According to the AfDB, the measures initiated by Djibouti reduced poverty by 1.8% between 2020 and 2021. To assist the government’s efforts, several partners, including the World Bank, are also building the capacities of MSMEs to help them create jobs and economic opportunities. 

The World Bank (WB) and the European Union (EU) recently signed an agreement to support the development of micro, small and medium enterprises (MSMEs) in Djibouti, a release dated December 20, 2022, informs.  

The program, financed to the tune of more than US$ 4.1 million by the EU, will boost the country's MSMEs through access to digitalization, improved accounting practices, credit applications, business plans, and legal and marketing strategies. “It will also support the creation of a virtual “one-stop-shop” where MSME’s can go to one place to access permits and other services.”

“ The project will foster the growth of MSMEs in Djibouti by supporting technology adoption and business development. This new injection of funds will also help to boost the capacity of MSME’s in Djibouti, which are an important driver of jobs and income,” said Marina Wes, World Bank country director in Djibouti.

The release states that the program targets new and existing MSMEs in need of business development services, beneficiaries in need of additional support from the WB's Women and Youth Entrepreneurship Support Project in Djibouti, and aspiring entrepreneurs. Financial institutions, public institutions, and MSME support programs will participate as "intermediate beneficiaries.”

The ultimate goal of the project, which is part of the World Bank Group's 2022-2026 Country Partnership Framework for Djibouti, is to help the country achieve its poverty reduction goal by “promoting inclusive private sector-led growth, job creation, and human capital; and strengthening the role and capacity of the state.” 

According to the World Bank, Djibouti's economy started recovering in 2021 after the Covid-19 restrictions were lifted.  From 0.5% in 2020 (the lowest growth since 2000), the country’s economy grew by  4.3% in 2021. However, the crisis in Ethiopia has caused a general downturn in shipping and services and slowed the growth momentum, causing inflation to rise to 2.5% year-on-year in 2021. 

The Bretton Woods institution expects Djibouti’s growth to slow to 3.3% this year, in anticipation of a prolonged crisis in Ethiopia. "If economic growth continues, poverty is expected to resume its downward trend from 14% in 2022 to 12.4% in 2024," it says.

Jean-Marc Gogbeu