Economy of Djibouti

By | April 29, 2022

According to businesscarriers, the basis of the country’s economy is trade through the international port of Djibouti and the service sector associated with it. The seaport is of international importance, being the most important in the western part of the Indian Ocean. A special role is played by the railway connecting the city of Djibouti with Addis Ababa, and a modern airport capable of receiving heavy jet liners. The financial sector is of great importance, which is determined primarily by the free convertibility of the Djiboutian franc. Servicing the French military garrison and other foreigners living in the country also provides a significant income. GDP 586 million USD. GDP per capita – $ 1,400, inflation 2%, unemployment 50% (2001). Sectoral structure of the economy in terms of contribution to GDP: agriculture 3%, industry 10%, services 87%.

Djibouti has very little cultivated land, the country meets only 3% of its food needs. The population engaged in breeding goats, sheep and camels leads a nomadic lifestyle. Developed fishing, pearling, coral, sponges. Agriculture, including hunting, forestry and fishing, employs 75% of the working population.

Industrial production is poorly developed, represented by small enterprises for the production of food products, leather products, building materials, as well as mechanical and sewing workshops. Evaporation of salt from sea water has been developed. The public sector owns power plants, an oil company, transport (partially), communications, several processing plants, for example, for the production of mineral water in Tadjoura. The conflict between Ethiopia and Eritrea in 1998-99 increased the load on the Addis Ababa-Djibouti railway line, which served as an incentive to upgrade the wagon and locomotive fleet. The increased use of the port of Djibouti by Ethiopia marked the beginning of a program to expand the port from 2000.

The Addis Ababa-Djibouti railway, founded in 1909, jointly owned by the two countries, 781 km long, of which 106 km runs through Djibouti. There are only 2890 km of roads, of which 364 are paved (1996). Airports – 12, of which with a runway with a special coating – 3, international – one, in the capital.

Phones – 10,000, mobile phones – 5,000 (2002), radios – 52,000 (1997), televisions – 28,000 (1997), Internet users – 3,300 (2002).

Djibouti is heavily dependent on foreign aid, which is readily available due to its special strategic position. The main donors are the UAE, France and Saudi Arabia.

Foreign trade (million US dollars, 1999): export 260; import 440. Main export commodities: animal skins, coffee. Re-export developed. Export partners: Somalia (53%), Yemen (23%), Ethiopia (5%) (1998). Major imports: food, beverages, transport equipment, chemicals, petroleum products. Import partners: France (13%), Ethiopia (12%), Italy (9%), Saudi Arabia (6%), United Kingdom (6%) (1998).

External debt US$366 million (2002 est.). Foreign exchange reserves 69.10 million US dollars (1999).

The political instability of recent years and economic difficulties have worsened the socio-economic situation of the population. The massive influx of refugees from neighboring countries increases the percentage of the unemployed population. Djibouti’s failure to reform its fiscal policy led to an additional fiscal law being passed in 1998 to meet IMF demands for a $9 million reduction in the budget deficit. and khat (a plant with a mild narcotic effect).

The state budget for 1999 was (US$ million): revenues 135, expenditures 182. In October 1999, Djibouti agreed to accept an IMF loan of US$26.5 million to support the government’s three-year economic reform program (1999-2002). Achieving a balance was the main condition for the reforms: these included tax reform, revision of the administration’s revenues and budget allocation; completion of the army demobilization program by the end. 2000; reform of the civil service, incl. wage cuts; publication of the privatization program for 6 major state-owned enterprises. The reduction in payroll deductions and a significant increase in tax collection made it possible to increase the total amount of the 2002 budget by 3.9% compared to the 2001 budget.

Tourism is developed in Djibouti. Deserted stretches of the sea coast, the rich underwater world of the coral reefs of the Red Sea make snorkeling and diving in these places an attractive activity. Tourists are interested in: Djibouti Tropical Aquarium, marinas, some of the best in the world, perfectly flat desert plains – Petit Vara and Grand Bar, which serve as a “stadium” for windsurfing on wheels. In the national parks Dai, Mascali-Moucha, Lac Abbe, you can see nature that is unique even by African standards. The number of tourists in 1998 – 20 thousand people.

Economy of Djibouti