Djibouti

Last updated: February 23, 2023

Located in the Horn of Africa, the Republic of Djibouti is one of the smallest states in Africa, with an area of 23,200 km² (for comparison, Mecklenburg-Vorpommern has an area of 23,214 km²) and a population of about 957,000 people. However, its geographic location on the Red Sea and the Gulf of Aden, as well as its proximity to Ethiopia, Eritrea and Somalia, make it a geostrategically and economically important location. Djibouti hosts a number of foreign military bases-including those of the United States and China-and provides the regional naval base for the EU’s Operation Atalanta against piracy off the Somali coast, in which Germany also participated until a reassessment in May 2021.

In April 2021, Ismaïl Omar Guelleh was elected for his fifth five-year term as president-he has ruled since 1999. In 2022, Djibouti looked back on 45 years of independence from France. Djibouti is a member of the UN, the African Union and the Intergovernmental Authority on Development (IGAD), a regional organization in northeast Africa based in Djibouti.

Djibouti’s economy is growing and had remained relatively unaffected by the global financial crisis, falling oil prices and slowing Chinese economic growth prior to the outbreak of the Covid 19 pandemic. Growth rates had increased from 4.5 percent in 2011 to 7.5 percent in 2019. This was mainly due to the increase in private and public investment. Despite the Covid 19 pandemic, Djibouti’s GDP was forecast to grow by a remarkable seven percent in 2021, following a decline of one percent in 2020. However, Djibouti’s growth is heavily dependent on developments in neighboring Ethiopia.

With a GDP share of more than 80 percent, the service sector determines economic activities. Its main sectors are ports, administration, the deployed foreign military and air transport. The strategically located container port in Doraleh is an important transit and transshipment port for countries in the region-especially Ethiopia. It is the largest and most modern in East Africa and the only port connected to Ethiopia by rail; however, new developments in Ethiopia’s relations with Eritrea and Somaliland mean that Djibouti’s quasi-monopoly is already facing competition.

The country is also focusing on renewable energy development and, according to the Borgen Project, has the natural capacity to produce 300 megawatts of renewable energy per year due to abundant solar radiation and many opportunities to harvest geothermal energy. In March 2021, the EU’s largest project to date in Djibouti – a €70 million seawater desalination plant – became operational. In addition to the construction of a geothermal power plant in the Lake Assal region in 2018, a public-private partnership between Djibouti’s Ministry of Energy and Natural Resources and a European consortium launched the construction of a solar park in southern Djibouti; the project was approved by the Djiboutian government in May 2020. This effort is part of Djibouti’s plan to become the first country in Africa to rely exclusively on green energy by 2025. However, diversification of the economy and foreign direct investment are also intended to address persistent energy and water supply challenges, as well as dependence on port operations.

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