Viewpoint: Ramiss Houmed
Looking at the multitude of reforms under way to transform the business environment and the arrival of investments, particularly for ports and transport infrastructure, it is clear that Djibouti is experiencing an economic transition. This transformation is part of a desire to positively and quickly impact growth, a process that is already quite advanced. Coupled with its strategic geographical location, Djibouti has succeeded in stimulating renewed interest from foreign investors, and is increasingly positioning itself to access other regional and continental markets.
However, these advantages also come with obstacles when developing industrial activities and digital services. With regard to the former, the country’s accession to greater utilisation of renewables is a top priority. A special focus is being placed on geothermal and solar energy, which could help to considerably reduce power costs. For the latter, the digitalisation of administrative processes through the e-government initiative will help to formalise the economy, ensure the security of transactions and enable good practice.
As a result, the fiscal framework has also been undergoing important changes in order to support the country’s economic transformation. For instance, targeted tax breaks – especially for start-ups – are encouraging independent workers and small artisans and traders to enter the formal economy and comply with common law tax duties. It is important for all actors in the sector to realise that the major challenge will be establishing an adequate fiscal environment, and that this process will not be without obstacles.
The right fiscal conditions should help attract more investment, reduce the cost of employment and standardise the collection of value-added tax, while also broadening the tax base and encouraging the formalisation of the country’s economy.
Fortunately, the accounting profession anticipated this economic shift back in 2013. In this context, an overhaul of the institutional and legal framework led to the creation of a new law that merged the decades-old entities of the National Company of Auditors of Djibouti and the Order of Chartered Accountants within the single Order of Chartered Accountants of Djibouti.
This new order combines the two complementary professions of accounting and auditing. In this sense, the accountant has a contractual obligation, while the statutory auditor has a legal duty subject to the appointment of an auditor. The accountant is still responsible for the preparation of a company’s balance sheet by applying the relevant laws and regulations, with assurances lying in the reliability and consistency of the accounts. In addition, the accountant can also be entrusted with a multitude of specific responsibilities such as payrolls, tax assistance and consultation. As for the auditor, they intervene in the accounts that are prepared by the service provider or the client to verify compliance with the legal, accounting and tax entities. As a result, the order provides a guarantee to a third party that accounts are well kept and reflect the professional image of the company.
This regulatory overhaul, financed by a special grant from the World Bank and carried out in technical partnership with the French Professional Accounting Organisation, brought together all stakeholders. Amendments to the new legislation and the finalisation of internal rulings and the profession’s code of ethics are awaiting approval by the Ministerial Council, after which they can be submitted to the vote of the National Assembly.
This new framework should allow the Order of Chartered Accountants of Djibouti – which is already an associate member of the International Federation of Francophone Accountants and Auditors as well as the Pan African Federation of Accountants – to start the process of joining the International Federation of Accountants. This will ensure there is a reliable financial information value chain, as well as provide companies, associations, communities, public institutions and the state with reliable and inter-disciplinary professionals.
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