Pigeons flying over Djibouti's sky

Photo by UNDP Djibouti

Middle East & North Africa

Djibouti is one of the smallest countries in Africa, with an area of 23,200 square kilometers and a population estimated at about 990,000. The size of its economy limits its ability to diversify production and increases its reliance on foreign markets, making it more vulnerable to market downturns and hampering its access to external capital. With less than 1,000 square kilometers of arable land (0.04% of its total land area) and average annual rainfall of only 130 millimeters, Djibouti depends almost completely on imports to meet its food needs.

Djibouti’s strength lies in its strategic location at the southern entrance to the Red Sea, marking a bridge between Africa and the Middle East. Adjacent to some of the world’s busiest shipping lanes (between Asia and Europe), it hosts military bases for France, the United States, Japan, China, and the North Atlantic Treaty Organization (NATO), as well as for other countries with forces supporting global anti-piracy efforts.

Djibouti’s economy is driven by a state-of-the-art port complex, among the most sophisticated in the world. Trade through the port is expected to grow rapidly in parallel with the expanding economy of the country’s largest neighbor and main trading partner, Ethiopia. Djibouti has some natural assets that could be used for tourism, untapped marine resources that could support more artisanal fishing, and an infrastructure of undersea telecommunications cables from which it could develop new digital and service industries. Renewable energy could be another source of growth, as Djibouti has geothermal, solar, and eolian potential.

The country’s medium-term economic outlook remains positive despite the impact of COVID-19: Output growth is set to reach 5.5% in 2021 and average 6.2% over 2022 and 2023, as free zone re-exports, as well as economic activity in, and exports of, transportation, logistics, and telecommunication services to Ethiopia rebound. That said, a more protracted economic slump in Ethiopia would have knock-on effects in Djibouti. Djibouti’s ongoing infrastructure projects, such as the construction of a ship repair yard, a new oil jetty at the Port of Damerjog and new hospitality infrastructure are also expected to boost growth and job creation, barring protracted delays in these new projects. The shipyard's repair and maintenance capabilities are expected to attract more ships to Djibouti, giving the country’s main port a competitive advantage over neighboring ports, and cementing its position as a regional trade and logistics hub.

Source: World Bank, Djibouti Country Overview

Investment OpportunitiesDescribes the number of investment opportunities in the country.
Most Affected SDGsDescribes the three priority SDGs the investment opportunities address in the country.
Decent Work and Economic Growth (SDG 8) Industry, Innovation and Infrastructure (SDG 9) Sustainable Cities and Communities (SDG 11)
Priority Target SectorsDescribes the three priority sectors the investment opportunities address in the country, based on the SASB Sustainable Industry Classification System®️ (SICS®️) classification.
Services, Transportation, Renewable Resources and Alternative Energy
Ease of Doing Business ScoreDeveloped by the World Bank, the Ease of Doing Business Score helps assess the absolute level of regulatory performance over time. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100 represents the best performance.
See the World Bank Ease of Doing Business site for more information.
Human Development IndexDeveloped by the United Nations Development Programme (UNDP), the Human Development Index is a summary measure for assessing a country’s long-term progress in three basic dimensions of human development: a long and healthy life, access to knowledge and a decent standard of living.
See the UNDP Human Development Index site for more information.


Opportunities 21 Investment Opportunity Areas