Djibouti is often described through the advantages that have shaped its development: its strategic location along major international shipping routes, its role as Ethiopia’s primary maritime gateway, and the ports and logistics infrastructure connecting it to regional and global markets.
These strengths have supported robust economic growth. Between 2016 and 2024, Djibouti’s economy grew by an average of 5.3 percent a year, helping establish the country as an important regional hub. Yet sustaining growth is only part of the story. Equally important is ensuring that growth translates into broader economic opportunities and more jobs for Djiboutians.
This remains a significant challenge. The official national unemployment rate stood at 36.4 percent in 2025, while businesses face obstacles that limit investment and expansion, including high electricity costs, limited access to finance, skills gaps, and constraints affecting competition. These barriers are not confined to one activity. They cut across much of the economy.
The World Bank Group’s new Country Private Sector Diagnostic for Djibouti, published in September 2026, examines these issues from the perspective of investors and entrepreneurs. It asks where commercially viable opportunities already exist, what prevents investment from taking place, and which policy actions could address those constraints.
Its findings are significant. Across three strategic sectors – off-grid solar energy, data centers, and tourism – the report identifies reforms that could unlock US$600 million in private investment and support the creation of around 12,000 jobs over five years. These estimates illustrate what could become possible if specific barriers are addressed, complementary measures are put in place, and reforms are implemented.
These three opportunities have one thing in common: they build on assets Djibouti already possesses.
Electricity, for example, remains the largest single cost factor for many businesses. Commercial tariffs stand at around 25 US cents per kilowatt-hour, compared with an African regional average of 14 cents. At the same time, private investors have deployed approximately 10 megawatts of off-grid solar capacity since 2022, with additional projects in preparation. Raising self-generation limits, clarifying power-purchase arrangements, strengthening regulation and quality standards, and developing relevant skills could help expand this market.
The opportunity extends beyond the energy sector. More accessible off-grid power could help firms manage a major operating cost and support investment in other activities, including digital infrastructure and tourism.
Djibouti’s digital connectivity illustrates this connection. Eight operational submarine cables run through the country, linking Africa with Asia and Europe. Yet existing data-center capacity is nearing full utilization. The country has a strategic connectivity asset that could support a larger digital infrastructure market.
The reforms identified by the CPSD are specific: establish a clearer framework for licensing and operating data centers, provide greater flexibility in how facilities obtain energy, and improve access to submarine-cable landing stations and internet exchange points.
Tourism offers a different set of assets but a similar lesson. Lake Assal, the limestone chimneys of Lake Abbe, the waters of Tadjourah, coral reefs, annual whale shark visits, as well as Djibouti’s islands, volcanic landscapes, mountains, and cultural heritage, provide a strong foundation for nature-based and cultural tourism. The country’s location and flow of business visitors also create opportunities to connect leisure tourism with meetings and conferences.
Realizing this potential will require more than promoting destinations. The report identifies gaps in licensing, skills, tourism data, and visitor infrastructure that continue to discourage investment.
Viewed together, these sectors reveal common constraints. High energy costs affect tourism operators and digital businesses alike. Skills shortages constrain firms across industries. Limited access to finance particularly affects smaller businesses. Regulatory uncertainty can delay decisions whether an investor is considering a solar installation, a data center, or a tourism venture.
One possible response is targeted public support that helps private financing reach businesses. Under the Women and Youth Entrepreneurship Project, support to Djibouti’s Partial Credit Guarantee Fund helped mobilize US$3.64 million in financing from commercial banks for small and medium-sized enterprises, exceeding the initial US$2 million target. While modest in scale, the experience illustrates how public resources and risk-sharing instruments can mobilize private capital where constraints might otherwise hold investment back.
This is why the CPSD should not be read simply as a report about three sectors. It shows how targeted reforms, combined with strong implementation, adequate institutional capacity, complementary public investment, and sustained cooperation with the private sector, could allow Djibouti to derive greater value and employment from its strengths. These are not the country’s only promising activities, and reforms will not automatically deliver the estimated investment and jobs.
Djibouti has already demonstrated how geography, infrastructure, and connectivity can support growth. The next phase is about building on that foundation and enabling a wider range of businesses to invest, expand, and create jobs.
