Djibouti - Country Private Sector Diagnostic : Executive Summary

Overview & Synopsis

Djibouti possesses significant strategic advantages for private sector-led growth, including its location at the Bab-el-Mandeb Strait, a critical maritime gateway linking the Red Sea and the Indian Ocean, proximity to major global shipping routes, and its role as a regional information and communication technology (ICT) hub supported by eight operational submarine cables. These factors have helped attract substantial foreign direct investment (FDI), while presenting opportunities for increased domestic and foreign investment if key constraints are addressed. The economy demonstrated strong performance, with gross domestic product (GDP) growth averaging 5.3 percent annually between 2016 and 2024. This Country Private Sector Diagnostic (CPSD), a core World Bank Group analytical product, was prepared to inform the design, implementation, and prioritization of policies that can be implemented within three to five years to promote private sector development. Developed from the perspective of investors and entrepreneurs, the CPSD identifies untapped investment opportunities, barriers to private investment, and policy actions needed to unlock growth, create better jobs, generate domestic revenue, and foster sustainable and inclusive development. Completed in early April 2026 through desk research, value chain analysis, and stakeholder consultations, this report complements the 2023 Private Sector Diagnostic by expanding sectoral analysis and proposing targeted reforms to address constraints in priority subsectors.