Djibouti Country Economic Memorandum - Dijibouti Beyond the Ports and Bases: A Path to Prosperity for All : Fixing High Costs, Low Human Capital, and Governance for Sustained Growth and Jobs Creation (English)

As Djibouti embarks on its second phase of development, it is crucial to ensure that the benefits of growth are felt by all segments of society, particularly women and youth. To achieve this, three critical priorities have been identified in the Country Economic Memorandum (CEM): (i) enhance economic resilience and foster diversification by improving the macro-fiscal framework, promoting competitiveness, and fostering diversification; (ii) improve human capital and labor market outcomes for a more inclusive society by investing in education and health as well as enhancing the effectiveness and efficiency of the social protection system; (iii) strengthen the state-owned entreprise (SOE) sector by introducing competition in SOE dominated sectors, operationalizing the Djibouti Multi-sector Regulatory Authority (ARMD) in charge of regulating the energy and telecommunications sectors, and strengthening the institutional framework for financial oversight to mitigate fiscal risks associated with SOEs. Addressing these issues is crucial to foster a more conducive environment for businesses and stimulate economic growth. The report suggests that a progressive reduction in Djibouti’s electricity and telecommunications costs could lead to a substantial 39.1% increase in the country’s real GDP by 2030.. This positive impact would extend beyond GDP growth, with the potential to generate approximately 23000 jobs and to bring about a 25 percent increase in household income and consumption. While reducing costs is essential for rapid additional growth, it is crucial to recognize that sustained and long-lasting impact requires complementary measures to enhance human capital and improve governance. Recognizing these challenges, the Government of Djibouti has recalibrated its development strategy through the “Djibouti 2035 Vision” and the National Development Plan (NDP) for 2020-2024.