Djibouti: Investing

FDI in Figures

The Djibouti government having created a climate favorable to business, FDI value increased six fold between 2003 and 2008, attaining 31% of the GDP in 2008. However, in 2009, the global economic crisis has curbed this FDI influx, although in the climate of the economic recovery these should progressively return to their previously strong performce.,

Djibouti's main strong points are its strategic geographical location, its international port, which is at the maritime crossroads between the far-east, the Arab-Persian Gulf, Africa, Europe and the Eastern coast of the United States. The government offers significant tax reductions to foreign investors, in addition to offering a stable currency, which is freely convertible and linked to the American dollar by a fixed parity.

Factors which restrict foreign investment include administrative complexities, corruption, high labor costs, the slowness of the judicial system and the relatively high cost of living.

Most of the FDI is received by the services sector (particularly ports and telecommunication). The main investor countries are Ethiopia, Yemen, the USA and France.

	Djibouti	Middle East & North Africa	الولايات المتحدة	Germany
Index of Investor Protection	2.3	4.8	8.3	5.0

Source: Doing Business

Note: The Greater the Index, the Higher the Level of Investor Protection.

Foreign Direct Investment	2008	2009	2010
FDI Inward Flow (million USD)	234	100	27
FDI Stock (million USD)	751.7	851.7	878.5
Number of Greenfield Investments***	3.0	2.0	-
FDI Inwards (in % of GFCF****)	51.1	27.6	-
FDI Stock (in % of GDP)	76.6	81.3	-

Source: UNCTAD - Last Available Data

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

Tax Rates

Value Added Tax (VAT).: The government introduced a Value Added Tax (VAT) system in January 2009 with a flat rate tax of 7 percent imposed on companies with an annual turnover exceeding 80 million Djiboutian Francs (approximately USD 450,000). Whenever VAT is levied at 7 percent, other existing taxes on the same transaction are reduced by 7 percent.
Company Tax: 25%. Non-resident taxation is 10%.
Withholding Taxes: Withholding taxes on royalties are taxed at the corporate tax rate of 25% in Djibouti. The tax rate is 10% for non-residents.
Withholding taxes on management fees are taxed at the corporate tax rate of 25% in Djibouti. The tax rate is 10% for non-residents.
Consult the National Promotion Investment Agency of Djibouti Website (in English)
Bilateral Agreement: Djibouti and Egypt are not bound by a Double Taxation Agreement.
Social Security Contributions Paid By Employers: 15.7%

Investment Opportunities

Tenders, Projects and Public Procurement: Tradeinvest Africa, Tenders in Africa
African Tenders
DgMarket, Tenders Worldwide
Setting Up a Company: Consult Doing Business Website, to know about procedures to start a Business in Djibouti.
Useful Resources: National Investment Promotion Agency
Economic Developments and Prospects in Djibouti - African Economic Outlook
Egyptian Embassy in Djibouti
CITE DU HERON, LOT N.49
5880 DJ
Phone: (+253) 351231 -351232 - Dir. 356929
Fax: (+253) 356657
Contact the Embassy via Email.

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