Djibuti: Investir

FDI in Figures

According to UNCTAD’s World Investment Report 2023, FDI flows to Djibouti amounted to USD 191 million in 2022, up from USD 168 million one year earlier. Excluding direct investment in port entities, direct investment in Djibouti is concentrated in real estate, industry, and services (IMF). The main investors are the Gulf countries, Ethiopia, China, Mauritius, the United States, France, Brazil, India, and Turkey. As a member of COMESA willing to attract more FDI, Djibouti aims specifically at building closer ties with the Gulf Cooperation Council and India. The government is gradually opening public-sector entities, including state-owned utilities, to private investment. The privatization of a minority stake in Djibouti Telecom, the monopoly telecommunications SOE, was announced in 2022, but no progress has been made so far.

In terms of the business climate, Djibouti has recorded progress in recent years. The country has undertaken many reforms, including creating a one-stop shop for business start-up; making property transfer easier and more transparent; strengthening access to credit; strengthening minority investor protections; making enforcing contracts easier by establishing a dedicated division within the court of first instance to resolve commercial cases and by adopting a new Code of Civil Procedure; and making resolving insolvency easier. Both foreign and domestic private entities enjoy equal rights to establish and own business enterprises and participate in all forms of remunerative activity. Additionally, foreign investors are not obligated by law to have a local partner, except in the insurance industry, where it's required only for companies registered locally, not as branches of existing foreign companies. However, some foreign firms opt for a local partner to facilitate navigating local bureaucracy and cultural nuances. Notably, there is no formal screening process for foreign direct investment (FDI). The country's main attractive feature for investment is its strategic geographical location, situated at the maritime crossroads between the Far East, the Persian Gulf, Africa, and Europe, which makes its deep-water port facilities and railway key assets. Moreover, Djibouti has a stable currency, which is freely convertible and pegged to the U.S. dollar. Furthermore, the government, which is implementing an ambitious infrastructure program, offers significant tax reductions to foreign investors. The redevelopment of the historic port into a business center and the further development of the Damerjog port industrial free zone, with the construction of a new oil jetty, are expected to boost investments (Coface). Other major projects include the Addis Ababa-Djibouti railway, the construction of a drinking water pipeline with Ethiopia, as well as airports, a wind farm, a solar power plant (with Germany), and a geothermal power plant (with China). Among factors impeding FDI flows are mediocre governance, corruption, the lack of a sound judicial framework, an unstable regional geopolitical situation, a poorly diversified economy with little resilience to outside shocks, and a fragile ecosystem prone to environmental crises. The National Investment Promotion Agency (NIPA) of Djibouti, established in 2001, is tasked with promoting private-sector investment, facilitating investment operations, and modernizing the country’s regulatory framework. Djibouti ranks 132nd among the 180 economies on the 2023 Corruption Perception Index and 105th out of 184 countries on the latest Index of Economic Freedom.

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Latest Update: May 2024