2017 Index of Economic Freedom

Djibouti

overall score46.7
world rank171
Rule of Law

Property Rights12.3

Government Integrity32.6

Judicial Effectiveness10.3

Government Size

Government Spending39.5

Tax Burden80.9

Fiscal Health13.8

Regulatory Efficiency

Business Freedom51.6

Labor Freedom59.0

Monetary Freedom75.3

Open Markets

Trade Freedom54.9

Investment Freedom80.0

Financial Freedom50.0

Embed This Data

Create a Comparison Chart

See how Djibouti compares to another country using any of the measures in the Index.

vs
Close
Download PDF
Quick Facts
  • Population:
    • 1.0 million
  • GDP (PPP):
    • $3.1 billion
    • 6.5% growth
    • 5.9% 5-year compound annual growth
    • $3,204 per capita
  • Unemployment:
    • 53.9%
  • Inflation (CPI):
    • 2.1%
  • FDI Inflow:
    • $124.0 million
Embed This Data

Djibouti’s economy is driven mainly by services, with industry accounting for less than 20 percent of GDP. Economic activity is centered on port facilities, the railway, and military bases. Increased investment, particularly in construction and port operations, has led to relatively high economic growth in recent years.

Institutional weaknesses such as poor governance and the lack of a sound judicial framework severely undercut vibrant economic expansion and constrain long-term economic development. Corruption continues to raise the cost of doing business. Open-market policies related to free trade and the free flow of capital are not deeply rooted in the economic system.

Close

Background

President Ismael Omar Guelleh was reelected by a landslide to a fourth term in 2016 after getting parliament in 2010 to change a constitutional prohibition against more than two terms. Djibouti’s strategic location at the mouth of the Red Sea makes its port facilities and railway key assets. The U.S. has its only permanent African base in Djibouti, and France and Japan have a military presence there as well. In early 2016, China began building “support facilities” for its army and navy in the port town of Obock. Djibouti has few natural resources and imports most of its food. The government relies on foreign assistance to finance development projects.

Rule of LawView Methodology

Property Rights 12.3 Create a Graph using this measurement

Government Integrity 32.6 Create a Graph using this measurement

Judicial Effectiveness 10.3 Create a Graph using this measurement

Protection of private property is weak. Judicial proceedings and trials are time-consuming, prone to corruption, and politically manipulated. Sharia law prevails in family matters. Power remains heavily concentrated in the president’s hands, and repression of political opposition has increased. Public officials do not have to disclose their assets. Government corruption is a serious problem, and efforts to curb it have had little success.

Government SizeView Methodology

The top personal income tax rate is 30 percent, and the top corporate tax rate is 25 percent. Other taxes include a property tax and an excise tax. The overall tax burden equals 19.6 percent of total domestic income. Government spending has amounted to 44.9 percent of total output (GDP) over the past three years, and budget deficits have averaged 11.5 percent of GDP. Public debt is equivalent to 55.5 percent of GDP.

Regulatory EfficiencyView Methodology

The regulatory system’s lack of transparency and clarity injects considerable uncertainty into entrepreneurial decision-making. A modern labor market has not been fully developed. In 2016, the government and the Saudi Arabia–based Islamic Trade Finance Corporation, a subsidiary of the Islamic Development Bank, signed a $75 million agreement that the IMF warns will probably be used to finance Djibouti’s fuel subsidies.

Open MarketsView Methodology

Trade is important to Djibouti’s economy; the value of exports and imports taken together equals 58.7 percent of GDP. The average applied tariff rate is 17.6 percent. State-owned enterprises distort the economy. Credit is generally allocated on market terms, but access to credit for entrepreneurial activity is still limited by high costs and the lack of other available financing instruments.

Country's Score Over Time

View Chart of Scores over Time

Regional Ranking

rank country overall change
1Mauritius74.70.0
2Botswana70.1-1.0
3Rwanda67.64.5
4Côte d'Ivoire 633.0
5Namibia62.50.6
6South Africa62.30.4
7Seychelles61.8-0.4
8Swaziland61.11.4
9Uganda60.91.6
10Burkina Faso59.60.5
11Benin59.2-0.1
12Mali58.62.1
13Gabon58.6-0.4
14Tanzania58.60.1
15Madagascar57.4-3.7
16Nigeria57.1-0.4
17Cabo Verde56.9-9.6
18Democratic Republic of Congo56.410.0
19Ghana56.2-6.8
20Guinea-Bissau56.14.3
21Senegal55.9-2.2
22Comoros55.83.4
23Zambia55.8-3.0
24São Tomé and Príncipe 55.4-1.3
25Mauritania54.4-0.4
26Lesotho53.93.3
27Kenya53.5-4.0
28The Gambia53.4-3.7
29Togo53.2-0.4
30Burundi53.2-0.7
31Ethiopia52.71.2
32Sierra Leone52.60.3
33Malawi52.20.4
34Cameroon51.8-2.4
35Central African Republic51.86.6
36Niger50.8-3.5
37Mozambique 49.9-3.3
38Liberia49.1-3.1
39Chad492.7
40Sudan48.8N/A
41Angola48.5-0.4
42Guinea47.6-5.7
43Djibouti46.7-9.3
44Equatorial Guinea451.3
45Zimbabwe445.8
46Eritrea42.2-0.5
47Republic of Congo 40-2.8
See Entire Region List ›

View all countries ›

Back to Top