Financial Services
From The Report: Djibouti 2023
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Djibouti’s financial services sector is undergoing notable reforms that aim to support broader economic growth. There is a focus on expanding technological infrastructure to enhance efficiency and accessibility in banking, capital markets and insurance. Updated regulations are being implemented to diversify the market, attract more players and foster healthy competition. Microfinance is being leveraged to boost the penetration of financial services, particularly among underserved segments of the population. Additionally, new laws are targeting the reduction of non-performing loans, aiming to strengthen the financial stability of institutions and promote responsible lending practices. These initiatives collectively contribute to the growth and modernisation of Djibouti’s financial services industry, supporting economic development and financial inclusion.

This chapter contains interviews with Ahmed Osman Ali, Governor, Central Bank of Djibouti; Mohamed Aden, General Manager, Assurance AMERGA; and Jama Hersi Abdi, General Manager, Salaam Africa Bank.

Articles from this Chapter

Overview

Growth driver: A rising number of banks compete for untapped market potential
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Alongside investment in transport infrastructure, Djibouti’s economy has benefitted significantly from the ongoing expansion of its financial services sector. Liberalisation of banking activity since 2006 has made the country an attractive location for banks and insurance companies aiming to satisfy the growing demand linked to logistics services and trading. With a population of slightly more than 1m people, Djibouti remains a relatively small domestic market. But the low penetration of financial…

Interview

The right track: Ahmed Osman Ali, Governor, Central Bank of Djibouti (Banque Centrale de Djibouti, BCD), on bolstering resilience
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Interview:Ahmed Osman Ali How have the BCD’s intervention plans helped improve the country’s economic indicators? AHMED OSMAN ALI: The priority of the BCD’s interventions is to preserve the integrity of Djibouti’s monetary system, which dates back to 1949. Our currency board regime is bound by strict rules, issuing a freely convertible and stable currency pegged to the US dollar. Accordingly, the Djibouti franc continues to secure the nation’s robust macroeconomic performance and,…

Interview

Expanding coverage: Mohamed Aden, General Manager, Assurance AMERGA, on incentives to boost market penetration
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Interview:Mohamed Aden What are the main economic indicators driving investment in insurance, and which lines of coverage are experiencing the strongest growth? MOHAMED ADEN: Following a recovery in 2021, economic activity slowed in 2022. This downturn was attributed to disruptions in global shipping and logistics chains related to Russia’s ongoing invasion of Ukraine, low demand in Ethiopia, and severe drought. However, macroeconomic indicators in Djibouti remain strong. GDP growth remained…

Analysis

Open market: Economic growth and new competition are expected to raise insurance awareness and penetration levels
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Djibouti’s insurance market has made progress in recent years. The sector finished 2022 with four insurance players, up from the two operating in the market in 2021, and additional competitors are considering their own entry. The authorities expect the new players to help stimulate innovation and increase insurance penetration. Although transport and shipping activities have driven economic growth, the diversification of the country’s revenue is opening up potential for new insurance products…

Interview

Wider appeal: Jama Hersi Abdi, General Manager, Salaam Africa Bank, on the country’s efforts to improve financial inclusion
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Interview:Jama Hersi Abdi Which elements are underpinning the resilience of the banking sector in Djibouti? JAMA HERSI ABDI: The primary factors that have been contributing to the banking sector’s resilience are Djibouti’s sustained economic growth and political stability, as well as the continuing modernisation of the sector. The country has enjoyed consistent economic expansion in recent years, with GDP growth at 1.2% in 2020 and 4.8% in 2021. These figures incentivise investment in the…

Analysis

Riding the wave: Tackling cryptocurrency crime by strengthening legislation
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Amid record levels of cryptocurrency crime, many emerging markets are looking at ways to strengthen their cryptocurrency-related protections. The incidence of cryptocurrency-linked crime is increasing as the uptake of the payment medium rises rapidly and broadly. An all-time high of $20.6bn in digital currencies was transferred to illegal addresses in 2022, according to blockchain data platform Chainalysis, up from the $18bn transferred in 2021, itself a record year. Illicit addresses are defined…

Analysis

Change ahead: Updates to international accounting standards could pose challenges for emerging markets
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Insurance companies worldwide are working to adjust to the most significant change in global accounting standards in almost two decades. In January 2023 the International Financial Reporting Standards (IFRS) 17 came into effect. Replacing the previous standard, IFRS 4, which was issued in 2004, IFRS 17 aims to standardise insurance accounting globally in order to improve comparability and increase transparency by applying an uniform approach. This is expected to help those in the industry better…