Djibouti's Main Business Sectors

Djibouti's location on the Red Sea near the Gulf of Aden makes it a very important location for the shipment of goods, and the country also serves as a refueling point for ships. However, the country's arid climate, barren landscape, and scant rainfall make it difficult for business sectors to flourish. Because most crops are grown at subsistence levels, the labor force is largely unskilled and working just to get by. Unemployment in Djibouti approaches 50%, and the main business sector in the country is the service sector, which accounts for more than eighty percent of the country's GDP.

The country's small agricultural sector took a big hit this year, behind 2009's less than favorable weather conditions. Rural areas in Djibouti received almost no rainfall, causing the loss of up to 80% of area livestock. Those losses all but wiped out the smaller farms, rendering them unable to replenish their stocks. This situation could result in the further deterioration of grazing land and the faster depletion of reservoirs, worsening the country's food insecurity.

The seaport at Djibouti has recently been expanded, to include state of the art facilities and private management, to go along with its strategic location. Over the last ten years, the government of Djibouti has made great strides in encouraging foreign investment and the development of the construction and tourism sectors.

Because of the worldwide financial crisis, foreign investment has decreased slightly this year, but the country's banking sector continues to attract foreign banks that want to establish a regional presence. The telecom sector is wholly owned by a state-run company; the services it provides are very reliable, but also expensive. All in all, the country of Djibouti offers a lot of incentive for foreigners to invest in the private sector, but there are many obstacles in the way; high energy and labor costs, as well as a contracted domestic market.

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