The telecommunications market in Djibouti is monopolized by the incumbent operator, Djibouti Telecom, and no private competition is allowed in the country. The company is currently considering the rollout of a full-blown 4G network to provide users with data downloads of up to 1GB on their mobile devices. In 2013, the World Bank lambasted Djibouti for failing to liberalise the country’s telecoms market, to the detriment of service quality and access costs there.
Djibouti’s economy is based on service activities connected with the country’s strategic location as a deepwater port on the Red Sea. Three-fourths of Djibouti’s inhabitants live in the capital city; the remainder are mostly nomadic herders. Scant rainfall and less than 4% arable land limits crop production to small quantities of fruits and vegetables, and most food must be imported.
Djibouti provides services as both a transit port for the region and an international transshipment and refueling center. Imports, exports, and re-exports represent 70% of port activity at Djibouti’s container terminal. Reexports consist primarily of coffee from landlocked neighbor Ethiopia.
Djibouti has few natural resources and little industry. The nation is, therefore, heavily dependent on foreign assistance to help support its balance of payments and to finance development projects. An official unemployment rate of nearly 50% – with youth unemployment near 80% – continues to be a major problem. Inflation was at 3% in 2014-2016, due to low international food prices and a decline in electricity tariffs.
Djibouti’s reliance on diesel-generated electricity and imported food and water leave average consumers vulnerable to global price shocks, though in mid-2015 Djibouti passed new legislation to liberalize the energy sector. The government has emphasized infrastructure development for transportation and energy and Djibouti – with the help of foreign partners, particularly China – has begun to increase and modernize its port capacity.