Investing in Djibouti

The Code des investissements provides the main framework for private investment projects in Djibouti, including projects in the Zone Franche. Eligible activities can include private company participation, buildings, vehicles, ships, aircraft and productive installations. Sector examples include port and airport services, logistics, energy, telecommunications, agriculture, fisheries, tourism and industry. Djiboutian and foreign investors generally receive the same investment freedom, but an activity may require company registration, tax and employment compliance, land rights, sector approval and anti-money-laundering and customer-identification checks. The Agence Nationale pour la Promotion des Investissements (ANPI) provides information, advice and investor support. The Guichet Unique is a single-window administrative channel for relevant procedures. The Commission nationale des Investissements can grant project approval, known as agrément, where the applicable investment regime requires it. An application should be submitted before implementation and normally includes an investment plan, costs, timetable, expected jobs and a profitability study. An approval does not automatically make every incentive available; the project's activity, structure and compliance determine the applicable treatment. Régime A generally applies from DJF 15 million for agriculture, livestock, handicrafts and fisheries, and from DJF 30 million for other qualifying projects. Régime B additionally requires at least DJF 100 million or 50 permanent jobs. Approved Régime A projects may receive benefits such as patent-tax exemption until commissioning plus five years and import or domestic-consumption-tax relief for approved materials. Régime B can provide certain exemptions for up to ten years, including profit-tax exemption for up to eight years in the cases covered by the rules, as well as possible land, registration and building-permit facilitation. If the agrément is withdrawn, deferred taxes and fees can become immediately payable. ANPI and the responsible ministry should confirm the current application of each benefit for the specific project. Securities such as shares and bonds are legally contemplated, but the Banque Centrale de Djibouti (BCD) has confirmed the absence of a national financial market. No local exchange, local broker, central securities depository, regular local price formation or standard retail trading infrastructure was verified. Credit institutions may provide placement, subscription, purchase, management, custody of securities or financial products and asset advice as ancillary activities, but only within their BCD approval and the applicable legal basis. The BCD supervises banks and financial institutions. Its current register lists 10 conventional banks, 3 Islamic banks, 4 microfinance institutions, 3 specialised financial institutions and 2 electronic-money issuers. These institutions may offer savings, financing or custody access, but their existence does not establish a retail securities market. The Fonds Souverain de Djibouti (FSD) is a state-owned fund intended for medium- and long-term investments. It can hold listed or unlisted assets, intangible assets, real estate, funds, venture capital and debt, and can co-invest with national or international investors. The available evidence concerns strategic and professional projects, not open retail access for small investors. Local portfolio diversification is therefore limited. A combination of direct project or company exposure with liquid bank-held funds can reduce concentration only to the extent that the investor has suitable, lawful and available access to each instrument. An external securities platform would be outside Djibouti's local institutional equivalent and should not be presented as a Djiboutian market service. Djibouti operates a currency board, with a reported rate of USD 1 = DJF 177.721, and the DJF is convertible. The BCD reports no restrictions on payments or transfers for current international transactions, but this does not prove unrestricted capital repatriation in every investment structure. Exchange-rate exposure remains for currencies other than the US dollar and the DJF. Costs vary by bank, custody arrangement, transfer, registration, tax, due diligence and project activity; no uniform retail broker or fund fee was verified. Application times also depend on the project and authorities. There is no guaranteed return. The principal risks include illiquidity and difficult exits, limited local price discovery, concentration in state-linked, port, logistics and infrastructure exposure, title and permit problems, regulatory or political change, counterparty and banking risk, anti-money-laundering restrictions, refinancing and interest-rate risk, climate and supply risks, and exposure to Red Sea conditions. A project assessment should therefore cover ownership, permits, land, contracts, financing, currency, counterparties, exit routes and the continuing conditions of any agrément before capital is committed.