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What Businesses Experience in Djibouti

David Francis's picture

The World Bank Group’s Enterprise Surveys (ES) evaluate the quality of the business environment in an economy by asking a series of questions that capture both the experiences and perceptions of firms. These surveys provide much needed information, particularly in developing countries where firm-level data about what businesses experience are limited. 

The Djibouti Enterprise Survey is the first-ever ES in the country and consists of 266 firms in Djibouti City across three sectors – manufacturing, retail, and other services. Firms interviewed for the ES are formal, private-sector firms operating in non-agricultural, non-extractive private sector with five or more employees. 


Results from the survey show that private sector firms in Djibouti have maintained flat, if not declining, productivity. In particular, manufacturers are operating well below capacity, and collectively these trends reflect experiences of firms operating in a business environment with substantial obstacles in terms of electricity, low utilization of bank credit, and others. 

Below we highlight a few key findings from the study (for a more complete assessment, see the full Country Highlights document).

Djibouti’s manufacturers are operating at low capacity levels

Manufacturers in Djibouti maintain low levels of capacity utilization, operating at only 53 percent of capacity, far below the average of other lower middle income economies, where manufacturers maintain 71 percent capacity. Furthermore, these manufacturers only operate on average for 42 hours per week. By contrast, the typical manufacturer in the ES database operates for 59 hours a week. Despite low levels of capacity utilization among manufacturers, firms in this sector are nonetheless investing in fixed assets at a 46 percent rate, comparable to that of lower middle income economies (50 percent) (see figure 1 below).

Figure 1: Djiboutian manufacturers have low levels of capacity utilization 
Djibouti Manufacturing

Firms in Djibouti scarcely utilize the financial sector as a source of credit

Limited use of bank finance is prevalent in the private sector in Djibouti. A mere three out of every 10 firms in Djibouti have a loan or line of credit, slightly below the lower middle income country average of 35 percent.  Still, 75 percent of firms in Djibouti report not needing a loan, a proportion that is substantially higher than the rate among lower middle income economies, 43 percent. The fact that firms in Djibouti do not seek bank financing seems to be in line with a static private sector, as suggested by low sales growth and capacity utilization (see figure 2 below).

Figure 2: Firms in Djibouti utilize low levels of financing from banks
Djibouti Financing

Electricity is most often cited as the largest obstacle to operations

Another key highlight of the survey is that among 15 areas of business environment, 49 percent of firms in Djibouti tend to rate electricity as the biggest obstacle to daily operations. This obstacle is reflected in firms’ heavy reliance on generator power (nearly seven out of 10 firms own or share a generator), far above comparable averages. 

The second common obstacle for firms in Djibouti is corruption (13 percent), followed by tax rates (12 percent). Less than 2 percent of firms in Djibouti cite access to finance as the biggest obstacle to their operations, a possible indication that low levels of bank financing by firms in the country may not be a notable obstacle (Figure 3 below).

Figure 3: Firms in Djibouti report electricity as the biggest obstacle to their operations 
Djibouti Electricity

For a full range of indicators please visit the Djibouti survey webpage in the Enterprise Surveys website. The raw survey data can also be obtained here after registration. Please feel free to provide comments, specifically for our survey highlights. Any feedback is much appreciated and may assist us in improving the product.

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