Djibouti’s financial strategies including improving ease of business, implementing Islamic banking and catering to financial inclusion aim to secure its stable outcome.
Over the past decade, Djibouti’s service-based economy has been subject to sustained growth and prosperity. A crucial factor to this has been its complete lack of restriction on foreign exchange, including the conversion and transference of funds, providing US$240 million annually in foreign direct investment (FDI) and boosting the nation’s GDP growth. With the Djibouti franc pegged to the US dollar at a fixed exchange rate of 177.71 Djibouti francs, Djibouti’s modernisation of its economy depends upon open trade, substantial tax breaks and its Free Zone. “We have the biggest Free Zone in the area,” states Ahmed Hamid Al-Dheeb, CEO of CAC International Bank. “Djibouti has a very strategic location, and the stability of the country is very well appreciated. We will be a financial, transit, trading and logistic hub.”
The government has worked hard to improve the nation’s ease of doing business, jumping from 154th to 99th in the World Bank’s ease of doing business ranking in 2018. “The President himself has put some considerable efforts in law reforms with the new Code of Civil Procedure and Code of Commerce, which today facilitates the creation of a business,” explains Comlan David Ocahoumare, Deputy General Manager of the Bank of Africa.
Djibouti’s banking sector has also experienced rapid expansion in recent years, providing the continent with the roadmap on Islamic finance as part of its core strategy in financial inclusion. “Monetary policy, like everywhere, is part of the measures we put in place for the promotion of the country,” relates Ahmed Osman Ali, Governor of Central Bank of Djibouti. “So, we have developed a lot of ideas. The first thing is the modernisation of the banking system in Djibouti, the second is to attract more banking, the third is to promote the financing of public and private economy, the fourth is to ameliorate financial inclusion, the fifth is to update the strategy every year.” Djibouti has flung open the doors on financial expansion and opportunity. Abdulraqeb F.A Salem, General Manager of Saba African Bank agrees, “Djibouti is like a hub for other investors to come and invest here, especially due to our political stability.”