RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/159 
23 January 2006 
 
 (06-0212) 
Trade Policy Review Body Original: French 
  
 
   
 
TRADE POLICY REVIEW 
 
Report by 
 
DJIBOUTI 
 
   
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Djibouti is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Djibouti. Djibouti WT/TPR/G/159 
 Page 3 
 
 
 CONTENTS 
 
  Page 
I. INTRODUCTION ................................................................................................................... ...5 
II. MAIN FEATURES OF NATION AL ECONOMIC POLICY ...................................................5  
III. INSTITUTIONAL FRAMEWOR K OF TRADE POLICY .......................................................7  
IV. BUSINESS ENVIRONMENT ...................................................................................................8  
 (A)  PROMOTION OF INVESTMENT .......................................................................................8  
 (B)  COMMERCIAL AND INDUSTRIAL FREE ZONE .................................................................9  
 (C) PRIVATE SECTOR DEVELOPMENT AND PROMOTION STRATEGY .................................10 
 (D) REFORM OF THE TAXATION SYSTEM ..........................................................................10 
 (E) IMPROVEMENT OF THE FINANCING SYSTEM ...............................................................10 
 (F) IMPROVEMENT OF THE LEGAL ENVIRONMENT ...........................................................10 
 (G) STRENGTHENING OF THE NATI ONAL STATISTICAL SYSTEM .......................................10 
 (H) IMPROVEMENT OF THE FINANCING SYSTEM ...............................................................11 
V. SECTORAL DEVELOPMEN T STRATEGIES ......................................................................11  
 (A) AGRICULTURE AND LIVESTOCK BREEDING ................................................................11 
 (B) FISHERIES ...................................................................................................................12 
 (C) INDUSTRY AND COMMERCE .......................................................................................12 
 (D) WATER ........................................................................................................................13 
 (E) ENERGY ......................................................................................................................14 
 (F) TRANSPORT ................................................................................................................14 
 (1) Road subsector ...........................................................................................15  
 (2)  Rail subsector .............................................................................................15  
 (3)  Airport sector..............................................................................................15  
 (4) Maritime sector ..........................................................................................15 
 (G) NEW INFORMATION TECHNOLOGIES ..........................................................................15 
 (H) TOURISM .....................................................................................................................16 
VI. INTERNATIONAL TRADE COOPERATION.......................................................................16  
 (A) INTEGRATED FRAMEWORK FOR TRADE -RELATED TECHNICAL ASSISTANCE ..............16 
 (B) INTEGRATED PROGRAMME .........................................................................................17 
 
REFERENCES ..................................................................................................................... .................21 
 Djibouti WT/TPR/G/159 
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 I. INTRODUCTION 
1. Situated at the gateway to the Red Sea, the Repub lic of Djibouti covers an area of 23,000 km², 
with a 370 km-long coastline. 
2. A former French colony which became independe nt in 1977, Djibouti is bounded on the north 
by Ethiopia and Eritrea and on the south by So malia.  Djibouti occupies a very favourable 
geostrategic position on the sea route linking Africa, Europe and Asia. 
3. The country is divided into five administrativ e regions (Arta, Ali-Sabieh, Dikhil, Tadjourah 
and Obock), in addition to the capital, the c ity of Djibouti, which has special status. 
4. The population was estimated at 632,000 in 2004, with a density of 28 per km², and grew by 
2.8% a year between 2000 and 2003.  Two thirds of the population is concentrated in the capital. 
5. With a per capita GDP estimated at US$910 in 2004, Djibouti is a least developed country 
(LDC).  It should be borne in mind that this figu re is skewed because of the strong influence of 
expatriates.  Moreover, the social indicators: pr imary school attendance [30%], life expectancy at 
birth [45.8 years], infant mortality [10%], etc.) are all on the wrong side of the average for the countries of sub-Saharan Africa. 
6. In 2002, two exploratory poverty surveys EDAM 1 and EDAM-IS2 showed that nearly 74.4% 
of the population lives in relative poverty, while absolute poverty affects 42.2%, an increase of 12.7% 
and 18.25%, respectively, as compared with 1996. 
7. Djibouti’s economy is heavily dependent on th e tertiary sector.  Between 2000 and 2003, the 
tertiary sector accounted for 87.6% of GDP and provided 8 jobs out of 10, whereas the 
underdeveloped primary and secondary sectors genera ted only 3.5% and 8.9%  of national wealth, 
respectively. 
8. The Republic of Djibouti is a parliamentary de mocracy. Djibouti’s parliament has a single 
house, the National Assembly, and its members (deputi es) are elected for a 6-year term.  At the last 
elections, held in January 2003, the Union pour la  Majorité Parlementaire (UMP) won an absolute 
majority and went on to form the present government. 
9. Laws are enacted by the National Assembly , which consists of 65 deputies elected by 
universal suffrage. 
10. The President of the Republic is also elected by universal suffrage.  Having won a first term 
in 1999, President Ismaël Omar Guelleh was trium phantly re-elected to a second 6-year term on 
8 April 2005. 
II. MAIN FEATURES OF NATIONAL ECONOMIC POLICY 
11. Djibouti’s economic prospects are encouraging in the medium term.  During the period 2006–
2010, the economy should achieve an average growth ra te of about 4%, driven in particular by the 
construction work on the port and free zone of Dorale h.  The inflation target will be between 2 and 
3% and the global investment rate should average 22% of GDP over the next five years. 
12. The projections of the authorities are based on a global budget deficit expected to average 
1.7% of GDP between 2006 and 2010, th anks to an increase in internal  revenue (about 4% a year) and WT/TPR/G/159 Trade Policy Review 
Page 6 
 
 
 a moderate rate of progression of current governme nt expenditure.  To this end, the government 
intends to pursue a medium-term budgetary policy designed to reduce financial vulnerability while 
improving the composition of public expenditure, in support of growth and poverty reduction.  
Accordingly, the authorities will redouble their e fforts to increase revenue, by improving the 
collection of duties and taxes, and tighten control over current government expenditure. 
13. The adoption of the medium-term income and expenditure reforms envisaged by the 
government will probably help to restore Djibou ti’s financial credibility and increase public 
investment.  Thus, the government intends to m eet the need to  earmark substantially greater 
expenditure and investment for poverty reduction while  maintaining the viability of its budgetary and 
external positions. 
14. Between 2006 and 2010, the deficit on current acco unt should be contained at around 4% of 
GDP.  This deficit will have to be financed in part  by foreign direct investment and an increase in net 
official flows.  Djibouti’s external public debt should remain fairly stable during the period 2006-
2010. 
15. Where structural reforms are concerned, th e Djibouti authorities are aiming at market-
oriented growth driven by private investment.  To this end, they are working to create a more 
business-friendly environment by adopting a series of fundamental reforms (rev iew of the investment 
and labour codes and preparation of a commercial code). 
16. The authorities also intend: 
 - To improve the legal framework in order to facilitate the settlement of commercial 
and industrial disputes by experimenting with  recourse to international arbitration so 
as to free up the ordinary courts; 
  - to make better use of human capital;   - to develop the economic infrastructure (particularly in the areas of transport and 
telecommunications); 
  - to diversify energy and water res ources, while improving and modernizing the 
management structure in order to reduce energy and water costs. 
 
Table 1 
Projections for the main ma croeconomic indicators 2006-2010 
Projection 2006 2007 2008 2009 2010 
(Average change in per cent) 
Real GDP 3.4 3.3 3.6 3.8 4.0 
Consumer prices  2.2 2.0 2.0 2.0 2.0 
(as a percentage of GDP, unless otherwise indicated) 
Investment 21.7 22.2 21.9 21.7 21.1 
Global budget deficit -2.1 -2.1 -1.5 -1.5 -1.5 
Current account  -3.1 -4.3 -3.8 -4.0 -3.9 
External debt outstandi ng 65.2 68.8 70.6 72.0 72.8 
Source :  Projections of the Djibouti authorities and the services of the IMF. Djibouti WT/TPR/G/159 
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III. INSTITUTIONAL FRAMEWORK OF TRADE POLICY 
17. It would be impossible to integrate Djibouti’s trade without creating a business environment 
that is legally and institutionally re liable, consistent and predictable.  The ultimate aim is to attract 
domestic and international private investment and prepare domestic businesses for international 
competition. 
18. With this in mind, Djibouti has taken a numbe r of measures such as the establishment of a 
Steering Committee1 for the Integrated Framework for the pr omotion of trade, whose mission includes 
trade policy formulation, and a Standardization Review Committee2 responsible for preparing 
standardization and metrology legislation, but al so for consumer protection and the repression of 
fraud. 
19. Since 1997, the main tasks of the National Institutional Reform Commission (CNRI) have 
been: 
 - To make an overall diagnostic study of the civil service;  and 
 
 - to design a coherent reform project with  an action plan derived from the diagnostic 
study to support the economic reform programme.3 
 20. In 2002, an interministerial committee to guide government action and a committee to 
monitor and coordinate the re form programme were set up.
4 
21. The tasks of the interministerial committee are to determine the broad outlines of budgetary 
policy and structural reform, to promote and orga nize a framework of consultation and dialogue to 
bring the horizontal structural measures to fruition and to popularize the economic reform programme 
among civil society. 
22. The functions of the technical coordination a nd monitoring committee are to coordinate and 
follow up the implementation of the macroeconomic  stabilization programme, coordinate and follow 
up the implementation of the sectoral reforms and prepare a summary progress report, supervise the 
drafting of a poverty reduction strategy paper, and co ordinate the institutional and structural reforms. 
23. Finally, it should be noted that in April 2005  Djibouti signed and ratified the United Nations 
Convention Against Corruption.5 
                                                      
1 Order No. 2002-0195/PR/MCIA establishing a St eering Committee for the pr eparation of a round 
table on an Integrated Framework for the promotion of trade. 
2 Order No. 2002-0757/PR/MCIA establishing a Standardization Review Committee. 
3 Decree No. 97-0075/PR/FP of 19 May 1997. 
4 Decree No. 2002-0180/PR/MEFPCP of 9 September 2002. 
5 Law No. 96/AN/05/5èmeL of 8 February 2005.  This convention has been signed by 124 countries, but 
is not yet in force.  Information on line from the ODCCP (http://www.unodc.org/unodc/en/crime_signatures_ 
corruption.html#S) [3 August 2005]. WT/TPR/G/159 Trade Policy Review 
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 IV. BUSINESS ENVIRONMENT 
(A) PROMOTION OF INVESTMENT  
24. The main reasons for investing in Djibouti are as follows: 
 - Its geostrategic position; 
 
 - Access to the largest African common market: COMESA;   - Freedom to invest (see the investor’s guide);  
 - Freedom to transfer profits and dividends; 
  - Genuine legal protection through free recourse to arbitration;   - A single window to simplify all the administrative procedures;  
 - The quality of life made possible by the increased protection provided for property 
and persons and continuous im provements in the administration of justice, transport 
and communications; 
  - The availability of human resources charact erized by their youth, their high level of 
technical and university training and their ability to cope with change; 
  - An impressive economic infrastructure potential:  
- Doraleh oil and container term inals operational 24 hours a day; 
 
- Doraleh free zone; 
 
- Construction of a future international airport; 
 
- Construction of docking facilities for ore carriers; 
 
- Modernization, in the short term, of the Djibouto-Ethiopian Railway 
Company, over a 781 km-long stretch linking the Port of Djibouti with the Ethiopian capital; 
 
- The construction of a national road network (Tadjourah-Obock, Tadjourah-
Balho, Wea-Galileh, Djibouti-Holl-Holl-Grand Bara); 
 
- An efficient optical-fibre telecommunications network which gives this sector 
one of the best systems in Africa in terms of capacity and interconnection power (SEA-ME-WE network). 
 
25. As attracting foreign direct investment is  a priority, the Djiboutian Government has 
undertaken a review of the 1994 Investment Code. Djibouti WT/TPR/G/159 
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 (B) COMMERCIAL AND INDUSTRIAL FREE ZONE  
Creation of a favourable environment for investment, trade and industry 
 
26. The Djibouti Free Zone was set up, in partners hip with JAFZA International of Dubai, to 
position Djibouti, over the short term, as a regional l ogistical platform for the importation, storage and 
distribution of goods shipped from and to the neighbouring countries. 
27. In the longer term, it is planned to estab lish a processing industry capable of exporting 
products "made in Djibouti". 
28. In order to achieve this objective, Djibouti Fr ee Zone offers an environment favourable for 
investment, trade and industry through: 
 - A partnership with JAFZA International,  which provides expertise in the techniques 
of free zone management. JAFZA Internati onal is the management and consultancy 
division of Jabel Ali Free Zone in the Emirate of Dubai.  It also offers a network of potential partners consisting of 3,800 co mpanies from 110 countries operating in the 
Jabel Ali Free Zone Area; 
 
 - Infrastructure in the form of sheds, o ffices and serviced lots for rapid business start-
up in the free zone; 
  - The Single Window approach which covers  the formation and registration of free 
zone companies, customs formalities and a wide range of services such as visas, 
permits and other services that companies re quire, all under the same roof within the 
free zone; 
  - Fiscal and non-fiscal incentives to improve  the competitiveness of these companies. 
 
29. Free zone companies enjoy a range of advant ages such as a foreign ownership guarantee, 
exemption from company taxes and customs duties on imports of goods and equipment, and the 
possibility of repatriating 100% of pr ofits and employing foreign specialists. 
Djibouti as a regional supply centre 
 30. With the establishment of more and more comp anies in the free zone, particularly the new 
Doraleh port complex, an expanding range of goo ds and services will become available, thereby 
making Djibouti Free Zone a competitive source of regional supply. 
31. Potential importers in the countries of the regi on will find in Djibouti an  alternative to Dubai 
and the countries of the Far East as a source of impor ts and thus will be able  to benefit from shorter 
delivery times and lower freight costs. 
32. Companies exporting or importing to meet the ne eds of the region will also find in Djibouti 
Free Zone the ideal place to carry on value a dded activities such as light processing, assembly, 
packaging and labelling. 
33. In addition to the availability of a suitable infrastructure for such activities, free zone 
companies will have the advantage of exempti on from tax on the profits made from value added 
activities carried on in the free zone, with a consequent improvement in competitiveness. WT/TPR/G/159 Trade Policy Review 
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 (C) PRIVATE SECTOR DEVELOPMENT AND PROMOTION STRATEGY  
34. It is now generally acknowledged that the private sector is the real engine of growth.  It is 
therefore essential to create a le gal, institutional, macroeconomic and social environment that favours 
private sector development. 
35. The success of such a strategy depends on the involvement of the private sector in the 
strategic development choices.  This necessarily means strengthening the Chamber of Commerce which should be given full rein to play its role  of privileged partner and interface between the 
authorities and the private operator. 
(D) 
REFORM OF THE TAXATION SYSTEM  
36. The reform of the taxation system mainly involves the establishment of an approved 
management centre to help private operators keep accounts and declare imports and exports 
electronically, to reduce indirect taxation and in the medium term introduce a value added tax. 
(E) IMPROVEMENT OF THE FINANCING SYSTEM  
37. Measures calculated to improve the financing system include the creation of an economic 
development fund to expand financing capacity, the a doption of a more appropriate credit policy, the 
promotion of a structure for mobilizing private savings and a venture capital system, and the 
establishment of a guarantee fund to encourage investment by micro-enterprises and SMEs. 
38. Moreover, in its quest for improved economic  growth, the Government has set up a 
committee on the problems of micro-finance (CREM), under the authority of the Central Bank.  This 
committee will propose ways and means of reformi ng the micro-finance sector to enable it to 
participate fully in the poverty reduction camp aign and the effort to stimulate growth. 
(F) IMPROVEMENT OF THE LEGAL ENVIRONMENT  
39. The improvement and adaptation of the trade le gislation, the liberalization of employment 
policy through the improvement of the labour code, the drafting of a commercial code and the review 
of the investment code are all measures in th e process of being implemented.  This important  
programme of adaptation and modernization of the legislation should be completed in the course of 
2006.  It will meet the needs of investment , trade and economic procedure facilitation. 
(G) STRENGTHENING OF THE NAT IONAL STATISTICAL SYSTEM  
40. Without reliable statistics, no general or sect oral economic policy can produce the desired 
results.  Usable statistics can make an important co ntribution to the success of  bilateral, regional and 
multilateral negotiations, especially in the foreign trade sector. 
41. In April, the Government of Djibouti undertook  a diagnostic study of its National Statistical 
System (SSN) which led to the formulation and valida tion of a statistics master plan and the adoption, 
in December 2005, of specifications for the period 2006-2010. 
42. In the field of foreign trade, emphasis will be  placed on improved production and the efficient 
processing and timely dissemination of statistics to en able the Government to refine its negotiating 
strategy within the context of partnership agreements. Djibouti WT/TPR/G/159 
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 (H) IMPROVEMENT OF THE FINANCING SYSTEM  
43. An extensive study will be undertaken in order to gain a better understanding of the impact of 
this sector on the economy.  It will be necessary to estimate the number of enterprises operating in the informal sector and consider the main obstacles they f ace, in particular, the pressure of direct taxation, 
administrative costs, access to financing, etc.  Th is study will be required to identify solutions for the 
problems of these enterprises and to propose ways and means of gradually integrating them into the 
formal economy. 
V. SECTORAL DEVELOPMENT STRATEGIES 
44. Article 1 of the Economic and Social Polic y Law for the period 2001-2010 defines the 
Government’s global economic and social development strategy, lays down the broad outlines of its 
sectoral development policies , specifies the principal reform measu res to be introduced and thus 
establishes a reference framework for the formulat ion of future economic and social development 
programmes and plans. 
45. This law has just been supplemented by a Gove rnment road map which stresses not only the 
need for the Law to be implemented but also the ne ed for each ministry to adjust its sectoral action 
plan, in conformity with these two texts. 
(A) 
AGRICULTURE AND LIVESTOCK BREEDING  
46. The two-pronged development strategy recomme nded for the agricultural sector calls for: 
 - An increase in the cultivated area through the creation of new agricultural zones; 
 
 - An improvement in productivity to be achieved by: 
 
- providing farmers with technological packages (introduction of seed species 
and varieties adapted to local conditions); 
 
- extending the use of low-cost irriga tion systems designed to save water and 
reduce production costs; 
 
- developing marketing outlets, both loca lly and in the capital, and arranging 
for a supply of inputs at reasonable cost; 
 
- providing security for grazing activities to slow down the rural exodus and 
maintain economic activity in the ma rginal areas while preserving the 
environment; 
 
- promoting the commercial sector in the field of peri-urban livestock breeding 
(dairy, small-scale animal husbandry) including, in particular, the promotion 
of a non-industrial animal feed production plant; 
 
- protecting consumers by strengthening the arrangements for controlling the 
quality of animal products in the interests of public health. 
 WT/TPR/G/159 Trade Policy Review 
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 47. This strategy will be accompanied by medium and long-term measures such as the structuring 
of peasant farmer organizations, agricultural trai ning and the privatization of market gardens. 
48. The project to turn Djibouti into a hub for th e export of live animals and meat is progressing 
slowly but surely.  The management of the Regiona l Cattle Export Centre has been turned over to a 
private operator.  This is part of the process of disengagement of the State and involvement of the 
private sector.  The Centre will certify the orig in of the animals and guarantee the good health of 
cattle for export.  A project to introduce sanitary  and phytosanitary standards, financed by the 
Integrated Framework, is also in the process of implementation. 
(B) FISHERIES  
49. The global strategy is based on a four-part programme calling for: 
 - The sustainable management of marine  resources by building the institutional 
capacity of the department responsible for the sector; 
  - An improvement in fisherme n’s income and job creation, in particular by upgrading 
the means of production and introducing new technology; 
 
 - Export promotion by bringing the fish export infrastructure into line with 
international standards and installi ng an animal health laboratory; 
  - An improvement in food security, in particular by providing support for the women 
involved in marketing fish, introducing low-cost processing and preservation 
techniques, promoting the consumption of fish and providing technical support for the cooperatives involved in the sector. 
 50. In order to implement this strategy, the Govern ment has provided itself with a global tool for 
developing and regulating fishing, namely, the Fisheries Master Plan for the period 2005-2015. 
51. A priority action programme has been draw n up and divided into five main parts: 
 - Support for small economic operators; 
  - Support for the export sector;  
 - Strengthening of the administration of the fishing industry; 
  - Environmental protection;   - Sustainability of the productive infrastructure. 
 
(C) 
INDUSTRY AND COMMERCE  
52. The strategic objectives common to the industrial and commercial sectors are: 
 - To increase the contribution of the industrial sector to national product formation; 
  - To develop  natural and mineral resources; 
 Djibouti WT/TPR/G/159 
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  - To reduce energy dependency; 
  - To strengthen and exploit Djibouti’s par ticipation in COMESA and its access to the 
markets of the Arab sub-region; 
 
 - To develop through education and traini ng the industrial and commercial culture and 
skills necessary to promot e Djibouti as a suitable place for relocation and 
international trade; 
 
 - To identify and develop core industries,  in particular industries based on national 
resources such as agro-industry (exportation of preserved, packaged and processed seafood and meat), salt, building materials and mines; 
  - The creation of a commercial and industrial free zone to foster the processing 
industry. 
 
(D) 
WATER  
53. The national strategy is set out in the National Master Plan for Water (2000).  It has four main 
aims, which include the following: 
 - To promote the rational use of the coun try’s water resources, taking into account the 
overriding need to protect them and meet the present and future requirements of the 
population and the economy; 
  - To improve the availability and quality of  water throughout the country and ensure 
that it is accessible to the poor. 
 
54. The main priorities of this strategy are: 
 - To assess the country’s water resources and define a global strategy for their 
management and for the protection of the various aquifers; 
  - To remove the institutional constraints on the development of the sector by promoting 
private sector participation in water financing; 
  - To make the public aware of the problem s relating to water (wastage, pollution) and 
involve it more closely in infrastructure management. 
 
55. With regard to rural water engineering, the main priorities are: 
 - To carry out surveys, assess the water resources of the various rural areas and define a 
strategy for developing and protecting them; 
  - To make an inventory of rural water holes and implement a programme for supplying 
the rural population with drinking water by upgrading rundown facilities (including 
traditional wells), drilling new boreholes, and developing supply and distribution 
networks for the larger villages; 
 WT/TPR/G/159 Trade Policy Review 
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  - To improve well design (depth, protection against flooding and pollution) and to 
promote suitable methods of pumping the water (hand pumps, solar pumps, wind 
energy, etc.); 
 
 - To develop water engineering trades, train local artisans and involve them in the 
maintenance of the equipment. 
 56. In addition to the goals pursued in the prev ious decade (reduced dependency on imported 
food, improved standard of living in the rural areas) , the latest strategy incorporates new policies such 
as the anti-desertification campaign, the promotion of women, the sustainable management of natural 
resources (environmental protection, biodiversity), and the transfer of responsibility to the local level, 
within the context of a nationa l policy of decentralization. 
57. Finally, the Republic of Djibouti has opted for seawater desalination as a means of solving the 
problem of the ever-increasing salinity of the coast al wells, helping to overc ome the water shortage 
and, over the long term, reducing the bill for local consumption. 
(E) 
ENERGY  
58. Energy is undoubtedly the Achilles heel of D jibouti’s economy.  Aware of the importance of 
this input to national production, the country is sp aring no effort to find an economical and sustainable 
solution.  The possibilities considered include: 
 - The project for a thermal (diesel) power station at the Doraleh port complex and the 
possibility of a link-up with the oil refinery project; 
  - The project to exploit wind energy in the Lake Assal economic development zone and 
the Arta region; 
  - A project for interconnection with Ethiopi a for the exportation of surplus energy, in 
winter for Djibouti and in summer for Ethiopia.  The cost of this project is estimated 
at US$35 million; 
  - The possibility of develo ping renewable sources of energy (geothermal, solar). 
 (F) 
TRANSPORT  
59. Transport sector development policy is ai med at making Djibouti a multi-modal regional 
platform for goods in transit, in both directions , between the COMESA countries and the rest of the 
world, particularly the countries of the Near and Far East. 
60. The Government is developing a strategy co mmon to the various transport subsectors (road, 
rail and air), together with individual strategies for each mode of transport. 
61. The common strategy consists in involving users,  private operators and donors in decisions of 
importance for the transport sector in order to improve operational capacity, efficiency and transparency, thereby reinforcing the progressive disengagement of the State from all activities of an 
industrial or commercial nature in favour of the private sector. Djibouti WT/TPR/G/159 
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 (1) Road subsector 
62. Road transport strategy is aimed at rehab ilitating and strengthening the existing network by 
implementing a multiannual road infrastructure prog ramme and building new trunk roads to relieve 
the burden and pressure on the Djibouti-Ethiopia and D jibouti-Eritrea corridor.  The strategy also calls 
for the development of road passenger tra ffic between Djibouti and its neighbours. 
63. Another concern is the reform of the urban tr ansport sector to ensure that it is properly 
regulated and managed. 
(2) Rail subsector 
64. Rail transport strategy emphasizes the institutional reform of the Djibouti-Ethiopia Railway 
(CDE) in collaboration with the Ethiopian authorities to provide it with an efficient and productive 
management framework.  Moreover, the operational ma nagement will very shortly be turned over to 
the private sector. 
65. To reverse the decline of the CDE a two-stage recovery process has been launched.  The first 
stage involves the physical rehabilitation of the equi pment.  The EU has released 40 million euros to 
finance these activities.  In the second stage the pr ivatization process will be finalized by granting a 
concession.  The timetable provides for the futu re concession operator to be chosen in 2006. 
(3) Airport sector 
66. The airport strategy will consist in the adoption of an open skies policy and the creation of an 
airport free zone to complement the port free zone. 
67. Discussions on implementing this strategy are curre ntly being held with the large air freight 
companies with a view to making Djibouti an ai r freight transit and transhipment platform. 
(4) Maritime sector 
68. Where maritime transport is concerned, in a ddition to oil and container terminals and a 
commercial and industrial free zone, the Doraleh port complex will be the site for the construction of 
a privately financed gas terminal.  The oil te rminal has been operational since September 2005. 
(G) NEW INFORMATION TECHNOLOGIES  
69. Like energy, telecommunications and the new information technologies are production factors 
of vital importance for improving pr oductivity and increasing competitiveness. 
70. The strategic objectives for the sector are as follows: 
 - To develop and promote telecommunications services and new information 
technology products; 
 
 - To reduce the bill;   - To facilitate access for pe ople living in remote areas; 
 WT/TPR/G/159 Trade Policy Review 
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  - To promote access to and extend the cove rage of the fixed-line and mobile telephone 
network and the Internet; 
  - To connect up to the EASSY and FLAG submarine cables; 
 
 - To turn around and modernize, technica lly and financially, the national operator and 
develop value added services in general (Internet, LS, IP services, equipment); 
  - To prepare Djibouti Télécom for international competition. 
 
(H) 
TOURISM  
71. The strategic objectives assigned to tourism are as follows: 
 - To promote the creation of stable employment and help alleviate poverty; 
  - To make Djibouti a preferred destination for international tourism by exploiting its 
tourist potential and natural advantages while  improving the quality of the products 
on offer; 
  - To attract investors and improve the return on investment;  
 - To protect and improve the natural and cultural environment; 
  - To help promote the craft industry;   - To establish a regional tourism training centre;  
 - To make tourism an economic driving force capable of contributing to the 
development of the hinterland and comba ting rural depopulation and rural poverty. 
 
VI. INTERNATIONAL TRADE COOPERATION 
(A) 
INTEGRATED FRAMEWORK FOR TRADE -RELATED TECHNICAL ASSISTANCE  
72. In October 1997, a ministerial meeting of the World Trade Organization established the 
Integrated Framework (IF) to meet the special  challenges facing the Least-Developed Countries 
(LDCs) in their process of integration into the wo rld economy.  The system is intended to improve the 
integration of trade policies into national polici es such as the Poverty Reduction Strategy Paper 
(PRSP), and to encourage the broadest possible technical cooperation between the bilateral and 
multilateral financing agencies for the purpose of achieving such integration. 
73. Six large international agencies:  the Intern ational Monetary Fund (IMF), the International 
Trade Centre (ITC), the United Nations Confer ence on Trade and Development (UNCTAD), the 
United Nations Development Programme (UNDP), the World Trade Organization (WTO) and the World Bank have joined forces to achieve this objective. 
74. Between 1997 and 1999, the IF fell short of atta ining its goals.  An independent review, 
carried out in June 2000, identified the weaknesses and made it possible to redefine the means of 
improving the integration of trade into national development strategies.  This new policy was Djibouti WT/TPR/G/159 
 Page 17 
 
 
 facilitated by the establishment of  a "Trust Fund", which initially benefited the three countries that 
participated in the pilot project (Cambodia, Madaga scar and Mauritania) and agreed to a Diagnostic 
Trade Integration Study (DTIS). 
75. In May 2002, the Integrated Framework Steeri ng Committee drew up a final balance sheet for 
this project and decided to extend the Programme to 11 other countries, including Djibouti. 
76. Djibouti finalized its DTIS in May 2004 and is implementing two priority projects drawn 
from the action plans annexed to the report.  These involve strengthening the institutions concerned 
with trade (Ministry of Trade and Industry, the National Agency for Investment Promotion and the 
Djibouti Chamber of Commerce) and support fo r the development of the tourism sector. 
(B) INTEGRATED PROGRAMME  
77. In parallel with the Integrated Framework, the Ministry of Trade and Industry is 
implementing a technical assistance project known as the " Integrated Programme " in collaboration 
with the United Nations Industrial Development Organization (UNIDO). 
78. This programme supplements the current initiativ es to combat poverty and unemployment.  It 
aims to promote new engines of economic growth  through intervention in the following two areas: 
 (i) Component 1 (Strengthening institutional capacity) comprises an integrated sub-
programme of technical assistance and investment in the following areas: 
 
- Strengthening of the Small and Medium-Sized Enterprise (SME) services in 
the Ministry of Trade and Industry; 
 
- Promotion of national private initiative;  - Strengthening of the centres of production and organizers of information 
through the establishment of an In formation and Indus trial Knowledge 
Network (RICID) in Djibouti; 
 
- Strengthening of the National Agency for Investment Promotion (ANPI);  - Strengthening of the Quality Control and Standards Service;  
- Setting up of a database on investment. 
  (ii) Component 2 (Strategic support to key sectors) calls for technical assistance to 
generate analyses and data on new sources of  growth for the economy of Djibouti.  
This should lead to the formulation of strategies and action plans designed to 
encourage the emergence of new compe titiveness poles.  Component 2 will also 
provide pilot support in strengthening produc tive activities in two sectors:  fish and 
salt. 
 79. Briefly, the Programme is expected to lead to :  (i) the strengthening of institutional capacities 
in the areas of industrial promotion and private investment;  (ii) the establishment of a number of new 
enterprises;  (iii) increased employment and production, in particular in the fish and sea salt sectors; WT/TPR/G/159 Trade Policy Review 
Page 18 
 
 
 and (iv) strategies and action programmes de signed to encourage the emergence of new 
competitiveness poles in the economy of Djibouti. Djibouti WT/TPR/G/159 
 Page 19 
 
 
 Annexes  
 Action Plan to improve the competitiveness of Djibouti’s economy and its integration into the world economy. 
 
The steps that need to be taken as quickly  as possible are underlined and in bold face. 
 
Implications of the reforms 
Sector Priority action 
Integration Competitiveness Growth Poverty 
Customs reform Reform committee 
 Computerization Regional trade 
facilitation Greater efficiency 
of procedures and attraction of 
business to the ports Expansion of trade Job creation 
      
Budgetary policy Audit of public 
expenditure  Reduced labour 
costs through 
improvements in potential 
productivity 
(education, health) New activities Ease of finding 
employment 
   - Higher standard of 
operation of the 
judicial system and reduced transaction 
costs  Highly labour-
intensive 
programme 
   - Infrastructure 
development   
 Study of the impact 
of the CET and VAT Regional agreement Importance of 
constructing a customs union International trade:  
evaluation of risks and opportunities Redistributive 
implications of the CET and VAT for 
consumption 
      
     Impact on the wage 
level and social 
redistribution 
      
 Clearance of arrears   Macroeconomic 
stability and 
development of the private sector Reduced costs and 
easy access to 
services 
      
Public market services Study of the 
institutional 
procedures for the 
privatization of electricity and 
telecommunications Desirability of 
interconnections 
with Ethiopia 
(electricity) Reduced cost 
overruns and prices   
  Reduction in the 
cost of energy 
through expansion 
of the sources of supply Investment and a 
broader range of 
profitable goods Development of 
employment in the 
services and crafts 
sector 
  Prospect of a 
telecom hub at 
Djibouti 
   
   Standard of service   
      
Institutions Support for building 
the capacity of the MCIA (foreign trade services and 
craft industry) Improved 
knowledge of the regional environment for 
marketing national 
products Transparency of 
contracts as a factor in reducing costs   WT/TPR/G/159 Trade Policy Review 
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 Implications of the reforms 
Sector Priority action 
Integration Competitiveness Growth Poverty 
   - Advice and 
information on the 
productive system 
- Improvement of coordination with 
the CTD Identification of 
foreign outlets  
 Incentives for 
business formation  Reduced transaction 
costs Expansion of the 
range of production 
of tradeables Secondary effect of 
the creation of new 
activities 
 Simplification of 
free zones Harmonization of 
free zone regimes    
 Functionality of 
ANPI  Single window for 
formalities   
 Finalization of new 
labour code  Flexibility of 
contracts and 
salaries   
 Study of prospects 
for the realization of 
Doraleh  Conditions for 
success:  factor cost 
and availability Infrastructure 
investment and 
expansion of production  
Transport sector 
and port activities Emergence of a 
multi-modal transport regulation service (Ministry of 
Transport) Evaluation of 
regional and multilateral integration trade Reduced costs 
through improved coordination of modes of transport Development of 
road transport through intermodal synergy Skilled and 
unskilled jobs 
  Fluidity of regional 
trade  International trade 
and physical 
development Training jobs at 
various levels 
Salt Conditions for 
exploiting salt and 
export prospects Development of a 
regional transport 
hub - Product quality 
- Health standards 
- Factor costs Revival of transit 
activity Poverty reduction 
through artisanal 
employment 
Livestock 
breeding Cattle grouping 
capacity and 
improved veterinary 
services Creation of regional 
integration and 
export flows - Product quality 
- Health standards 
- Factor costs Sustainable 
development based 
on new activities Creation of direct 
and indirect 
employment 
Fishing Diagnostic study of 
the possibility of 
exploiting the fishing potential Creation of regional 
integration and 
export flows Influence of 
resource prices and 
distribution logistics (local and export)  Jobs and improved 
diet for the poor 
Tourism Plan for a tourism 
development strategy Exports to Asia and 
the COMESA countries Identification of 
solutions to the problems of factor 
costs and limited 
hotel capacity Evaluation of the 
demand for leisure and business 
tourism Development of 
direct and indirect employment (local 
craft industry) 
  Prospect of 
integrated regional 
tourism    
      
Financial sector Evaluation of the 
contribution of the 
various mechanisms for financing the 
economy Development of 
trade with 
neighbouring countries Cost of the capital 
factor lowered by 
reducing transaction costs Dynamism of the 
activities on the 
national territory Extension of the 
process of 
participation to local activities 
 
 Djibouti WT/TPR/G/159 
 Page 21 
 
 
 References  
 
- Diagnostic Trade Integration Study - May 2004 
 
- Poverty Reduction Stra tegy Paper – March 2004 
 - Data of the EDAM and EDAM IS 2 surveys – 2002  
- Integrated Programme 
 - Economic Information Bulletin – 2003  - Annual Report of the Central Bank – 2003  
- Report on the economic and social conditions of the East African region: Djibouti – July 2004 
 - Official Journal of the Republic of Djibouti  - Study of the impact of the COMESA region Common External Tariff 
 
- Fisheries Master Plan  - Promotion of new sources of growth and private investment  - Djibouti/UNIDO Integrated Cooperation Programme (2004-2006) 
 
- Government road map - May 2005  - www.presidence.dj  
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