Geography and Population
The Republic of Djibouti is located in the Horn of Africa and spans 23,200 km2.. Djibouti is the third smallest nation in Africa. It shares direct access to the strategic Bab el-Mandeb, or the Gate of Tears, with Eritrea and Yemen. This strait controls southern access to the Red Sea and therefore the Suez Canal. It is one of the busiest commercial waterways in the world.
Djibouti is bordered by Eritrea to the north, Ethiopia to the west and south, and Somalia to the southeast. To the east is its coastline along the Red Sea and the Gulf of Aden. Djibouti gained its independence from France in 1977.
The population of Djibouti is estimated at approximately 876,200 people. More than 500,000 people reside in the capital, Djibouti City. Djibouti is a multi-ethnic country. The Afar (35%) and Somali (60%) constitute the two largest ethnic groups, both of which speak Afro-Asiatic languages. The remaining 5% of the population comprises Arabs, Ethiopians and Europeans, most of whom are Italian or French.
Djibouti is a unitary presidential country. The National Assembly of Djibouti comprises 65 members who are elected during general elections by popular vote to serve five-year terms. Thirty-five members of the National Assembly are Somali, while 30 members are Afar.
The President of Djibouti is the head of state and is elected to serve a six-year term. The president is also the commander in chief of the Djibouti Armed Forces. He is responsible for appointing the principal government officials including the prime minister. The prime minister heads the executive branch and appoints cabinet members.
Djibouti has a GDP worth 2.1 billion dollars. Increased investment, particularly in construction and port operations, has generated relatively high economic growth in recent years, with growth expected to be 6.8% in 2018. The growth in GDP is driven by continued investment in infrastructure, particularly ports, justified by the transportation of goods to and from Ethiopia.
Main Employment Sectors
Djibouti’s economy is based on service activities arising from the country’s strategic location as a deep-water port on the Red Sea. The service sector represents nearly 80% of the country’s GDP. Djibouti provides services as both a transit port for the region and an international transhipment and refuelling centre.
Imports, exports, and re-exports represent 70% of port activity at Djibouti’s container terminal.
Djibouti’s principal trading partners are Ethiopia, Somalia, some Arab countries, notably, Yemen and Saudi Arabia, and China and France.
Given its strategic location, Djibouti has become a base for various super power countries, such as the USA and China and other European and Asian countries. These military bases have contributed to the growth of the service sector, as reflected in Djibouti’s GDP.
The government of Djibouti has established a goal of attracting 500,000 visitors by 2030. The government has also advanced Vision 2035, which seeks to leverage tourism for job creation and foreign exchange income, consistent with broader efforts aimed at economic diversification.
According to the World Bank, currently less than 10% of the country’s tourism capacity is being exploited.
Djibouti crafted a developmental strategy that includes large-scale investments focused on public sector projects, such as a water pipeline and the construction of a railroad to Ethiopia that was completed in 2016.
The Doraleh oil terminal has a capacity of 370,000m3 of hydrocarbons and chemicals products. Two hundred trucks containing 45,000 litres may be unloaded daily at the ports of Djibouti.
Loading a truck requires 4 hours instead of 24 hours. Highly secure, this complex is the first oil reservoir in the Horn of Africa.
Urban renovation programmes in cities, particularly in the capital city, are improving housing infrastructure, while large-scale transport infrastructure projects are aiming to improve connections across the country and establish Djibouti’s position as an international commerce hub.
The manufacturing sector is weak and plays a secondary role in the country’s economic development. Authorities are trying to boost the sector to reduce the unemployment rate and foster more inclusive economic growth. This sector accounts for less than 4% of the country’s GDP.
Currently, Djibouti has over 30 formal, large-scale commercial manufacturing enterprises. These firms are focused on the domestic market rather than exports, with several companies specialising in building materials, beverages, mineral water, and plastic and paper production.
The manufacturing sector is dominated by domestic investors, but according to Djibouti’s National Investment Promotion Agency, foreign investors have recently shown interest in investing in Djibouti.