Housing Finance in Djibouti
Overview
This profile is also available in French here.
To download a pdf version of the full 2023 Djibouti country profile, click here.
Djibouti is a small, arid country in the Horn of Africa with a population of approximately 957 273 people.An estimated 78% of the population lived in urban areas in 2021, making it one of the most urbanised countries in the world. Despite the country’s economic performance being on an upward trajectory, Djibouti continues to grapple with housing issues and the expansion of informal settlements or slums.
Djibouti has one of the lowest loan rates in the Horn and Sub-Saharan Africa, giving great real estate finance prospects. Kenya, the region’s largest economy, has loan rates of 12% and 7%. Low loan default rates may be due to poor, biased credit procedures. In 2020, Djibouti had 2.12% non-performing loans, while the global average was 6.6% based on 121 countries.
Djibouti is prone to flash floods, earthquakes, multi-year droughts, and fires. 70% of its population lives in the capital city, which is vulnerable to climate change and rising sea levels. Floods destroy buildings and highways, worsening the country’s severe poverty rates. The World Bank, UN-Habitat, and other UN agencies helped Djibouti improve the housing and settlement sector by evaluating climate change damage. Despite the recorded devastation of homes and infrastructure, there is little indication that victims get compensation.
Djibouti is one of the Horn of Africa’s most stable and peaceful nations. The country’s stability is an excellent investment opportunity, particularly given the region’s upheaval. Major infrastructure investments in the nation will not only stimulate economic activity, but will also offer crucial shared infrastructure that will benefit investors. Djibouti has a plethora of real estate companies and estate agents to assist the market. Real estate transaction taxes and land conservation incur fixed costs. Salaam African Bank is ready to finance up to 70% of the value of residential properties over a five-year period. When it comes to property ownership, men and women enjoy equal rights. In the city centre, the government usually gives streamlined construction permission.
Find out more information on the housing finance sector of Djibouti, including key stakeholders, important policies, and housing affordability:
- Overview
- Access to Finance
- Affordability
- Housing Supply
- Property Markets
- Policy and Legislation
- Opportunities
- Availability of Data on Housing Finance
- Green Applications for Affordable Housing
- Additional Sources
- Websites
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2023 edition, which has up-to-date profiles for 55 African countries.
Download yearbookDjibouti
Overview
Djibouti is a small, arid country in the Horn of Africa with an estimated population of 957 273.[1] The country is an island of peace in a conflict-plagued region and has become a haven for refugees escaping wars in Somalia, Yemen, Eritrea, and Ethiopia. An estimated 78% of the population lived in urban areas in 2021,[2] making it one of the most urbanised countries in the world. Despite its overall positive outlook, Djibouti also has a high poverty rate. Although more recent poverty figures are not available, the 2017 data shows that the national extreme rate of poverty stood at 21.1% with rural areas at 45%.[3] While the country’s economic performance has been on an upward trajectory, Djibouti continues to grapple with housing issues and the expansion of informal settlements or slums. Recently, this has been exacerbated by migrants becoming stranded in the country’s informal settlements, situated along the migration corridor between Somalia, Eritrea and Ethiopia.[4]
Djibouti is strategically located on the Red Sea, and its economy is driven by its port complex serving the shipping trade routes between Europe and Asia, as well as serving as a military base for France, the United States, Japan, China, and the North Atlantic Treaty Organisation (NATO) and for anti-piracy stations for other countries.[5] The Djiboutian Franc is one of the most stable currencies in the region having benefited from the country’s calm political and macroeconomic environment. As at September 2022, US$1 was worth Fdj177.5 (US$1) compared with Fdj180 recorded in 2021. Djibouti’s economy is showing signs of recovery, with the resumption in activities at the port largely driven by the international trade revival following the Covid-19 pandemic.[6] Economic growth in Djibouti as measured by Gross Domestic Product (GDP) was 3.9% in 2021, up from 1.2% in 2020.[7] The June 2022 annual inflation rate stood at 11.6% compared to the May inflation rate of 5.3%, while the June food inflation rate was 25.7% compared to 11.1% recorded in May 2022.[8] These inflation rates suggest that the effects of the Russia-Ukraine war have continued to put upward pressure on food and oil prices, driving up overall inflation.
Djibouti is susceptible to multiple natural hazards such as regular flash floods, frequent earthquakes, multi-year droughts, and drought-fueled fires.[9] With only 0.04% of its land arable, and an average annual rainfall of only 130mm, Djibouti cannot produce sufficient food to meet its needs, and therefore depends on imported goods.[10] Djibouti city, where 70% of the population live, is exposed to the risks associated with the rise in sea level and that climate change will harm the country’s marine and terrestrial ecosystems.[11] Floods have been observed to devastate infrastructure such as houses and roads thus aggravating the country’s high poverty rates.[12] The World Bank, UN-Habitat and other UN agencies have helped Djibouti develop the housing and settlement sector by identifying the damage caused by climate change, outlining recovery strategies, and in meeting short, middle and long-term housing needs.[13] Djibouti has also benefited from the United Nations Environment Programme (UNEP) Global Environment Facility for Least Developed Countries, enabling the country to build dikes that have saved many houses from destruction by floods.[14] Importantly, although the perennial destruction of homes and infrastructure in Djibouti has been documented, there is no evidence to suggest that victims receive any form of compensation. Climate change has reduced the availability and access to clean drinking water. In rural areas, nearly 65% of the population reportedly is without safe drinking water and therefore risks catching waterborne diseases.[15] Housing developers will therefore need to factor in the source and reliability of clean drinking water in the houses they build.
[1] CIA World Fact Book (2022). Djibouti. https://www.cia.gov/the-world-factbook/countries/djibouti/#people-and-society (Accessed 30 August 2022).
[2] World Bank (2021). Urban population (% of total population) – Djibouti https://data.worldbank.org/indicator/SP.URB.TOTL.IN.ZS?locations=DJ (Accessed 30 August 2022).
[3] World Bank (2020). Poverty and Equity Brief: Middle East & North Africa – Djibouti. April 2020. http://databank.worldbank.org/data/download/poverty/33EF03BB-9722-4AE2-ABC7-AA2972D68AFE/Global_POVEQ_DJI.pdf (Accessed 6 October 2022). Pgs. 1-2.
[4] International Organization for Migration (2021). Djibouti – Migrants presence (as of 12 August 2021). 13 August 2021. https://dtm.iom.int/reports/djibouti-migrants-presence-12-august-2021 (Accessed 15 August 2022).
[5] World Bank (2021). Country overview- Djibouti. https://www.worldbank.org/en/country/djibouti/overview (Accessed 29 September 2022).
[6] African Development Bank Group (2022). African Economic Outlook. https://www.afdb.org/en/countries-east-africa-djibouti/djibouti-economic-outlook (Accessed 30 August 2022).
[7] African Development Bank Group (2022). African Economic Outlook. https://www.afdb.org/en/countries-east-africa-djibouti/djibouti-economic-outlook (Accessed 30 August 2022).
[8] Trading Economics (2022). Djibouti Consumer Price Index CPI. https://tradingeconomics.com/djibouti/consumer-price-index-cpi (Accessed 15 August 2021).
[9] UNDP (2022) Climate Change Adaptation. Djibouti. https://www.adaptation-undp.org/explore/eastern-africa/djibouti (Accessed 15 August 2022).
[10] World Bank (2021). Country overview – Djibouti. 1 November 2021. https://www.worldbank.org/en/country/djibouti/overview (Accessed 29 September 2022).
[11] UNDP (2022). Climate Change Adaptation Djibouti. https://www.adaptation-undp.org/explore/eastern-africa/djibouti (Accessed 21 August 2022).
[12] United Nations Environment Programme (2021). Flood walls and forests help Djibouti adapt to climate change. 29 April 2021. https://www.unep.org/news-and-stories/story/flood-walls-and-forests-help-djibouti-adapt-climate-change (Accessed 18 September 2022).
[13] Guarneri, M., Ramalho, T., Straus, et al. (2020). UN-Habitat Sub-Saharan Africa Atlas. https://unhabitat.org/sites/default/files/2020/07/atlasroaf_v02_final-compressed.pdf. (Accessed 15 August 2022). Pg. 43.
[14] UNEP (2021). Flood walls and forests help Djibouti adapt to climate change. 29 April 2021. https://www.unep.org/news-and-stories/story/flood-walls-and-forests-help-djibouti-adapt-climate-change (Accessed 18 September 2022).
[15] Nyamhunga, C. (2019). Improved drinking water saving lives in Beyadeh .. safe water, saving lives. 30 April 2019. https://www.unicef.org/djibouti/en/stories/improved-drinking-water-saving-lives-beyadeh (Accessed 18 September 2022).
Access to Finance
Djibouti has a small but well-developed financial system, largely dominated by the banking sector. According to the Central Bank of Djibouti (Banque Centrale de Djibouti), the country has 10 conventional commercial banks, three Islamic banks, 18 forex bureaus, four microfinance institutions and two specialised financial institutions.[1] Commercial banking in Djibouti is regulated by the Central Bank of Djibouti which is also the country’s monetary authority. The high poverty and unemployment rates coupled with high vulnerability to economic and climate shocks in Djibouti could impede widespread access to finance.[2]
Djibouti has one of the lowest lending rates in the Horn of Africa and Sub-Saharan Africa regions, thus providing excellent real estate financing opportunities. For instance, while lending rates in Kenya, the region’s biggest economy, average 12%,[3] lending rates in Djibouti average 7%.[4] Djibouti has no comprehensive and operational electronic database that could be used for checking mortgages.[5] Thus lending practices tend to favour large businesses and rarely start-ups or small businesses. That loan default rates in the country are low by international standards may be due to selective credit practices that are biased against the poor. For instance, whereas in 2020 Djibouti had 2.12% non-performing loans as a percentage of all bank loans, the world average based on 121 countries was 6.6%.[6]
Commercial banks represent over 94% of financial assets in Djibouti’s financial sector.[7] Notably, the banking sector is dominated by Islamic banks[8] in the predominantly Muslim country. Of these Islamic banks, the East Africa Bank (EAB) and Salaam Africa Bank are the main actors, with EAB, a fully compliant sharia bank, having seven branches in Djibouti.[9] Most recently, the financial sector has attracted the support of international organisations interested in building capacity of the sector. So, EAB recently received support from the International Finance Corporation (IFC) to develop risk and credit management systems to curtail losses, raise capital and gain the confidence of investors and regulators.[10] Islamic banking is at the core of Djibouti’s banking sector given that Islam is the dominant religion in the country, practised by 94% of the population.
The gender gap in bank accounts is pronounced. Only 8.8 % of women have an account in a bank or any other financial institution, compared to 16.6% of men.[11] According to the World Bank, the percentage of women having a bank account in Djibouti is lower than in the lower middle-income group of countries and in the Middle East and North Africa region. The gender gap in bank account access in Djibouti is explained by the high poverty, illiteracy and unemployment rates of Djibouti women. For instance, the United States Agency for International Development (USAID) observes that 65.5% of Djibouti women are illiterate while 19% are employed compared to 81% of men.[12] It is expected that as the financial sector continues to expand due to rapid growth in Islamic banking in Djibouti, financial access in general and account ownership by women in the country will increase.[13]
[1] Banque Centrale de Djibouti (2022). Conventional banks. https://banquecentrale.dj/index.php/etablissements-bancaires/ (Accessed 14 August 2022).
[2] Making Finance Work for Africa (2022). Djibouti Financial Sector Overview. https://www.mfw4a.org/country/djibouti (Accessed 31 August 2021).
[3] World Bank (2021). Lending interest rate (%) – Kenya. https://data.worldbank.org/indicator/FR.INR.LEND?locations=KE (Accessed 5 September 2021).
[4] Statista (2021). Prevailing mortgage interest rates in Africa in 2021, by country. https://www.statista.com/statistics/789843/mortgage-interest-rates-africa-by-country/ (Accessed 21 August 2021).
[5] World Bank (2020). Economy Profile Djibouti – Doing Business 2020. https://www.doingbusiness.org/content/dam/doingBusiness/country/d/djibouti/DJI.pdf (Accessed 2 August 2022). Pg. 24.
[6] The Global Economy (2020). Djibouti: Non-performing loans. www.theglobaleconomy.com/Djibouti/nonperforming_loans/ (Accessed 15 August 2022).
[7] IFC (2021). IFC Partners with Djibouti-Based EAB Bank to Strengthen its Risk and Credit Framework. https://pressroom.ifc.org/All/Pages/PressDetail.aspx?ID=26323. (Accessed 15 August 2022).
[8] Pasha, A. (2019). Djibouti: A hub for expanding Islamic Finance across ‘Horn of Africa’. 5 March2019. Islamic Finance News. https://www.islamicfinancenews.com/djibouti-a-hub-for-expanding-islamic-finance-across-the-horn-of-africa.html (Accessed 6 October 2022).
[9] International Finance Corporation (IFC) (2021). IFC Partners with Djibouti-Based EAB Bank to Strengthen its Risk and Credit Framework. https://pressroom.ifc.org/All/Pages/PressDetail.aspx?ID=26323 (Accessed 15 August 2022).
[10] IFC (2021). IFC Partners with Djibouti-Based EAB Bank to Strengthen its Risk and Credit Framework. https://pressroom.ifc.org/All/Pages/PressDetail.aspx?ID=26323. (Accessed 15 August 2022).
[11] World Bank (2021). Gender Data Portal – Djibouti. https://genderdata.worldbank.org/countries/djibouti/ (Accessed 18 September 2022).
[12] USAID (2020). Gender Equality And Women’s Empowerment. https://www.usaid.gov/djibouti/our-work/gender-equality-and-womens-empowerment (Accessed 18 September 2022).
[13] Penresa (2020). Expanding and Modernising Djibouti’s Financial Horizon. 4 March 2020. https://www.penresa.com/expanding-and-modernising-djiboutis-financial-horizon/ (Accessed 18 September 2022)
Affordability
Decent housing in Djibouti is beyond the reach of much of the population due to the high poverty and unemployment rates. Decent housing, whether owner occupied or rented, is not realistic for most Djibouti dwellers. The cost of renting a one-bedroom apartment in Djibouti’s city centre ranges between Fdj89 737 (US$505) and Fdj390 000 (US$2 194) while a three-bedroom house at the same location rents for between Fdj130 000 (US$731) and Fdj600 000 (US$3 375).[1] Outside the city centre, renting a one-bedroom house will cost between Fdj50 000 (US$281 ) and Fdj177 935 (US$1 001) while a three- bedroom house will cost between Fdj65 000 (US$366) and Fdj215 371 (US$1 212). The cost of a plot of land largely depends on its location. Djibouti city is zoned into zones 1 to 5 with 1 located at the central business district (CBD) and zone 5 located in the outermost city suburbs. Thus, the price of land falls as one moves from zone 1 to 5, with the price of land per square metre varying as follows: Zone 1: Old Djibouti Station Fdj25 000/m2 (US$141/m2); Zone 2: PK 20 to PK 23 south of RN 1 Fdj2 000/m2 to Fdj3 000/m2 (US$11/m2 to US$17/m2): Zone 3: Douda – Nagad housing estates and their vicinity Fdj5 000/m2 (US$28/m2); Zone 4: Balbala Sud housing estates – Nassib and their neighbourhood Fdj2 000/m2 (US$11.25/m2); and lastly Zone 5: Balbala housing estates – PK 12 and their environs Fdj3 000/m2 (US$17/m2)[2]. While there is no data regarding average earnings in the informal sector, earnings from formal employment in Djibouti would range between Fdj56 500 (US$318) and Fdj997 000 (US$5 608) with an average of Fdj223 000 (US$1 254) per month.[3] These earnings may suggest that most Djibouti dwellers would find housing (whether buying or renting) to be quite pricey, especially in zone 1. While land in zone 5 may be cheaper, the zone is home to the biggest slum in Djibouti-Balbala.[4]
The government is making efforts to partner with the private sector to develop housing units under public private partnership (PPP) arrangements and the government recently floated a tender for a PPP aimed at developing affordable housing.[5] The local availability of cement is a big problem owing to high energy costs that discourage would be cement producers from setting up production plants in the country.[6] The absence of local cement producers means that the cost of cement and building costs are high. There is no evidence of associations involving home developers or other actors in the construction industry. Whereas the country is not known to possess sufficient skilled construction labour, high unemployment supplies sufficient unskilled labour.[7]
[1] Numbeo (2022). Property Prices in Djibouti. https://www.numbeo.com/property-investment/country_result.jsp?country=Djibouti (Accessed 2 September 2022).
[2] Women Connect (2022). Investor access to land ownership. https://www.womenconnect.org/web/djibouti/access-to-inputs (Accessed 14 August 2022).
[3] Salary Explorer (2022). Average Salary in Djibouti City 2022. http://www.salaryexplorer.com/salary-survey.php?loc=673&loctype=3 (Accessed 18 September 2022).
[4] Alamy (2022). Makeshift Houses of Balbala district near Djibouti city, Djibouti, Horn of Africa. https://www.alamy.com/makeshift-houses-of-balbala-district-near-djibouti-city-djibouti-horn-image65038903.html (Accessed 4 October 2022).
[5] Keating, S. (2022). Djibouti to tender out to developers for housing PPP. 1 September 2022. https://www.proximoinfra.com/news/51091/Djibouti-to-tender-out-to-developers-for-housing-PPP (Accessed 7 September 2022).
[6] Oxford Business Group (2022). Sourcing local cement in Djibouti a challenge. https://oxfordbusinessgroup.com/analysis/necessary-inputs-securing-sufficient-amounts-locally-produced-quality-cement-can-be-challenging (Accessed 7 September 2022).
[7] HKTDC Research (2022). Section 2: Labour & Land Resources in Djibouti. https://research.hktdc.com/en/article/MzU3MDU5OTkx (Accessed 7 September 2022).
Housing Supply
Housing supply in Djibouti, especially of decent housing, remains a challenge. In the recent past the country has grappled with rapid uncontrolled expansion of slums in urban areas, mostly aggravated by refugees and foreigners escaping war-torn neighbouring countries.[1] The proliferation of slums has had negative implications for service delivery of basic amenities and for progress in the Sustainable Development Goal (SDG) index.[2] Over 20% of Djibouti dwellers live in fast-growing slums with poor quality housing and with minimal or no access to basic services.[3] Thus, rapid growth in Djibouti population is a result of natural demographic expansion coupled with influx of people from rural areas as well as from neighboring war-torn countries. It appears meeting the demand for low-cost housing will remain a mirage considering real estate construction in the country is dominated by foreign companies such as the large companies awarded tenders for Chinese-funded projects.[4] The Saudi Fund for Development (SFD) is funding three projects in water and housing. This entails construction of close to 105km of piped water as well as water tanks at a cost of Fdj1.7 billion (US$9.5 million) benefiting 45 000 people in the coast province; a second project amounting to Fdj1.2 billion (US$6.8 million) involving the construction of 120 housing units; and construction of the 60km Djibouti-Galafi road linking Djibouti with neighboring countries, at a cost of Fdj21 billion (US$118 million).[5]
Other funded projects include Fdj5.3 billion (US$30 million) World Bank funding aimed at improving the living conditions of 114 000 slum dwellers residing in Ali-Addeh and Hol-Hol slums.[6] In the year 2018, the government launched a project dubbed Plan Zéro Bidonville (Zero Slums Plan) aimed at eradicating all slums in the city by building at least 20 000 low-cost housing units.[7] Nonetheless, while 20 000 units is a giant step towards solving the housing problem, the units are insufficient to deal with the 30 000 housing shortfall and estimated annual demand of 3 000 units.[8] According to the plan, beneficiaries will pay a monthly rent of between Fdj15 110 (US$85) and Fdj40 887 (US$230) for the units, and total investment will entail annual investment of Fdj8.9 billion (US$50 million) over 10 years.[9] Most of Djiobouti’s building materials are imported, owing to high local production costs driven up by high energy costs.[10] The government has given tax breaks of 8%-20% on the cost of imported construction materials to ameliorate the expense of construction for citizens. [11]
[1] World Bank (2018) World Bank Supports Efforts to Upgrade Djibouti Slums. 9 November 2018. https://www.worldbank.org/en/news/press-release/2018/11/09/world-bank-supports-efforts-to-upgrade-djibouti-slums (Accessed 1 September 2022).
[2] Sustainable Development Report (2022). Djibouti Sub-Saharan Africa. https://dashboards.sdgindex.org/profiles/djibouti/indicators (Accessed 14 August 2022).
[3] World Bank (2020). Djibouti: New World Bank Support to Improve the Lives of Refugees and Host Communities. https://www.worldbank.org/en/news/press-release/2020/12/18/djibouti-new-world-bank-support-to-improve-the-lives-of-refugees-and-host-communities (Accessed 25 August 2022).
[4] Oxford Business Group (2022). Infrastructure development across Djibouti boosts construction. https://oxfordbusinessgroup.com/overview/building-blocks-countrywide-infrastructure-development-expands-construction-activities (Accessed 4 September 2022).
[5] Saunyama, A. (2022). SFD-Funded Water-Housing & Transport Projects in Djibouti Launched. 22 February 2022. https://constructionreviewonline.com/news/sfd-funded-water-housing-transport-projects-in-djibouti-launched/ (Accessed 7 September 2022).
[6] World Bank (2020). Djibouti: New World Bank Support to Improve the Lives of Refugees and Host Communities. https://www.worldbank.org/en/news/press-release/2020/12/18/djibouti-new-world-bank-support-to-improve-the-lives-of-refugees-and-host-communities (Accessed 25 August 2022).
[7] Corrieu, B. (2018). Djibouti seeks to speed up social housing construction. 8 Aug 2018. https://www.linkedin.com/pulse/djibouti-seeks-speed-up-social-housing-construction-brice-corrieu/. (Accessed 1 September 2022).
[8] IFC (2022). IFC Project Information & Data Portal. https://disclosures.ifc.org/project-detail/AS/606463/djibouti-affordable-housing (Accessed 4 October 2022).
[9] Corrieu, B. (2018). Djibouti seeks to speed up social housing construction. 8 Aug 2018. https://www.linkedin.com/pulse/djibouti-seeks-speed-up-social-housing-construction-brice-corrieu/. (Accessed 1 September 2022).
[10] Oxford Business Group (2022). Infrastructure development across Djibouti boosts construction. https://oxfordbusinessgroup.com/overview/building-blocks-countrywide-infrastructure-development-expands-construction-activities (Accessed 6 October 2022).
[11] Oxford Business Group (2022). Infrastructure development across Djibouti boosts construction. https://oxfordbusinessgroup.com/overview/building-blocks-countrywide-infrastructure-development-expands-construction-activities (Accessed 6 October 2022).
Property Markets
Djibouti has an active property market, largely driven by the private sector and immigrants.[1] The country has accessible processes for registering properties, involving six procedures over 24 days on average and at a cost of 5.6% of the property value. This has led Djibouti to be ranked 117 for registering property out of 190 countries globally in the now discontinued World Bank Doing Business Index.[2] Buying an apartment will cost Fdj120 000/m2 (US$675/m2) to Fdj450 000/m2 (US$2 531/m2) in the city centre and between Fdj90 000/m2 (US$506/m2) and Fdj280 000/m2 (US$1 575/m2) outside the city centre.[3] Fixed fees are payable for real estate transaction taxes and land conservation.[4] Land conservation and tax filing processing takes 72 hours (3 days). For plots of land in the old quarters with an area of 150m2, the government normally issues a simplified building permit.[5]
In support of the market, Djibouti has many real estate companies and estate agents. Banks such as Salaam African Bank are willing to finance up to 70% of the value of residential properties with the financing payable over five years.[6] Both men and women have equal rights when it comes to ownership of land. There is no evidence of digitisation of title deeds.
Property markets in Djibouti were hit by COVID-19-related supply chain disruptions of construction materials as well as restrictions on free movement of construction workers. Given that the country lies along the migratory route used by refugees, many of the migrants were left stranded by the COVID-19 movement restrictions and had to find a place to settle.[7] Migrants built slums around existing housing units and this has had the effect of lowering the values of the affected properties.
[1] Moran, B. (2018). Crossroads Djibouti: The African migrants who defy Yemen’s war. 23 March 2018. The New Humanitarian. https://www.thenewhumanitarian.org/2018/03/23/crossroads-djibouti-african-migrants-who-defy-yemen-s-war (Accessed 2 September 2022).
[2] World Bank (2020). Economy Profile Djibouti – Doing Business 2020. https://www.doingbusiness.org/content/dam/doingBusiness/country/d/djibouti/DJI.pdf (Accessed 5 September 2022). Pg. 4.
[3] Numbeo (2022). Property Prices in Djibouti. https://www.numbeo.com/property-investment/country_result.jsp?country=Djibouti (Accessed 2 September 2022).
[4] Women Connect (2022). Investor access to land ownership. https://www.womenconnect.org/web/djibouti/access-to-inputs/-/asset_publisher/wcUYIQ6phcv5/content/procedure-d-immatriculation (Accessed 2 September 2022).
[5] Women Connect (2022). Investor access to land ownership. https://www.womenconnect.org/web/djibouti/access-to-inputs/-/asset_publisher/wcUYIQ6phcv5/content/procedure-d-immatriculation (Accessed 2 September 2022).
[6] Salaam African Bank (2022). Own your dream home today. https://www.banksalaam.com/retail-home-financing/ (Accessed 2 September 2022).
[7] United Nations Djibouti (2020). UN and Partners Covid-19 Response Plan Djibouti: in support of the National Solidarity Pact. https://reliefweb.int/sites/reliefweb.int/files/resources/DJI_COVID-19_Emergency_Appeal_21092020.pdf (Accessed 18 September 2022). Pg. 8
Policy and Legislation
The “Vision Djibouti 2035” development strategy is aimed at transforming the country into a middle-income country as well as a logistics and trade hub for East Africa.[1]
Djibouti’s building regulations are published online and in the official gazette and are available for free.[2] The responsibility for formulating and implementing housing policies in the country lies with the Ministry of Habitat, Urban Planning and Environment (Ministère Délégué auprès du Ministère de l’Habitat, de l’Urbanisme et de l’Environnement chargé du Logement, MDMHUEL). Article 55-1 sets out the procedure for enabling creditors to obtain their mortgage guarantees within a reasonable time. Thus, this provision enables both the creditor and debtor to agree on the modalities for private sale of mortgaged property subject to judicial control.[3] Importantly, Law No. 177/AN/91 2nd L of 10 October 1991 on the organisation of land is an important reform that facilitates the ownership of land for Djiboutians and foreigners, especially foreign investors.[4] Djibouti’s legal and policy framework enables men or women, whether citizens or foreigners, to own land in the country.[5]
The introduction of the Fdj35 000 (US$197) per month minimum wage in the country is likely to put upward pressure on the cost of real estate development in the long run.[6]
The country has been praised by the United Nations High Commission for refugees (UNHCR) for protecting refugees through legislative reforms and adopting the Comprehensive Refugee Response Framework (CRRF).[7] Further, Djibouti passed Refugee Law No 159/AN/16/7ème (the 2017 Refugee Law) which gives refugees many rights such as social economic rights for both asylum seekers and refugees.[8]
[1] Republic of Djibouti (2014). Vision Djibouti 2035. https://djiboutiembassykuwait.net/assets/files/djibouti-2035-en.pdf (Accessed 15 August 2021). Pg. 11.
[2] World Bank (2020). Economy Profile Djibouti – Doing Business 2020. https://www.doingbusiness.org/content/dam/doingBusiness/country/d/djibouti/DJI.pdf (Accessed 5 September 2022). Pg. 14.
[3] Oxford Business Group (2021). Affordable housing remains a critical component of Djibouti’s development plans. https://oxfordbusinessgroup.com/overview/home-improvement-provision-housing-remains-critical-component-development-plans (Accessed 4 September 2022).
[4] Women Connect (2022). Investor access to land ownership.
https://www.womenconnect.org/web/djibouti/access-to-inputs (Accessed 9 September 2022).
[5] Women Connect (2022). Investor access to land ownership. https://www.womenconnect.org/web/djibouti/access-to-inputs (Accessed 14 August 2022).
[6] World Bank (2020). Economy Profile Djibouti – Doing Business 2020. https://www.doingbusiness.org/content/dam/doingBusiness/country/d/djibouti/DJI.pdf (Accessed 5 September 2022). P.62.
[7] United Nations High Commissioner for Refugees (UNHCR) (2022). Djibouti. https://www.unhcr.org/djibouti.html (Accessed 4 October 2022).
[8] UNHCR (2020). Djibouti Refugee Policy Review Framework Country Summary as at 30 June 2020. https://reporting.unhcr.org/document/1899 (Accessed 4 October 2022). Pg. 2.
Opportunities
Djibouti is one of the most stable and peaceful countries in the Horn of Africa and has played host to wealthy immigrants especially from Yemen and Somalia.[1] The country’s stability is an outstanding investment opportunity, especially in the context of the turmoil in the region. Sustained economic growth, triggered by expansion in port activities in addition to U.S. dollar-pegged currency that has remained stable over the years, creates a favourable investment environment for home developers.[2]
Major economic activities in infrastructure in the country will not only spur economic activities, create jobs, and increase disposable incomes, but also provide critical shared infrastructure which will benefit investors. Djibouti has undersea telecommunications cables which could support new digital and service industries.[3]
Lastly, investors may tap into opportunities afforded by the UN Habitat and other UN agencies as well as the World Bank through the Djibouti government in support of housing and settlement.[4] By partnering with the government and the participating development partners, investors could reap rewards from interventions which seek to help meet short-, medium- and long-term housing needs. The potential for significant growth in the energy sector in Djibouti is high and investors may consider this an attractive prospect.[5]
[1] Saunyama, A. (2022). SFD-Funded Water-Housing & Transport Projects in Djibouti Launched. 22 February 2022. https://constructionreviewonline.com/news/sfd-funded-water-housing-transport-projects-in-djibouti-launched/ (Accessed 7 September 2022).
[2]Oxford Group (2022). Infrastructure development across Djibouti boosts construction. https://oxfordbusinessgroup.com/overview/building-blocks-countrywide-infrastructure-development-expands-construction-activities (Accessed 4 September 2022).
[3] World Bank (2021). Country overview – Djibouti. https://www.worldbank.org/en/country/djibouti/overview (Accessed 29 September 2022).
[4] Guarneri, M., Ramalho, T., and Straus, F. et al. (2020). UN-Habitat Sub-Saharan Africa Atlas. https://unhabitat.org/sites/default/files/2020/07/atlasroaf_v02_final-compressed.pdf (Accessed 7 September 2022). P.43
[5] USAID (2021). Djibouti Power Africa Fact Sheet. https://www.usaid.gov/powerafrica/djibouti (Accessed 9 September 2022).
Availability of Data on Housing Finance
Data availability in Djibouti presents significant challenges. What is available is generally outdated. No government institutions collect data specifically focused on housing or affordable housing. The data on commercial banks, forex bureaus and microfinance operating in the country was obtained from the Central Bank of Djibouti. There is no evidence of a grouping of real estate actors collecting affordable housing data.
Green Applications for Affordable Housing
Djibouti has a good energy mix comprising geothermal, wind and solar and is assessed to have the capacity to produce 300MW of electricity from clean renewable energy sources.[1] The country has slightly over 100MW of installed generation capacity but only 57MW is reliably available. Potential for renewable energy growth in Djibouti through geothermal and solar energy is substantial. Energy costs are prohibitive, blocking establishment of critical industries such as cement factories, with implications for the construction industry. Approximately 84.14% of Djiboutians at least use basic drinking water services.[2] Approximately 67% of the population has access to basic sanitation services.[3]
[1] USAID (2021). Djibouti Power Africa Fact Sheet. https://www.usaid.gov/powerafrica/djibouti (Accessed 9 September 2022).
[2] Trading Economics (2022). Djibouti – People Using At Least Basic Drinking Water Services, Urban (% Of Urban Population) https://tradingeconomics.com/djibouti/people-using-basic-drinking-water-services-urban-percent-of-urban-population-wb-data.html#:~:text=Of%20Urban%20Population)-,People%20using%20at%20least%20basic%20drinking%20water%20services%2C%20urban%20(%25,compiled%20from%20officially%20recognized%20sources (Accessed 9 September 2022).
[3] World Bank (2020). People using at least basic sanitation services (% of population) – Djibouti. https://data.worldbank.org/indicator/SH.STA.BASS.ZS?locations=DJ (Accessed 9 September 2022).
Additional Sources
Brice Corrieu (2018). Djibouti seeks to speed up social housing construction. 08 August 2018. https://www.linkedin.com/pulse/djibouti-seeks-speed-up-social-housing-construction-brice-corrieu/. (Accessed 1 September 2022).
Pasha, A. (2019). Djibouti: A hub for expanding Islamic Finance across ‘Horn of Africa’. Islamic Finance News (IFN).
Websites
African Development Bank www.afdb.org
Borgen Project. www.borgenproject.org
Central bank of Djibouti. www.banque-centrale.dj
Construction View Online. www.constructionreviewonline.com
Miyamoto International www.miyamotointernational.com
Heritage Foundation. www.heritage.org
International Finance Corporation.www.ifc.org
Numbeo. www.numbeo.com
Oxford Business Group. www.oxfordbusinessgroup.com
Statista. www.statista.com
The World Bank. www.worldbank.org
Trade Economics. www.tradeeconomics.com
United Nations High Commission for Refugees. https://unhcr.org/
Women Connect. www.womenconnect.org
