Located at the crossroads of major trade routes, Djibouti is well placed to play an outsized role in regional connectivity and integration in the years to come. At the same time, the country is tackling challenges ranging from youth unemployment to increasing climate impacts. The World Bank’s US$400 million IDA portfolio in Djibouti helps the country tackle these challenges by focusing on critical sectors such as energy, transport, digital transformation, education, health, and support for small enterprises.
These investments are helping to drive Djibouti's Vision 2035 strategy to reduce poverty, foster inclusive growth, and build resilience against future shocks.
Transforming Challenges into Opportunities
Djibouti, located at the crossroads of Africa and the Middle East, is a critical hub for regional and global trade, generating over $400 million annually in port revenues. However, the country faces significant challenges, including limited arable land, scarce water resources, and heavy reliance on imports for food. Despite its strategic position, Djibouti's economy remains vulnerable to external shocks and regional tensions, which impact growth prospects. The government continues to focus on improving human capital, infrastructure, and economic diversification through strategic development initiatives.
The World Bank is helping Djibouti to tackle these challenges head-on through the International Development Association, or IDA. The World Bank’s fund for low-income countries, IDA financing is supporting the country’s transition toward a more resilient, inclusive economy through investments in education, infrastructure, and social protection. These interventions are critical to achieving Djibouti’s Vision 2035, which focuses on sustainable growth, job creation, and poverty reduction.
Education is at the heart of Djibouti’s development strategy, with a strong focus on equipping the next generation for a rapidly evolving economy. The Expanding Opportunities for Learning Project is a key initiative to enhance access to education, particularly for vulnerable populations such as children from low-income families and refugees. As part of this effort, over 23,000 out-of-school children have already been enrolled, and the project is set to reach 12,000 more by 2025. The government’s commitment to early education includes the construction of 43 new preschool classrooms, providing 1,075 children with early learning opportunities. The project’s goal is to provide one year of preschool education for every child by 2035.
This program also focuses on refugee inclusion, ensuring that refugee children have equal access to education. Through these efforts, Djibouti is working to foster inclusive growth and provide equal educational opportunities for all children, regardless of their background or status.
To address the immediate needs of its most vulnerable citizens, Djibouti has been enhancing its social protection system. The Social Protection Emergency Crisis Response Project has helped over 86,000 people, including more than 40,000 women, through cash and in-kind transfers. These transfers provide families with the resources to meet basic necessities, reducing their reliance on emergency aid. Additionally, 60 percent of rural beneficiaries have been linked to formal financial institutions, promoting long-term financial inclusion and resilience.
For example, the initiative promotes community development by establishing village credit unions and creating income-generating activities, which empower vulnerable households economically. Furthermore, the project is enhancing access to basic services by developing 80 community infrastructure projects, which are crucial for building resilience and offering sustainable solutions for local populations. Fatouma, a mother from Tadjourah, shared, "Thanks to this support, I was able to buy food for my children and pay for my husband’s medical treatment. Without this program, we would have suffered."
Djibouti’s economic future hinges on its connectivity to regional and global markets. Through the Horn of Africa Initiative: Djibouti Regional Economic Corridor Project, IDA is helping to rehabilitate key infrastructure, reducing trade barriers and promoting regional integration. These improvements are expected to lower transportation costs, improve market access for local farmers and businesses, create jobs and strengthen Djibouti’s strategic position as a logistics hub in East Africa. Djibouti’s energy and digital sectors are essential for its economic diversification. The Second Djibouti-Ethiopia Power System Interconnection Project is helping Djibouti increase its reliance on renewable energy. This project, alongside the Sustainable Electrification Program, supports the country’s goal of achieving 100% renewable energy by 2035.
Additionally, the Digital Foundations Project is laying the groundwork for affordable, high-speed internet, which will unlock opportunities for innovation in education, healthcare, and other sectors.
Djibouti has long been a haven for refugees, and IDA’s support is helping the country meet the needs of both refugees and host communities. The Development Response to Displacement Impacts Project has benefited over 135,830 people by improving access to education, healthcare, and renewable energy.
In towns like Ali Sabieh, refugees and host communities share classrooms and resources, promoting social cohesion and mutual growth. These initiatives highlight Djibouti’s commitment to fostering inclusive, resilient communities, even in the face of external pressures.
A Path Forward: Building Resilience and Sustainable Growth
And as Djibouti progresses toward achieving its Vision 2035, IDA’s support is making a significant difference. IDA’s $400 million in active financing is addressing key challenges, building resilience, and unlocking the country’s potential for inclusive growth. From strengthening education systems to improving energy infrastructure, IDA is helping Djibouti lay the foundation for a brighter, more sustainable future.
By focusing on human capital development, infrastructure, and social protection, Djibouti is positioning itself as a model for resilience in the region. As the country continues to build on these achievements, the path to sustainable growth and prosperity becomes clearer, demonstrating how strategic investments can transform challenges into opportunities for lasting change.
