Challenge

Djibouti faces high unemployment (about 47 percent), wide gender gaps, and a large informal sector, with around 60 percent of private economic activity taking place informally.  Women and youth entrepreneurs struggle to access finance due to banks’ risk aversion and collateral constraints, amid weak MSME capabilities and services. High utility costs, complex regulations, and skills mismatches hinder formalization and firm growth.

WBG Approach

The World Bank Group took a blended, ecosystem-first approach: de-risking MSME lending via a Partial Credit Guarantee (PCG), strengthening the CPEC microfinance network, and building entrepreneurial capabilities through scaled training, coaching, and business plan competitions. It coupled grants with incubation/acceleration at the Center for Leadership and Entrepreneurship (CLE), improving formalization, access to finance, and firm survival. This mix—risk-sharing, capacity building, and market linkages, unlocked credit for women- and youth-led enterprises/startup and catalyzed new business creation.

Result

• 100 percent of beneficiaries are youth:
• Approximately 5,000 beneficiaries obtained a completion certificate (2018–April 2024); 40 percent women,
• Over 2,300 beneficiaries received grants (2018–April 2024); 60 percent women
• Over 1,300 winners of business plan competitions (2018–April 2024); 60 percent women
• 740 new businesses registered through project services (2018–March 2024); 55 percent founded by women,
• Approximately 4000 beneficiaries accessed financing (2018–March 2024); 55 percent women
• Partial Credit Guarantee Fund: $1.37 million mobilized (up to May 2022)

Contribution to WBG Targets and Jobs

The project advanced Djibouti’s jobs agenda by helping formalize 740 new businesses and expand access to finance for approximately 4,000 entrepreneurs, building skills. The project is estimated to have created approximately 1,100 direct jobs, with additional gains from business plan grants and training driving “better jobs” through formalization and higher earnings. Women represented about 40–60 percent across key beneficiary groups, and youth 100 percent in core training and grants streams.

Houmed is a young entrepreneur who owns an aluminum manufacturing and carpentry workshop in Dikhil (small town in Djibouti rural areas).

He received seed funding and training from the project. In this quote, he is referring to how he facilitated access for the people of Dikhil in his region to construction services by making these services available locally, instead of requiring them to travel all the way to Djibouti City.

Lessons Learned

• Integrating capacity building with financial support maximizes impact by enabling entrepreneurs to apply new skills through grants, loans, and PCG-supported risk-sharing instruments.
• Flexibility is essential, as shown by the successful shift to digital training during COVID-19
• Sustainability depends on strengthening institutions like the CLE through sustained investment and alignment with national strategies. Effective implementation requires clear stakeholder coordination and defined roles.
• Tailored financial products, complemented by financial literacy and individualized support, improve MSME access to credit.
• Legislative alignment such as Djibouti’s Startup Act must be assessed early, with contingencies and proactive engagement to manage reform delays

Next Steps

The World Bank Group will advance MSME financial inclusion through sustainable risk-sharing (e.g., PCG), diversified products, and digital lending aligned with inclusion and jobs targets. Focus will be on investments in digital infrastructure and literacy to close rural gaps, mainstreaming digital financial services. Continued support will strengthen local institutions (e.g., CLE) with long-term funding, capacity, and policy alignment. Formal coordination structures will be established early to streamline multi-stakeholder delivery. For legislative dependencies, we will plan contingencies and pre-compliance readiness. Tailored solutions for women and youth training, mentorship, and customized finance will ensure equitable access and sustained outcomes,