Banking
From The Report: Djibouti 2016
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On the back of a rise in both capital investment and transport activity, Djibouti’s banking sector has seen considerable expansion in recent years. The most visible change has been the growing number of players in the market, which has led to an increase in competitiveness, and the expansion of products and services targeting local clients. The increasingly robust regulatory role being adopted by the Central Bank of Djibouti has led to the promulgation of various new rules – ranging from risk assessment frameworks and sharia compliance to regulations for new payment systems. This should help pave the way for increased retail and corporate activity. Although some vulnerabilities persist, the range of measures currently on the sector’s reform agenda is set to further modernise the financial industry. Better payment systems and improved credit guarantees will not only help the banking sector, but will have a broader positive impact on Djibouti’s economy.

Articles from this Chapter

Overview

Room to grow: Multiple competitors and improving regulation are helping to drive the sector forward
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On the back of a rise in both capital investment and transport activity, Djibouti’s banking sector has seen considerable expansion in recent years. The most visible change has been the increase in the number of players in the market, which has led to an uptick in competitiveness and the expansion of products and services targeting local clients. The increasingly robust regulatory role that is being adopted by the Central Bank of Djibouti (Banque Centrale de Djibouti, BCD) has led to the promulgation…

Analysis

Keeping the faith: Islamic finance could help increase banking penetration
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Amid the steady expansion of Djibouti’s financial sector over recent years, Islamic finance has been taking an increasingly prominent role. Of the 10 existing banks in late 2015, four were Islamic, and the segment currently accounts for between 15% and 20% of the overall market. According to fourth-quarter 2015 information from the Central Bank of Djibouti (Banque Centrale de Djibouti, BCD) the four Islamic Banks operating in Djibouti had assets of over DJF50bn ($280m), disbursed 15% of total…

Interview

Expanding access: OBG talks to Ahmed Osman, Governor, Central Bank of Djibouti
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Interview:Ahmed Osman What specific measures can be taken to enhance access to credit for small and medium-sized enterprises (SMEs) in Djibouti? AHMED OSMAN: It is important to keep in mind that the majority of SMEs in Djibouti are of a commercial nature and have historically been underfunded. The local banking sector is highly liquid and has the means to finance SMEs. In fact, a specific mechanism for SME financing exists called the Economic Development Fund. The contrast between supply…

Analysis

Risk and reward: The country’s insurance industry wants a bigger slice of the pie
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Despite its limited size, with only two companies currently in operation – Assurance AMERGA and GXA Insurance – the Djiboutian insurance sector has enjoyed relatively steady growth, particularly over the past decade and a half. A number of reforms in 2000, followed by the more recent rise in capital investment and foreign investment in Djibouti, has brought new non-life opportunities, and while much of the larger infrastructure projects remain beyond the reach of the local providers, profits…

Interview

Building confidence: OBG talks to Jean-Pierre Gianotti, Head, Bankers Association of Djibouti
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Interview:Jean-Pierre Gianotti What measures can be taken to increase the population’s access to banking services? JEAN-PIERRE GIANOTTI: The percentage of Djiboutians currently making use of banking services stands at around 20%, compared to 15% three years ago. Although this number is low, mainly due to the persistence of a cash culture, efforts have been undertaken to allow people easier access to banking services. For example, digitalisation has presented new tools, such as mobile banking,…

Interview

A reliable partner: OBG talks to Christian Boucher, CEO, GXA Insurance
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Interview:Christian Boucher What challenges does the expansion in the freight-forwarding sector pose in providing adequate cargo insurance coverage? CHRISTIAN BOUCHER: Although the demand for insurance services in the transport sector has definitely increased, the capacity and tools to provide sufficient coverage are present. Specific insurances adapted to international maritime transport and dispatch of these goods, mainly to Ethiopia, are currently providing coverage under the land transport…

Analysis

Lending opportunities: Increased competition leads to increased participation
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Djibouti’s banking sector, which was a duopoly until as recently as 2006, has seen a wave of development in recent years, and the scope for further growth is significant. Recent years have seen lending rise exponentially as new players have entered an increasingly well regulated market: credit allocated to the private sector grew from 20% of GDP in 2005 to 29.5% of GDP in 2015, according to data issued by the Central Bank of Djibouti. As the wider economy continues to expand, the question of which…