WASHINGTON, December 14th 2016- The World Bank Board of Executive Directors approved today an additional US$5.1 million in support of ongoing efforts by the government of Djibouti to create a dynamic private sector that will be an engine of job creation and inclusive growth. The new funding comes from the International Development Association (IDA), the World Bank’s fund for the poorest countries, and aims to sustain momentum on reforms to make the business environment more hospitable and develop the country embryonic private sector, with an improved financial sector and payment system.
The additional financing will expand the scope of the Governance for Private Sector Development Project, whose achievements so far include, but are not limited to, the implementation of regulatory measures to facilitate business creation. The expanded project will focus on creating the conditions for regulatory and legal reforms; as well as support the modernization of the financial sector through the establishment of a national payment system.
“This operation supports the Government of Djibouti’s efforts to lay the foundation for private sector led growth and reduce the country’s high unemployment rates, as articulated in Djibouti’s long term Vision 2035” said Atou Seck, World Bank Resident Representative in Djibouti. “With the right reforms to improve the business environment, the project can be a catalyst for change in the country’s economic landscape and contribute significantly to the fight against poverty.”
Cumbersome procedures, the high cost of business creation and poor financial infrastructure impede the development of the private sector in Djibouti, limiting their role in the country’s long term growth. The additional financing will fund key reforms to improve the business climate and the introduction of a safe and efficient national payment and settlement system. An efficient national payment system will help promote economic and financial development, support financial stability, and broaden financial inclusion by enhancing the quality and cost-efficiency of all types of payments, including remittances sent by migrant workers.
“Improving the business climate will help small and medium businesses, that are the engines of growth, transition from the informal to the formal sector, giving them better access to financing and public market opportunities,” said Mehdi Benyaghoub, World Bank Task Team Leader for the project. “By contributing to broad based private sector development, and the modernization of the financial sector, this project will spur private sector growth, which global experience has shown us is the most effective route to job creation and poverty reduction.”
Currently, the World Bank Group portfolio in Djibouti includes 10 projects in various sectors for a total commitment of US$97 million, in IDA financing and Trust Funds.
