Interview: President Ismaïl Omar Guelleh

What structural factors underpin Djibouti’s attractiveness as a destination for foreign investment?

PRESIDENT OMAR GUELLEH: Djibouti’s investment proposition is underpinned by several advantages, such as its strategic location, enabling access to a market of more than 400m inhabitants; its port infrastructure; a financial sector with multiple players; a generous investment code; political stability; and a freely convertible currency without exchange controls. Foreign direct investment (FDI) increased five-fold between 2013 and 2021 to $1.58bn, which helped maintain the average 6% annual GDP growth seen from 2013 to 2019. FDI inflows are evidence of the country’s improving business climate.

Private sector development is central to our objective of fostering inclusive, sustainable growth, as it remains the most reliable lever for generating youth employment opportunities and reducing poverty. Ongoing investments in local solar and wind generation should further reduce business costs and boost Djibouti’s competitiveness. Structural reforms, and matching skills and labour needs will enhance the country’s attractiveness.

How would you evaluate the progress being made to diversify the country’s revenue base?

GUELLEH: The government aims to transform our service-based economy, with the private sector as the engine for the diversification of production and trade. Djibouti is developing renewable energy sources such as geothermal, solar and wind to reduce costs and boost its competitiveness, which should lead to new industries and more private investment.

The diversification strategy encompasses the construction of a ship repair yard, the development of the Damerjog Djibouti Industrial Development (DDID) and the mobilisation of capital under the Djibouti Sovereign Fund to support critical infrastructure. Djibouti has the marine resources to increase fishing and seafood exports, and the infrastructure for submarine telecommunications cables to facilitate new digital activities and services. Consolidating macroeconomic stability, strengthening innovation, and developing human capital to better match supply and demand are key to this.

To what extent can harnessing the potential of renewables contribute to energy security?

GUELLEH: Leveraging renewable energy is critical to Djibouti’s economic future. The successful implementation of key energy infrastructure projects, such as geothermal and wind, necessitates robust institutional and sector-level supervision, culminating in the establishment of a multi-sectoral regulatory authority.

Other measures include liberalising electricity production under a public-private partnership model, helping finance large-scale infrastructure. The current electricity supply is insufficient to launch major national projects such as the DDID. To keep pace with development and increase access to energy, Djibouti is leveraging its renewable resources by increasing its clean energy production and research capacity.

Which policies need to be implemented to further integrate youth into the labour market?

GUELLEH: Youth represent more than half of the country’s population, so their training and employment are key to its continued development. The government has mobilised substantial resources to develop educational resources, increase access to health care, and extend social protection and assistance to students from low-income families. The government spends an average of 14% of the state budget on education because investing in youth is investing in social progress, ensuring the competitiveness of our economy.

Access to employment is aided by matching curricula with labour market needs, strengthening vocational training, teaching foreign languages and adopting new technologies, as well as through entrepreneurial initiatives such as the Djibouti Partial Credit Guarantee Fund and the Centre for Leadership and Entrepreneurship.