The state of Djibouti has a profound attachment to democratic values and refers to this attachment in its first constitution, adapted on the September 4, 1992. The constitution, adopted via referendum by the citizens of Djibouti, integrates the stipulations of the Universal Declaration of Human Rights and the African Charter on Human and People’s Rights.

It underlines the separation of powers, guarantees fundamental rights, recognises the multi-party system (effectively put in place in September 2002) and prohibits political factions from identifying themselves based on race, ethnicity, sex, religion, sect, language or any other element that could serve as the basis for discrimination.

Three Branches

As in all democracies, the institutions of the republic are the executive power, the legislative power and judicial power. Executive power is exercised by the president of the republic, who is also the chief of government. The legislative power belongs to the parliament that consists of a unique chamber, the national assembly. A reciprocal independence of the president of the republic and the National Assembly is respected. In this way, the president cannot instigate the dissolution of the National Assembly in the same way as the National Assembly cannot question the responsibility of the president.

The guarantee of all the rights and liberties attributed to human beings under the jurisdiction of this constitution would not mean anything without an independent judicial and executive power. This is exercised by the Constitutional Council, the Ombudsman of the Republic, the High Court of Justice, the Court of Auditors and the courts.

The Ombudsman of the Republic is a recent institution, created by Law No. 51, of the August 21, 1999. The ombudsman is an independent personality who receives complaints concerning institutions’ relations with its citizens, the functioning of the state administrations, decentralised institutions, public institutions and all other state organs that are attributed with the provision of public services. The Ombudsman does not replace the tribunals. The Ombudsman has jurisdiction over regional delegates in the four districts of the interior (Ali-Sabieh, Obock, Tadjourah and Dikhil).

Major Reforms

The constitution has seen three major amendments: in 2006, 2008 and 2010. The constitutional law of the February 2, 2006 amended the organisation of tasks within the National Assembly; the constitutional law of January 19, 2008 reorganised the jurisdiction of public finances, and the constitutional law of the April 21, 2010 saw the revision of the constitution by permanently anchoring the process of decentralisation in Djiboutian governmental bodies. In this respect the new article 86 of the constitution is clear: “the territorial communities are freely administered by their elected councils”. The constitution also entrusts the legislator with the task to organise the electoral system of the local assemblies and their executives.

This same constitutional law of the April 21, 2010 strengthens the role of the Ombudsman by allocating him a new title. This constitutionalisation of the ombudsman shows the importance he holds in the Djiboutian administrative landscape in terms of settling disputes that arise between the administration and its citizens.

External Relations

Djiboutian law implies the principle of supremacy of (ratified and published) international legal instruments over internal laws. Therefore, international treaties or agreements duly ratified and published shall – upon their publication in the Official Journal of the Republic of Djibouti – hold a superior authority.

The Republic of Djibouti is a member of the World Trade Organisation, the UN and its agencies, as well as the World Bank Group and the IMF. Djibouti is a signatory of the Cotonou Agreement between the EU and the African, Caribbean and Pacific Group of States (ACP), and is a member of the African Union and of the Common Market of the Eastern and Southern African States (COMESA).

Previously known as the Intergovernmental Authority on Drought and Development, the Intergovernmental Authority on Development (IGAD) was created in January 1986 by seven East African countries: Djibouti, Ethiopia, Eritrea, Kenya, Uganda, Somalia and Sudan. Its initial objective was to combat drought and desertification. In March 1996, at a summit in Nairobi, the IGAD adopted a new charter, to re-launch and expand its mandate, leading to the incorporation of new priority sectors such as economic cooperation, conflict prevention and the settlement and management of humanitarian affairs. IGAD was officially recognised by the former Organisation for African Unity (currently the African Union) as a regional economic organisation in June 1997 and started to focus its efforts on economic integration. Its headquarters are in Djibouti.

The treaty establishing COMESA was signed by 20 states (including Djibouti) in Kampala, Uganda in November 1993, and ratified during the summit of Lilongwe in Malawi one year later. The countries that are a member of COMESA include Arab countries Egypt, Sudan, Djibouti and the Comoros, as well as Angola, Burundi, Democratic Republic of Congo, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Maritius, Namibia, Rwanda, Seychelles, Swaziland, Uganda, Zambia and Zimbabwe.

Close Neighbours

The COMESA area encompasses a total population of 340m inhabitants and has a combined total GDP of $170bn (the average GDP per inhabitant being $690). The volume of commercial transactions between COMESA member states and the rest of the world stands at $600bn. COMESA adheres to the goals outlined as follows:

  1. Achieving the durable economic growth and development of its member states, emphasising a development of production structures and commercialisation processes that are more balanced and harmonious;
  2. The promotion of joint development in all areas of economic activity and the joint adoption of macroeconomic programmes and policies, aimed at increasing living standards of its populations and strengthening mutual relations between the member states;
  3. The creation of an environment that is conducive to foreign investment, international and locally, notably the joint promotion of research and adaptation of science and technology to economic development;
  4. The promotion of peace, security and stability amongst member states with the aim of increasing economic development in the region;
  5. Strengthening the relations between the common market and the rest of the world as well as the adoption of common positions in international fora;
  6. Contributing to putting in place, advancing and achieving the objectives of the African Economic Community.

System of Arbitration

Djibouti will very soon host the Arbitration Centre of the COMESA. Following the 17th COMESA summit held on February 26 and 27, 2014 in Kinshasha, COMESA has recognised Djibouti’s efforts to create an international commercial court in the free zone and has noted that it will be hosted in Djibouti.

Following the request by Djibouti to host the Arbitration Centre of COMESA within the jurisdiction of the International Commercial Court of Djibouti, the necessary studies have been undertaken.

In March 2015 IGAD validated the choice of Djibouti as the arbitrator of its future Centre for Commercial Arbitration. The creation and implementation of the centre can count on the support of the World Bank and the EU. It is expected to be launched in the first six months of 2016.

Created in 1899 in order to facilitate the arbitration and managing other forms of agreements between different states, the Permanent Court of Arbitration (PCA) has become a modern diversified institution of arbitration that is ideally placed at the crossroads of international public law and international private law, and designed to respond to the needs of the international community in managing disputes.

The PCA is not a court in the traditional sense but a permanent framework for the use of tribunals of arbitration to address specific disputes. The PCA is an intergovernmental organisation made up of 117 member states, of which all except Djibouti are IGAD member states. However, this will change as soon as Djibouti can ratify the Hague convention.

Early Urban Law

When the first buildings appeared in the floodplain around 1899, the French colonial administration organised the settlement of the population by distributing building lots, while preserving the rights to infrastructure and public service equipment. However, it prohibited the population to construct permanent homes because of the likelihood of flooding. For this reason the administration only distributed temporary occupation licenses.

Djibouti City bears the evidence of this administrative decision to this day, having popularised temporary construction materials such as wood and corrugated zinc.

As a result, the land situation in old quarters is precarious. The vast majority of inhabitants only hold temporary concessions. In order to mitigate problems caused by the latter, the state has put in place transfer programmes that allow inhabitants to buy their parcel in order to obtain a permanent land title.

Urban Planning Code

The Urban Planning Code for land development and construction should facilitate the understanding and application of principles and general mechanisms of laws and rules of occupation and land use with regards to the whole territory. However, it should not only be a stratification of texts but should equally strengthen the regulation:

  • Based on precise regulations that are clear and adapted (for the current urban context) to determine their recipients, as well as the resulting obligations and constraints with regards to their application in time;
  • By transcending contradictory administrative logic in order to protect the public interest;
  • By promoting the principle of information and consultation towards the better involvement of citizens;
  • By simplifying the authorisation and permission procedure;
  • By completing the codification of domains not covered by existing texts;
  • By improving the taxation of development.

Environmental Law

In the process of strengthening the international framework for better managing the environment, the Republic of Djibouti completed an important milestone on July 1, 2009 by putting in place an environmental code via law No. 51.

The shortage caused by the absence of an environmental code before this date was felt in 1997 when severe pollution was discovered by the Djiboutian authorities. In March 2000 a Canadian expert found that this unprecedented pollution affected the entire port of Djibouti, including oil producers Total, Mobil and Shell, as well as the marine flora and fauna of the Djiboutian coast. The expert later showed that the massive oil spills had originated in the facilities of oil companies. The chief of state, a defender of the environment, insisted that the African Union take an active stance on environmental problems and strengthen its charter on the environment.

Since Rio in 1992 and Rio+20 in 2012, both summits in which Djibouti took part, the judicial arsenal has not stopped developing itself in order to protect our environment – as seen for example in the implementation of the Marine Air Protection programme.

In 2015, the East Africa Environmental Risk and Opportunities Summit, in partnership with Perim and Yale University and with participation of Berkeley and Boston University, was held in Djibouti. The event was attended by delegates from 20 countries and from 40 associations and NGOs working in the environmental field. The chief of state proposed that Africa should be attributed with a regional observatory on the environment for the African Continent.

Family Code

Through the enactment of specific laws and texts that apply to women questions of gender more generally, in recent years the country has seen notable improvements in terms of legislation and politics. The most significant legal amendment is the law dated from the June 31, 2002, on the Family Code, which filled a legal vacuum and guarantees the rights of women, children, and notably young girls. Thus, underage marriage is forbidden, with the minimum age of marriage set at 18 years of age. Furthermore, conditions for divorce have improved.

Criminalisation of Excision

The 1995 Penal Code takes into account the specific rights of women. Thus, the Penal Code is egalitarian with regards to parents, setting no distinction between the father or mother. The penalties for many offenses are aggravated when committed against women.

A major breakthrough was achieved by the creation of article 333 of the Penal Code that saw the implementation of criminalisation of female genital mutilation. NGOs had worked work tirelessly for the eradication of this barbarous practice.

The country’s first lady, through her role as president of the National Union of Djiboutian Women, an NGO focused on female activism, constantly works on improving the daily well-being of Djiboutian women by continuing to combat female genital mutilation, as well as working against illiteracy and poverty through the provision of micro credits. This organisation works hard to provide support to all disenfranchised groups and defend their rights.

Juvenile Justice

Djibouti has ratified the UN Convention on the Rights of the Child on the December 6, 1990. Juvenile justice and the protection of children’s welfare is developed by the judicial system. An alternative liability scheme is applied to minors based on age:

  • Minors of less than 13 years of age are not punishable by law; and
  • Minors aged between 13 and 18 benefit from the status of minority as well as potential protection measures or rehabilitation under the Code of Criminal Procedure.

Delinquents aged 13 cannot be placed in a penitentiary establishment unless this measure seems indispensible or if it is not possible to make any alternative arrangement. In such a case, the minor is placed in a specialised institution, and, by default, in a supervised educational centre reserved for minors. Law No. 95 within the Code of Legal Protection for Minors disposes itself towards the putting in place of protection for minors, the application of a specific procedure for delinquents and establishes the rights of minors to juvenile justice.

Fight Against Corruption

The World Bank has published its assessment of the business climate in Djibouti, noting that the situation is improving year-on-year. The fight against corruption forms a crucial part of these indicators. Already in 2012 and 2013, Djibouti received one of the best marks on the continent in terms of the fight against corruption; with averages that are very close to the majority of the most developed countries. Today, corruption is a declining problem, with Djibouti ranking well below the global average of 15.5%.

This progress reflects the “zero tolerance policy” put in place by the chief of state since his accession to power. This has involved putting in place the necessary capacity to ensure transparency in the management of public funds, including the ombudsman, the court of accounts and the state inspectorate general, charged with the fight against corruption, administrative control and the proper management of public funds. To tackle this issue, Djibouti has introduced obligatory competition for recruitment to public functions. This requirement was put in place by the Court of Accounts and resulted in the creation of the Independent National Commission for the Prevention and Struggle against Corruption in 2013. Apart from long prison sentences, the law also foresees the confiscation of products derived from illegal enrichment.

Land Tenure

The end of 2015 brought the proposition of a legal bill aimed at alleviating the tense situation of mortgage recovery. This legal project has the aim of making the organisation of the tenure regime more efficient, on the one hand, and to facilitate the financing of real estate in the Republic of Djibouti, on the other. Entering into force on October 10, 1991, Law No. 177 repealed the decree of March 1, 1909 regarding the organisation of landownership on the French Somali Coast.

The legislation of 1991 had already clearly declared the objective of the reform, as the first article of the law was intended to provide mortgage holders with guarantees that would cover the last issued loans.

However, the unwieldy nature of judicial procedures, particularly those concerning mortgage guarantees for real estate sales, caused major delays.

Banks, afraid of not being able to recover debts, proposed unreasonable high banking rates and, in doing so, discouraged the population’s real estate projects. Thus, the elements of the law that were excessively formal or lead to disputes that delayed or impeded the objective were redacted.

A new procedure has been put in place under Article 55-1, which acts as an effective mechanism that allows the creditor to be able to obtain his mortgage guarantee within a reasonable time frame. This new provision allows both debtor and creditor to come to an agreement on the private sale of mortgaged property, subject to judicial control.

If the desired goal of the current legal project is to provide guarantees to financial institutions and banks to recover loans quickly, the aforementioned also preserves the rights of the debtor, owner of the mortgaged property.

Commercial Code

A committee concerned with the accession of Djibouti to the Organisation for the Harmonisation of Business Law in Africa (OHADA) was created by decree No. 2001-0799/PR/MCTA and recommended that authorities choose between the accession of Djibouti to OHADA and the integration of OHADA provisions into national legislation. The government, based on Djibouti’s dual geographical position and identity as part of both the African and Arab worlds, decided to create its own commercial code based on the uniform acts of OHADA.

The first Commercial Code of Djibouti was formulated on the August 1, 2012. This legislation has coordinated all legal and regulatory standards related to trade within Djibouti jurisdiction. This important codification task has boosted business practice, replacing the previous trade legislation that consisted of various uncoordinated laws and decrees. With the implementation of this code, Djibouti has adopted a modern law that serves everyone.

Bill on Drug & Pharmaceutical Law

A draft law intends to establish a code of medicines and pharmacy which is the directory of the legal texts governing pharmaceuticals and drugs. In light of developments in the medical and pharmaceutical sectors in recent years, it has become increasingly urgent to put in place a legal framework that guarantees the quality of medicines.

This project has the aim of improving the registration of medicines in order to guarantee quality of incoming medicines on the territory of Djibouti and to implement standards for pharmaceutical establishments. By adopting this code, Djibouti will have a pharmaceutical legislation that is updated and that can fight against counterfeit medicines and the circulation of illicit products.

Legal Framework for Banks

Djibouti has instigated a number of reforms aimed at modernising financial sector legislation in order to bring it into line with international standards in financial regulation.

The Evolution of Banking In Djibouti

While the two main banks (BOA-Mer Rouge and BCI-Mer Rouge) hold 85% of assets, the Republic of Djibouti has seen considerable development in its financial sector since 2006, witnessing the development of more than 10 financial institutions. A decree by the Central Bank of Djibouti in 2009 requires each state employee to have a bank account to receive wages. This “bancarisation” of the active population has contributed to the development of the banking sector by growing the number of individual clients.

The Central Bank of Djibouti has continued the reforms initiated under the auspices of the IMF to strengthen supervision and banking regulations, with the enactment of two new decrees in 2013 on the calculation of liquidity ratios and on the regulation of the changed situation of credit institutions.

OBG would like to thank Cabinet Guerinot for its contribution to THE REPORT Djibouti 2016.

System Of Credit Information & National Payment System

The authorities have inaugurated the modernisation of the payment system and the creation of a historical credit system. Both were adopted in the Ministerial Council of November 2015.

Currently, the credit information system of Djibouti can be essentially summarised as central risk managed by the Central Bank, and no specific legal framework exists that governs the various aspects of credit information. This draft act envisages the regulation of the collection and dispatch of information between credit institutions. The goal is to promote the distribution of credit and prevent over-indebtedness by improving the quality and availability of information to participating institutions. At the same time the goal is to provide banks with discretion in assessing the creditworthiness of a borrower applying for credit. The national payment system aims to put in place a judicial framework that is efficient and that dynamises and secures financial transactions to support the evolution of electronic payment and the development of the appropriate infrastructure.

Islamic Finance

The arrival of Islamic finance in Djibouti has been designed to respond to a realistic need in the local market by moving into the market of conscious clients that want to avail of services that match their religious ethics. Based on numbers released by the Central Bank, these Islamic banks have around 15-20% of the Djiboutian market and have strengthened the ambitions of Djibouti as a sub-regional financial centre. The market size of the four Islamic banks is estimated to be DJF55.5bn ($310.8m),growing by 20% since 2013. Concerning deposits held by these institutions, the number is around DJF33bn ($184.4m), which represents 15% of the total deposits of banking clients, doubling the recipients of Islamic credit between 2012 and 2014. THE SHARIA COMMITTEE OF THE CENTRAL BANK OF DJIBOUTI: It is with a view to becoming a regional centre for Islamic finance that Djibouti and the Central Bank have strengthened legislation already in place concerning Islamic finance. Through the law concerning Islamic banks in Djibouti, a National Sharia Committee will be established within the Central Bank. This body is responsible for ensuring compliance of sharia products and banks offering these services. The implementation of this text will accompany the development of Islamic finance in Djibouti, according to Decree 2015-320/PRE.

Islamic Banking Africa

For the last four years, Djibouti has annually hosted the African Conference on Islamic Finance, which most recently took place on November 4-5, 2015. International providers of Islamic finance see an opportunity in the African market. Organised by the Central Bank, this conference has provided an established platform for professionals and international experts to discuss opportunities for Islamic finance on the African continent.