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DJIBOUTI : The Gateway to Africa. The Gateway to Africa.

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Presentation on theme: "DJIBOUTI : The Gateway to Africa. The Gateway to Africa."— Presentation transcript:

1 DJIBOUTI : The Gateway to Africa

2 The Gateway to Africa

3 DJIBOUTI : The Gateway to Africa

4  Why to Invest in Djibouti  Political and Economic Overview  Political Overview  Economic Overview  Djibouti 2035  Investment opportunities  Infrastructures  Transport and Logistics  Telecommunications  Energy  Geothermal  Wind  Solar  Tourism  Fishing  How to Invest in Djibouti  Contacts

5 Why to Invest in Djibouti 1- Political Overview Occupying a strategic position in the Eastern corner of the Horn of Africa and at the entrance to the Red Sea, the Republic of Djibouti is considered a stability hub as the country evolves in the heart of a region experiencing recurrent crisis. With an area of 23,200 sq km, Djibouti has a population estimated of inhabitants and more than two thirds are leaving in Djibouti-city, the capital city. The official languages are French and Arabic. Somali and Afar are the national languages. The majority of the population 99% is Muslim and Sunnite. About 50% of the population is less than 20 years old.

6 Since the demands for greater political openness have been the cause of civil conflict that lasted from 1991 to 1994, the country has engaged on a process of democratization marked by the adoption of a constitution in The Constitution of September 4th, 1992 recognizes political pluralism which occurred in two stages: (i) after the adoption of the Constitution, only four political parties were allowed a period of ten years, (ii) from September 2002, multiparty became integral. Political Overview

7 This constitution introduced a multiparty system and allowed the establishment of foundations for the rule of law. This constitution has been amended slightly to allow the country to meet the various challenges encountered in the process of modernization of national institutions particularly in terms of functioning of national institutions, government, the organization of activities for parliamentary committees, the creation of a Senate, the establishment of the Ombudsman, the reform of the Supreme Court and the transformation of the Accounts Chamber in the Court of Auditors, the establishment of regional authorities. Political Overview

8 The President of the Republic is elected by universal poll for a term of six years (reduced to 5 years after the constitutional revision of 2009), renewable, and combines the functions of Head of State and Head government. The Parliament (National Assembly) is formed of 65 members, elected by universal poll for five years. Decentralization policy, constituting a major focus of government policy, is seen as the basis of a regional economic development and as a continuation of efforts to strengthen national unity, soothing claims that were the basis of a civil conflict. Following the regional elections of March 2006, the Government of Djibouti is putting in place administrative structures in different regions and districts. In a second step, it is planned to complete the program, which deals exclusively with the administrative aspects of decentralization, a local economic development program to boost the economy of the regions and districts. Political Overview

9 A political and social stability which makes it a haven of peace, a peaceful nation and therefore an ideal destination for FDI and international private sector.  Political Governance and Democracy: Djibouti, an island of peace, democracy and political stability in a turbulent geographical environment, has acquired a regional influence and reputation as well as international recognition. The country has large foreign military bases, because of its geographical strategic location in the Gulf of Aden. A U.S. military base is added to the French military base and also German and Japanese military contingents are present in the country as well as the European operation against piracy.

10 Economic Governance and administration: Aware that the modernization of public management is a cornerstone of the development strategy, the Government of Djibouti has made significant efforts to make effective administration. The fundamental objective is to improve the productivity and efficiency in the delivery of quality public services Measures and actions have been taken to strengthen financial controls in government and public institutions, the development of a new procurement code, the realization of a public expenditure review and a survey of governance. In the interests of transparency and efficiency of public expenditure, the Ministry of Economy and Finance has initiated a process of reviewing the budget nomenclature in conformity with international standards.

11 Administrative management: the past decade has been characterized by an enlargement result of access to basic services, particularly in the areas of health, education and public services. Along with the continued expansion of population coverage, quality of services provided to users and the fight against corruption have been given special attention by the authorities. The question of the quality of human resources is a central concern of the government, because it depends of the quality of public services and the efficiency of the public administration.

12 Measures have been taken to reduce the complexity of administrative procedures and improve transparency. According to the Transparency International's rating, the index of perception of corruption has improved spend 2.8 in 2009 to 3.2 in  Business Climate. Political stability coupled with reforms to secure a business environment favorable to enjoy the confidence of the international community, technical and financial partners, private domestic and foreign investors. This helped attract a significant flow of resources to the development of economic infrastructure and the creation of private companies.

13 Economic Overview The exceptional position of the Republic of Djibouti is a major asset and a clear opportunity for sustainable economic development. Largely open to the Gulf of Aden at the exit of the Red Sea, Djibouti has a geostrategic position, backed by major countries like Ethiopia (66 million inhabitants), Eritrea (4 million) Somalia (10 million), plus relationships with some landlocked countries in Africa such as Burundi, Uganda and Rwanda. It faces the Arabian Peninsula and in particular Yemen (15 million inhabitants).

14 Djibouti is also a member of several economic entities:  it is one of the associated countries of the African, Caribbean and Pacific (ACP);  it belongs to the Common Market for Eastern and Southern Africa (COMESA), which includes 20 countries and stretches from Egypt to South Africa, also encompassing the islands of the Indian Ocean;  is a member of the Intergovernmental Authority on Development (IGAD), which includes seven countries;  It is also a member of the Arab League. In the era of globalization and capitalism triumphant, Djibouti has undeniable advantages:

15 An international port and maritime geostrategic position makes Djibouti a country of transit and services. At the crossroads of Africa, the Far East and Europe, on one of the busiest route in the world, Djibouti occupies a unique geostrategic position. The country has a considerable advantage and major assets that give it a role of an advanced particularly important platform which serves as a center of transit and redistribution and open up tremendous opportunities, both in the field of trade in general and in particular transport and telecommunications. Djibouti Port is equipped with infrastructure and modern and effective telecommunication network.

16 A liberal economy with an open trading system and free of tariff and non tariff with a monetary system characterized by the free movement of capital, a fixed exchange rate with the U.S. dollar: Djibouti has a liberal economic system very attractive for its Development: a strong currency pegged to the dollar since 1949 and freely convertible bank policy free from all restrictions (free transfer of capital, free determination of interest rates), trade policy open and accessible to all.

17 A financial and banking modern, secure, robust and well integrated into the international market: The presence of a stable and freely convertible currency combined with a unique geographical position, banking infrastructure and modern and reliable telecommunications provides Djibouti Financial sector dynamism and boundless attractiveness. The strict application of regulations and prudential standards in force at the international level have also allowed the financial system to provide a reliable and transparent environment, backed by major banking groups and enjoying the freedom of capital movements. In addition to the Central Bank of Djibouti, Djibouti banking system includes eleven credit and saving institutions.

18 A sound and stable macroeconomic framework and performance confirmed based on the confidence of the Bretton Woods Institutions and several donors, as Arab financial institutions; As mentioned above, Djibouti's economy has a sound macroeconomic framework which constitutes an effective means of achieving the objectives of sustainable growth, reduction of unemployment and poverty. It is characterized by a large opening towards the world, and this is due to the various free trade agreements that Djibouti has ratified with its principal economic partners.

19 Djibouti has natural assets whose exploitation could be the basis for a new growth model based on four key sectors taking into account the criteria of comparative advantage and the ability to create jobs:  Transports and Logistics  Tourism  Fishing  Telecommunications.

20 Economic growth has accelerated in recent years. The rate of GDP growth was 4.8% on average between 2006 and 2011, against 3% between 2001 and 2005.

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22 Djiboutian Economic growth is very intensive in capital. The country recorded a significant increase in the investment effort in the second half of the 2000s. The investment rate increased from 13% in to 34% during the period This change was mainly caused by foreign investment, which has averaged 15% of GDP between 2005 and 2010, against 2% between 2000 and This growth is mainly due to major projects funded by FDI, such as the Kempinski (U.S. $ 150 million) and the port of Doraleh (U.S. $ 450 million). Accompanying the effort of private investment, public investment is also on an upward trend, reaching 12% of GDP between 2005 and 2011.

23 Djibouti has initiated several reforms since 2000 to overcome barriers to the growth and development of the country whose main areas of activity include: Strengthening the competitiveness of the country and the creation of conditions for sustainable economic growth. Djibouti has implemented major reforms to transform Djibouti into a trading platform and services for the region of the Horn of Africa, which resulted among other things, the development and rehabilitation of transport infrastructure in support of the Port of Djibouti as the engine of economic growth and employment, the creation of the Commercial and Industrial Zone, improving the business environment.

24 To meet the challenges of the country's competitiveness management of the Djibouti port, international airport and customs has been handed over from 2000 to 2009 to the Leader in International marine terminal operations and development, logistics and related services, the Dubai World. Parallel to these actions, the government has mobilized on macroeconomic stabilization through appropriate structural reforms.

25 The introduction of compulsory education until the age of 16 and the creation of the first university in Djibouti has facilitated access to education for a large part of the population. Indeed, before the creation of the university a limited number of Djiboutian were qualified for scholarships for university studies abroad. The politics of human resource development is expressed through the promotion of the private sector and the creation of a dynamic growth and human capital accumulation in order to reduce unemployment and improve the living conditions of populations. The development of human resources

26 In addition, the government has launched several initiatives to train school leavers in the creation of professional learning center in collaboration with public or private entities. Finally, a major effort has been engaged in the valuation of resources to enable public administration to better meet the needs of the population and development challenges and improving the living conditions of populations.

27 Thanks to a collective effort and unparalleled unique given the financial, material and human resources committed by government development and social actions (more than 47% of the total expenditure of the Budget have been allocated to segments officers during the last five years) on one hand, and through the implementation of a set of priority actions in the social sectors (health, education, access to water, sanitation, the advancement of women, access to housing, income generating activities, etc.), on the other hand, real progress in the field of poverty and social exclusion were recorded.

28 Even if the most important success to date lies in the area of ​​ access to education and health, and the promotion of gender, the effort is multidimensional: education, health, vocational training, social housing, rural development, local development and decentralization support programs for vulnerable populations and victims, social protection, solidarity, support groups, etc.

29 Progress materialize as follows: - In the field of education: the rapid development of the primary school population, the significant increase in the net primary enrollment rate (43.2% in 2002 to 69.5% in 2012) with little difference between Djibouti City (73.3%) and other regions (60.7%), improving the net enrollment rate in secondary education (23.5% in 2002 to 49.5% in 2012 ) increasing access to higher education, and the virtual elimination of gender disparities in primary school (gender parity index of 0.98), the increase in the literacy rate of women aged 15 and plus years (67.4% in 2012).

30 - In the field of health: a significant decline in maternal mortality and infant mortality (from 103 ‰ in 2002 to 75.8 ‰ in 2012), improving access to health services and essential medicines; notable improvement in immunization coverage of children aged 0 to 5 years (from 53.1% to 83.1% between 2002 and 2008) and pregnant women at the national level; stabilization rate of spread of HIV / AIDS within the population.

31 - In the field of promotion of gender by: better representation of women in politics and administration. The parliamentary elections of 2008 saw the number of women elected from 7 to 9 women thus increasing their presence in the Chamber. Two State ministers and one minister women are in the government formed in May Local elections had already announced the trend by devoting 14 councilors in Djibouti and seven regional councilors, the multiplication of two bodies in micro-finance services for poor women, and the institutionalization of gender for the effective integration of Women in political, economic, social and cultural development.

32 - In the social field and access to basic infrastructure by: reducing the radius of access to improved water sources, especially in urban areas: 95.2% of the urban population have access to water against 52 5% in rural areas, strengthening of drainage stormwater construction of social housing, the renovation of the existing road network and the construction of a new modern road network and flamboyant. - In the area of ​​ access to ICTs by: ease of access of the population to the New Information Technology and Communication: the number of mobile phone subscribers reached 120,000 while that which is connected fixed telephone and internet increased by respectively and 6400.

33 Improving the economic and financial governance The Republic of Djibouti has undertaken many efforts to strengthen economic and financial governance of the country through major institutional reforms with the creation of new institutions of control, namely, the Chamber of Accounts and Budgetary Discipline and General Inspection Office and institutional capacity building of the National Assembly. The reform of services responsible for the execution of public finances, the reform of the public procurement code, the restructuring of the management of public enterprises and privatization of the management of certain entities in this sector which led to the capacity building.

34 On the other hand, the establishment of a financial regulation and banking helped introduce competition in this sector, previously controlled by two subsidiaries of French banks, with the installation of new international banks. This has allowed better access to credit and banking services to a larger population. Finally, the government has implemented a number of reforms to address serious deficiencies in the functioning of government services by streamlining administrative structures, upgrading and improving incomes of working conditions in the public and accountability agents to allow the Administration to improve the performance and quality of public service.

35 - - DJIBOUTI The vision 2035 will manifest policy of the Government of Djibouti, the highest levels of government which remains a valuable asset that encourages all stakeholders. To ensure the success of this process and develop its strong assets, the authorities are committed to developing a long-term vision on the horizon of 2035: "Djibouti in 2035." It aims to provide the country with an efficient instrument of development planning at the horizon of a generation, which is now part of strategic planning, policies and strategies for sustainable development.

36 The goal is to make Djibouti a country emerging economic and social development where the economy is diversified, growth has accelerated and is at a high level over the long term, poverty is reduced and improved social indicators, integration into the global economy is effective. Vision "Djibouti 2035" is a challenge to construct reasoned, even conquer the future. Vision "Djibouti 2035" four pillars that support transformations and commits the country on a new path of progress and development: 1. A Good Governance 2. A diversified economy with the private sector as an engine 3. A Consolidation of Human Resources 4. A Djibouti, an active role in regional integration.

37 The Vision advocates a new model of growth based on greater economic diversification and enhanced competitiveness. In this context and given the important role to be played by the private sector, special attention will be given to improving the business climate, training of national expertise, infrastructure development and optimization of the use natural resources. Implementation of the strategy requires a considerable effort to mobilize the required financing, both at the level of national savings and international cooperation. Given its size and its location, the deepening of regional and international integration of Djibouti's economy is a major focus for achieving the objectives.

38 POTENTIAL SECTORS 1- INFRASCTRUCTURE AND LOGISTICS A - Transport and logistics Djibouti has a remarkable complex deep-water port, located on one of the busiest shipping lanes in the world. In 2011, 17,800 vessels passed through the Suez Canal, 50 vessels per day on average, carrying a total of 700 million tons of cargo. Approximately 1500 of these vessels docked in Djibouti, at the junction of the Red Sea and Gulf of Aden. The historic port of Djibouti (International Autonomous Port of Djibouti - AID) has since 1985 a container terminal and a dozen well-equipped berths for vessels of bulk and general cargo.

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40 During the decade , Djibouti has experienced a substantial improvement of its port facilities through investment. About ten kilometers from the historic port at Doraleh were added a new oil terminal at a cost of U.S. $ 130 million (2006), and a new container terminal (Doraleh Container Terminal - DCT) for a cost of U.S. $ 400 million (2009). Djibouti has also created a free trade zone (2004) adjacent to the port that has simplified the foreign investment even within the same port. The oil terminal and container terminal Doraleh, which are at the forefront in terms of both design and operational efficiency, are the result of public-private partnership established in Djibouti in 2000 with Dubai Ports World (DPW), one of the largest global port operators.

41 B - Road Transport The recent improvement of the harbor and the road made Djibouti-Addis corridor more attractive for Ethiopian traders compared corridors Berbera and Port Sudan. About 1200 truckloads daily average flow from the port of Djibouti and Ethiopia (2011). Of these 1200 trucks, 200 transport of petroleum products, while 20 to 30% carry containers, cars and the rest carries goods imported in bulk (coal for example) or depotted containers in a special area outside Port of Djibouti (PK12). Since its independence in July 2011, South Sudan became a new player in the Horn of Africa and could rely on Djibouti and Ethiopia (via Addis) to open a major commercial corridor, which may involve a pipeline for export its crude oil production.

42 C - Railway The railway Djibouti-Ethiopian completely ceased to operate in The railway operated since 1917 and had long provided the freight and passengers transport between the two countries. A project to rehabilitate the railroad funded by the European Union was launched for a transitional period. In the context of regional economic integration, two major projects of modern railway are being launched: the first linking Djibouti to Addis Ababa (Ethiopia) and Juba (South Sudan), the second linking the port of Tadjoura (north of Djibouti) to Makelle (northern Ethiopia).

43 Djibouti Free Zone Djibouti Free Zone (DFZ), created in 2004 in partnership with JAFZA, on the model of Jebel Ali in Dubai, aimed to contribute to the formation of an integrated logistics platform, promoting the establishment of new creative activities jobs, particularly in the field of processing industries. DFZ has created an ecosystem attractive to business: lower taxes, stop for administrative procedures (registration, licensing etc.) And facilities. The quality of services offered has attracted about 140 economic operators established in the area (2011).

44 Managed by JAFZA (World leader in free zone management). Part of “Globally viable” Dubai Economic Zone World (EZW) Network. Regulations customized from JAFZA Regulations Managed by JAFZA (World leader in free zone management). Part of “Globally viable” Dubai Economic Zone World (EZW) Network. Regulations customized from JAFZA Regulations 40 hectares of space 40 hectares of space 145 companies already in place with 70% from overseas 145 companies already in place with 70% from overseas Modern facilities designed inline with JAFZA’s own facilities in Dubai. Modern facilities designed inline with JAFZA’s own facilities in Dubai. Office space, warehouses, Light Industrial Units, hangar and serviced land Office space, warehouses, Light Industrial Units, hangar and serviced land Strategy is to allow new customers to test the market by using office space and to upgrade to warehouses once justified by growing business volume. Strategy is to allow new customers to test the market by using office space and to upgrade to warehouses once justified by growing business volume.

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48 48 Future Projects

49 5th WFP biggest storage facilities at PK20 WFP WORLDWIDE REGIONAL HUB Panama city: America & Caraibe Dubai, Gulf, Pacific Southern Asia : Malaisia Ghana, Accra : West Africa Italia : Europe Djibouti WFP East Africa logistic center (under construction)

50 Total Investment of 400 Million USD Ship Repair & Dry Dock Off the sea coast of Djibouti is the one the busiest maritime route in the world, and we are lacking this sort of infrastructure in the region: - We are in feasibility study phase; - Project will be completed by 2014.

51 LNG Terminal Total Investment of 2.6 Billion USD

52 Investments The total amount of 4.4 Billion USD

53 2- TELECOMMUNICATIONS Djibouti has a powerful infrastructure of submarine cables, which is largely untapped. Since the 90s, the incumbent has been able to exploit the strategic geographic position Djibouti to connect to several submarine cables, making a must Djibouti broadband communications between Asia, Europe and Africa. Djibouti Telecom gets its international capacity 6 cables: SMW3 (1280 Gb), SAE (3840 Gb), SEACOM (1280 Gb), EASSy (4720 Gb), Aden-Djibouti and MENA.

54 In addition, the country is currently negotiating with the MENA- ICS for a connection of a seventh cable. Through its partnership with Telecom Italia Sparkle (branch "wholesale" Telecom Italia) and the installation of an Internet node class 1, a large portion of Internet traffic of millions of users in the sub-region will be redirected locally and reduce communications costs and response time. The installed infrastructure gives Djibouti Telecom overcapacity in the countries it exports in sub-region, which enables it to generate income with strong progress, projected to more than 22 million U.S. dollars for the year 2012.

55 Interne t Marseille Palermo Singapore Frankfurt EASS Y Customers SEACOM Djibouti Telecom Region al Cables EIG SMW-3 Jeddah Djibouti Télécom IP Transit Options in Djibouti

56 GREEN ENERGY IN 2020 Djibouti will change from 100% fuel in 2010 to 100% renewable by The interconnection with Ethiopia and geothermal ahead as promising solutions to the problem of energy Djibouti. The electricity situation in Djibouti has changed significantly in 2011, since the agreement of the interconnection with Ethiopia, Djibouti now provides much of its electricity. From the perspective of economic development, interconnection represents a major opportunity for Djibouti. 3- ENERGY

57 The interconnection with Ethiopia has the capacity to ensure total consumption Djiboutian (the existing transmission line can carry up to 700 GWh, corresponding to the projected demand of Djibouti in 2020). In the long term, the exploitation of geothermal drilling project which test is being launched in partnership with the World Bank, is also a promising avenue for the diversification of energy sources in Djibouti.

58 A potential geothermal and solar certain and untapped. The potential for wind energy: future project: The country has a considerable wind potential, particularly on sites Ghoubet / Assal, Gali Maab Wein and Bada. It is estimated that 4 to 5000 h / year of wind power in knowing that, in general, if we can reach 2000h/an, the project is profitable. The potential of solar energy: a bright future for a country full of promise The solar potential is huge because, according to some experts, "each year, each km2 exposed to solar energy is the equivalent of 1.5 million barrels of oil." Djibouti is one of the exhibitions of sunshine (2 300 kW / h per m2 per year) and the highest solar radiation (3500 hours per year) in the world.

59 The geothermal potential: Djibouti has a large geothermal potential whose operation remains a national priority. The East African forms with the Andes of South America the two regions with the highest potential exploitable geothermal energy. However, the Great Rift Valley of East Africa is the region where the energy source is the least exploited. Available estimates indicate a potential exploitable geothermal energy between 350 and 800 MW.

60 Djibouti has exceptional natural assets for tourism development. Djibouti has a coastline of 370 km at the entrance to the Red Sea and a vast maritime territory is characterized by the diversity of landscapes and richness of ecosystems:  Marine Resources  Land and Geological Resources  Cultural Resources. POTENTIAL SECTORS 4 – TOURISM

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65 Marine Resources: Specialists in scuba diving consider that the seabed Djibouti are exceptional wealth of coral reefs and the diversity of wildlife. The presence of whale sharks that come to breed Djibouti gives a great reputation among the international community of divers, amateurs or professionals. Djibouti is in fact one of three sites in the world (the other two are in Australia and the Caribbean) where you can approach the whale sharks at certain times of the year.

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67 Land Resources and geological Djibouti has unique volcanic landscapes and minerals, like depression and Lake Assal large ice salt, 155 meters below sea level (the lowest point in Africa) which offers a landscape similar to the Dead Sea in Jordan. Salt Lake Assal has virtues highly valued in thalassotherapy. Similarly, Lake Abbe houses an unusual setting, with hundreds of limestone fireplaces decorated with fumaroles and permanent source of hot water. Finally, the National Park Forest Day, located at 1500 meters above sea level on the slopes of Mount Goda is a living vestige of what was to be the vegetation of the Sahara and Arabia there are several thousand years, with giant acacia, juniper, wild olives, and jujube.

68 Cultural Resources from the cultural and archaeological Djibouti include engravings Abourma gorges in the mountains of Makarrassou representing a distance of about 3 km, unique scenes dating from 5000 years ago and showing a succession engraving styles over the centuries.

69 Tourism demand in the destination region is dynamic and high. Demand for products from the Red Sea resorts is growing rapidly (Sharm-el- Sheikh, Dubai, Hurghada, Oman etc..). Given the saturation of resorts in Egypt, many operators are interested in alternative destinations in areas such as Dubai, Oman and Djibouti. Ethiopia is also a potential market issuer for Djibouti, because of the Ethiopian population and expatriates looking for easy holiday at the seaside Djibouti has the potential to become a leading tourist destination in the region for scuba diving, sport fishing, water sports and boating. These activities could be complemented by a range of thalassotherapy and medical tourism, to develop land resources and geological. Three priority sites would be preferred: Arta Plage-Khor Ambado, Les Sables Blancs Tadjoura-Ras Ali and Mangrove Godoria. According to the simulations, Djibouti could accommodate up to 500,000 tourists in 2030.

70 5 - Fishing Djibouti has a coastline of 372 km, meeting place of the Red Sea and Gulf of Aden. Fishing is carried on small motorboats, and operates mainly stocks of large pelagic and demersal great. Fishing gear used are lines, gillnets, longlines, and to a lesser extent the traps. The number of vessels in operation was 157 units in 2010, divided into 136 small boats (7-8 m long, equipped with outboard 40 hp) and 12 larger vessels (10 m). New vessels acquired by the Government in the development program of fisheries were added to the existing fleet, which should increase the number of fishing units to 174. The number of jobs generated by this activity is land estimated at more than 2000 jobs. The whole sector represents nearly 2600 jobs numbers, nearly 2% of the labor force in the country. Although still small, the fishing industry in Djibouti saw sustained growth, as evidenced by the 50% increase in the number of fishermen and vessels between 2006 and 2011.

71 This is a major potential for the development of the fisheries sector in Djibouti. Protected and well managed, it can be the basis for sustained growth in the coming years to reach its optimum operating level. In this perspective, the fisheries sector can become an important source of jobs in Djibouti. The fisheries sector could create new direct jobs by 2020.

72 How To Invest in Djibouti Investing in Djibouti incentives: To encourage private initiative, the Government of Djibouti has established a legal and regulatory framework, through an investment code unique. Beyond that, there is also a zone with its advantages. 1. The investment code Promulgated by Law No. 58/AN/94/3èmeL 16 October 1994, the Investment Code of Djibouti provides tax benefits and non-tax for both foreign and domestic investors. Djibouti does not impose joint venture operation with a national citizen in order to invest in the country; Business law establishes a legal equality between domestic and foreign investors; all investors can freely repatriate profits without restrictions, etc.

73 1.1. The tax benefits For an investment of a minimum of 5,000,000 FD (approximately U.S. $ 28,000), an investor will benefit from the Plan A, ie tax exemptions below: Tax Exemption Consumer Affairs (ICT) equipment and materials necessary for the realization of the investment program as well as imported raw materials actually used during the first three years by the approved company. For an investment of a minimum of 50,000,000 FD (approximately U.S. $ 281,000), an investor will benefit from the Plan B, namely tax exemptions below: exemption from land tax for the construction of buildings for a period of 7 years; Tax exemption on income from professional activities approved in the limit of a maximum of seven years;.

74 1.2. The eligible sectors: Only investments and businesses for the purpose of the following activities can benefit from the Plan A and B: operating, preparation or processing of products of plant origin or animal, regardless of origin; fishing off the coast and offshore, preparing, freezing, processing or storage of seafood; mining, processing industry or training minerals or metals, whether or not extracted from the soil of the territory; ICT exemption for raw materials imported and used in the early years; investments approved under the provisions of the Plan B may be exempt from the tax on building permits

75 Research the use or storage of any energy source and the refining of hydrocarbons; creation, operation of institutions towards the development of tourism and crafts, creating, operating electrical, electronic, chemical and shipbuilding industries, the land, sea or air; the port and airport; the construction, repair and maintenance of buildings shipping or fishing; manufacturing or packaging on site products or consumer goods; banking or credit likely to promote new investments and Warrantage activities (warehousing credit); consulting services, engineering, computer data processing center telematics server databases.

76 2. Procedures in the Free Zone 2.1. Free Zone companies With the creation of the Zone, was established in Djibouti two new categories of legal persons of Djibouti private law: sole ownership limited liability also called Free Zone Establishment and bearing the acronym FZE; the limited liability company called Free Zone Company and also with the acronym FZCO. They are governed by the Act on the Code of Free Zones, Free Zone Regulations and the provisions of Law No. 103/AN/04/5emeL on commercial companies of the free zone.

77 2.2. Plan Tax Free Zone companies and individual traders operating in the free zone are not subject to any direct or indirect taxes or taxation including income tax, except for VAT where the free zone entities are subject to the provisions of the General Code taxes. This tax exemption is granted for a period of up to fifty years, running from the date of issue of the license; Goods imported or manufactured in the free zone are exempt from all customs and tax liability, unless they are imported into the customs territory of the Republic of Djibouti. Thus, the flow of goods in the local market from the free zone is subject to the payment of duties and taxes on imports.

78 CONTACTS National Investment Promotion Agency (NIPA) PO Box 1884, Republic of Djibouti Tel : (253) Fax : (253) The Chamber of Commerce P.O. Box Djibouti Tel : Fax : E.Mail : Djibouti Ports & Free Zones Authority P.O. Box 197, Djibouti Tel.: Fax :

79 79 DJIBOUTI At the Cross Road of 3 Continents


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