With an estimated per capita income of US$ 1,060 in 2007, Djibouti was ranked as a Middle-Income Country. Despite recent improvements in living conditions and human development indicators such as the gross enrolment rate, child and youth, and maternal mortality rates, as well as access to drinking water, remain below the levels which would enable the country to achieve the Millennium Development Goals by 2015.

Development Policy

Djibouti's formal private sector is fairly modest and currently accounts for only 22% of GDP (15% for trade and tourism, 3% for the primary sector and 4% for other services). The economy remains dominated by the public sector, which provides over 70% of jobs in the formal sector. The country has 2,300 registered enterprises, 82% of which are in the capital. The informal sector constitutes a major component of the private sector.  Private sector development is faced with many constraints, the most serious of which are:

• a still heavy tax burden;
• the low level of financial intermediation combined with a 5% increase in the number of bank account holders;
• weak human resource development; and
• the high cost of factors of production (water, electricity, and telecommunications).

To enhance the business environment, the Government aims to reduce the high cost of factors of production under the structural reform programmes, in particular those concerning the privatization of the management of public enterprises and liberalization of the labour market.

Bank Group Strategy

The Bank Group’s operations strategy for the 2007-2010 period identifies the Government’s development objectives that the Bank operations will aim to influence.  The strategy is based on four thrusts:

• strengthening the country’s competitiveness and creating conditions conducive to strong and sustainable economic growth
• human resource development, through improved access by the poorest to health and education, and implementation of a policy to promote employment through the development of micro-finance and vocational training
• integrated local development (grassroots development) by implementing actions more specifically targeting the areas of poverty
• the promotion of good political, local, judicial and economic governance

It will be focused on two of the four thrusts of the Poverty Reduction Strategy Paper, namely: the promotion of integrated local development (Thrust III), as well as of good governance (Thrust IV).

As at 30 June 2007, the Bank Group had approved twenty-eight (28) operations, representing cumulative commitments net of cancellations worth UA 120.45 million.  The active portfolio comprises 8 projects, corresponding to commitments of UA 43.3 million, 28.5% of which have been disbursed. Ongoing operations by order of importance concern: the energy sector (40.75%); the social sector (37.6%); the agricultural sector (3.5%); the multisector (2.7%). The private sector (16.3%) is supported by the Bank through the financing of the Bulk Terminal Project for the storage and treatment of agricultural imports.