Djibouti, the Horn of Africa global shipment country is poised to become the Singapore of Eastern Africa
Djibouti, officially known as the Republic of Djibouti, is a francophone country and one of the smallest countries in Africa, with an area of 23,200 square kilometers and a population estimated at 1.2 million. Djibouti is in the Horn of Africa. It is bordered by Somalia in the south, Ethiopia in the southwest, Eritrea in the north, and the Red Sea and the Gulf of Aden in the east. Across the Gulf of Aden is Yemen.
The size of the Djibouti economy limits its ability to diversify production and increases its reliance on foreign markets, making it more vulnerable to market downturns and limiting its access to external capital. Djibouti is a strategic entry point for regional business, capitalizing on its political stability, well developed financial market, and accommodating investment climate with a “World Bank 2020 Doing Business Index” of 60.5, which is the highest in the region. By virtue of its strategic geographical position in the Horn of Africa and the Gulf of Aden, proximity to commercial maritime corridors, with around 60% of world maritime trade passing through nearby shipping lanes, free zones, open trade regime, and stable currency, Djibouti’s total FDI stock amounted to USD 1.98 billion in 2020 (58.5% of GDP).
Djibouti, Vision 2035 seeks to transform the economy into a diversified, tech based, and competitive global powerhouse. The recent drivers for economic transformation were investment in infrastructure, transport sector (maritime, rail, air, and road), renewable energy, electricity and water. In line with its strategic vision and long term capital preservation, in 2021 Djibouti established a Sovereign Wealth Fund (SWF) to invest parts of the proceeds deriving from the national ports operations.
Djibouti-Ville the engine for economic growth: Djibouti Ville is the center of Djibouti’s economic activity accounting also for over 80% of total population and close to 90% of national Gross Domestic Product (GDP). The national GDP in 2021 was $3.37 billion, a 5.5% increase from 2020. Djibouti’s strength lies in its strategic location at the southern entrance to the Red Sea, marking a bridge between Africa, Asia and the Middle East. Djibouti energy dependency is changing rapidly as the…