s construction sector. Urban renovation programs in the cities, especially the capital, are improving housing infrastructure, while large-scale transport infrastructure projects aiming to better connect the country and establish its position as an international commerce hub are helping reshape this small nation in the Horn of Africa. New transport, energy, water and urban infrastructure will be key for Djibouti to solidify its economic integration with international markets, but equally important will be its impact on the overall improvement in living conditions. Making the housing construction sector more dynamic will significantly help in this respect, though tackling the country’s housing deficit will remain a critical challenge, both in terms of quality and quantity. The government is working to devote a higher amount of public resources and attention to the development of adequate housing solutions. In addition to helping expand housing options for the 875,000-person country’s middle-class, large-scale efforts are also being directed towards the elimination of informal settlements in major cities, with a view to replacing temporary housing with adequate long-term construction. Policy changes – both in terms of the allocation of budgetary resources, as well as stronger encouragement for private sector participation – are expected to accelerate the construction of new homes across the country over the coming years. This chapter contains an interview with Amina Abdi Aden, Secretary of State for Housing.

Djibouti has witnessed a steady expansion in opportunities for telecommunications investment, mostly due to increasing consumption and regional demand for high-bandwidth international connectivity. Over the past two years more than $100m has been invested in gateway connections, with the country now linked to six submarine data cables. These capital expenditures are in line with government efforts to strengthen the role of telecommunications and IT in national development, and to increase the role the sector plays regionally. Given the rapid development of Djibouti’s IT sector, the country possesses significant potential in terms of data provision for the wider region. Challenges nonetheless remain in terms of ensuring the affordability of tariffs and in building a competitive market for the future. This chapter contains an interview with Mohamed Assoweh Bouh, Director-General, Djibouti Telecom.

Given Djibouti’s economic reliance on international trade, manufacturing industries have traditionally played a secondary role in the country’s economic development. However, authorities are now looking to drive their expansion as a means to cut unemployment, and foster more sustained and inclusive economic growth. As the gateway to East Africa, Djibouti is well positioned to supply manufactured goods to the surrounding landlocked countries. By encouraging FDI in its free zones, Djibouti has an opportunity to boost manufacturing activities. Meanwhile, there is strong potential for growth in other subsectors, particularly cement and building materials, bolstered by the country’s ongoing infrastructure investments. With fisheries and salt mining pegged to see greater investment due to rising local demand and efforts to strengthen the business climate, there is definite scope for industry to play a larger role in the economy. This chapter contains interviews with Ahmed Osman Guelleh, CEO, GSK Group; and Abdoulkarim Al Gamil, Chairman, Al-Gamil Group.

Although Djibouti benefits from an array of renewable resources, the country was a net energy importer as of early 2016 and has set itself some ambitious goals to improve domestic supplies. The energy sector is a key element of the country’s long-term development plan, known as Djibouti Vision 2035, which identifies energy access and security for its 875,000-strong population as strategic goals, as well as central to expanding manufacturing and industrial activities. The plan sets forth the ambitious target of meeting 100% of Djibouti’s energy demand through renewable sources by 2020. While keeping pace with growing energy needs will remain a key challenge in the years ahead, several factors are likely to prompt a significant redefining of Djibouti’s energy sector over the long term. With considerable renewable energy resources for the size of its economy, there is real potential for Djibouti to reach its goal of self-sufficiency, reducing energy costs for businesses and benefitting the economy as a whole. This chapter contains interviews with Gregory Meneses, Managing Director, Black Rhino; and Houssein Ahmed Houssein, General Manager, Horizon Djibouti Terminals Limited.

Thanks to Djibouti’s fortuitous positioning between East Africa and the Middle East, on a key trade route between Asia and Europe, the country has long played a central role in regional trading. This has translated into a dynamic transport sector and significant GDP growth rates since the mid-2000s. In order to take its geographic advantages to the next level; however, Djibouti will need to ensure that large-scale investments to upgrade its transportation networks are implemented adequately. The opening of a new railway and road links to the north of Ethiopia will contribute to exchanges with other landlocked countries in East Africa, as well as new ports and facilities that will bring added capacity to freight handling. Although large-scale investment in port infrastructure will be critical, coordination between the building of new maritime commerce infrastructure, and the rest of the inland road and railway networks will be essential for the Djiboutian transport and logistics sector to function properly as an integrated system. This chapter contains interviews with Moussa Ahmed Hassan, Minister of Equipment and Transport; Aboubaker Omar Hadi, Chairman, Djibouti Ports and Free Zones Authority; and Mario Fulgoni, CEO, Air Djibouti.

On the back of a rise in both capital investment and transport activity, Djibouti’s banking sector has seen considerable expansion in recent years. The most visible change has been the growing number of players in the market, which has led to an increase in competitiveness, and the expansion of products and services targeting local clients. The increasingly robust regulatory role being adopted by the Central Bank of Djibouti has led to the promulgation of various new rules – ranging from risk assessment frameworks and sharia compliance to regulations for new payment systems. This should help pave the way for increased retail and corporate activity. Although some vulnerabilities persist, the range of measures currently on the sector’s reform agenda is set to further modernise the financial industry. Better payment systems and improved credit guarantees will not only help the banking sector, but will have a broader positive impact on Djibouti’s economy.