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#EconomyTalks: Djibouti

Djibouti’s economy is driven mainly by services, with industry accounting for less than 20 percent of GDP. Economic activity is centered on port facilities, the railway, and military bases. Increased investment, particularly in construction and port operations, has led to relatively high economic growth in recent years.

Institutional weaknesses such as poor governance and the lack of a sound judicial framework severely undercut vibrant economic expansion and constrain long-term economic development. Corruption continues to raise the cost of doing business. Open-market policies related to free trade and the free flow of capital are not deeply rooted in the economic system.

President Ismael Omar Guelleh was reelected by a landslide to a fourth term in 2016 after getting parliament in 2010 to change a constitutional prohibition against more than two terms. Djibouti’s strategic location at the mouth of the Red Sea makes its port facilities and railway key assets. The U.S. has its only permanent African base in Djibouti, and France and Japan have a military presence there as well. In early 2016, China began building “support facilities” for its army and navy in the port town of Obock. Djibouti has few natural resources and imports most of its food. The government relies on foreign assistance to finance development projects.

Trade is important to Djibouti’s economy; the value of exports and imports taken together equals 58.7 percent of GDP. The average applied tariff rate is 17.6 percent. State-owned enterprises distort the economy. Credit is generally allocated on market terms, but access to credit for entrepreneurial activity is still limited by high costs and the lack of other available financing instruments.

Currency Djiboutian franc
GDP per capita 1 813.60 USD (2014, World Bank)
Gross domestic product 1 589 billion (2014, World Bank)
GNI per capita 2 2220 PPP dollars (2005, World Bank)
Gross national income 1 726 billion PPP dollars (2005, World Bank)
GDP growth rate 6.0 % annual change (2014, World Bank)
Internet Users 11.9% of the population (2015, World Bank