DJIBOUTI CITY, September 13, 2026 – The World Bank Group today released a Country Private Sector Diagnostic (CPSD) for Djibouti, identifying reforms that could unlock at least US$600 million in private investment and create around 12,000 jobs over five years in off-grid solar energy, data centers, and tourism. The report outlines targeted policy actions that would enable such investment.
Positioned at the intersection of some of the world’s busiest shipping lanes and serving as the primary maritime gateway for Ethiopia, Djibouti has seen GDP growth average 5.3 percent annually from 2016 to 2024 and has attracted substantial foreign direct investment in port infrastructure. Yet high electricity tariffs, limited access to finance, skills gaps, and restrictions on competition in key sectors have constrained private sector expansion. With unemployment remaining high, the CPSD identifies opportunities to create jobs in strategic sectors.
Solar Energy: Up to $390 Million and more than 8,500 Jobs
Private investors have deployed approximately 10 megawatts of off-grid solar capacity in Djibouti since 2022, with additional projects in preparation. Commercial electricity tariffs at 25 US cents per kilowatt-hour – against an Africa regional average of 14 cents – are the largest single cost factor for businesses operating in the country. The CPSD identifies targeted regulatory reforms, including raising self-generation limits, clarifying power purchase arrangements, strengthening sector regulation, and expanding skills development to attract private investment. Together, this could attract up to $390 million in investment and create more than 8,500 jobs over five years.
Data Centers: Up to $240 Million and 1,300 Jobs
Eight operational submarine cables run through Djibouti, connecting Asia, Europe, and Africa. Current data center capacity is nearing full utilization. The CPSD identifies reforms to the regulatory framework, energy provisioning, and market access that would unlock private investment in the sector, with potential for between $160 million and $240 million in investment and between 700 and 1,300 new jobs.
Tourism: Up to $180 Million and 2,600 Jobs
Djibouti’s tourism assets include Lake Assal (the lowest point on land in Africa), the limestone chimneys of Lake Abbe, marine ecotourism such as whale shark sightings, and a cultural heritage recognized when Djibouti City became the first African metropolis named World Capital of Culture and Tourism by the European Council on Tourism and Trade. The CPSD identifies licensing, data, and skills reforms that would convert investor interest into committed capital, with potential for between $66 million and $180 million in investment and 2,600 jobs.
Djibouti’s strategic position at the entrance to the Red Sea, modern port infrastructure, and role as a regional connectivity hub have supported strong economic growth and substantial foreign investment. While GDP growth averaged 5.3 percent a year between 2016 and 2024, high external debt, unemployment and poverty, as well as heavy dependence on a narrow range of activities underscore the need for greater economic diversification.
The CPSD report finds that private investment is held back by several economy-wide constraints. Electricity is costly, serviced land is scarce outside free zones, and access to finance—particularly for micro, small, and medium enterprises and women-owned firms—remains limited. Skills mismatches, relatively high labor costs, and state-owned enterprise dominance in telecommunications, water, and electricity also weaken competition and raise the cost of doing business.
Against this backdrop, the new CPSD identifies three sub-sectors where private investment can be boosted by concrete policy actions: off-grid solar energy, data centers, and tourism. Off-grid solar could reduce businesses’ energy costs and strengthen resilience; data centers could capitalize on Djibouti’s strategic location and regional connectivity; and tourism could build on the country’s distinctive natural and cultural assets, as well as its potential as a hub of business travel.
Across all three sectors, the report’s recommendations converge on a common set of priorities: strengthening regulatory institutions, reducing energy costs, improving access to finance, and investing in workforce development. Energy reform is identified as the most urgent priority, given its cascading effect on competitiveness across all sectors of the economy. With targeted policy action, Djibouti is well positioned to translate its geographic, political, and digital advantages into broad-based, inclusive economic growth.