According to the World Bank data, Djibouti is the most expensive country in Africa and ranks as the 60th costliest nation in the world. For the average Djiboutians this means that the cost of living or the amount needed to cover basic expenses, housing, food, taxes and healthcare is quite high.
While State imposition of taxes and custom duties keep prices of goods on the market shelves of Djibouti on a costlier side; on the other hand, unemployment in Djibouti is reaching alarming levels at over 43 percent and is a major contributor of poverty and poor purchasing power of the people.
For a developing country Djibouti has an exceptionally high population growth rate of 2.2%, making it the 40th fastest growing country globally. More than three-quarters of the steadily growing population of Djibouti resides in urban centers maintaining the country’s steady growth rate of urbanization. Yet Djibouti lacks basic infrastructure such as paths, trails, bridges and roads and access to transport services making it difficult for poor people to access markets and services.
Despite the rise in port construction, Ethio-Djibouti Railway, Trade zones, and road links for trade purposes, the domestic infrastructure remains poor. The Djibouti government has pledged expenditure of $15bn over the next five years to build a new infrastructure and improve upon the road, rail, and airport networks, but those investments are yet to be seen enacted.
The most alarming fact about the infrastructure of Djibouti is the increasing dependence on Chinese money aiding Beijing’s bid to dominate world markets that determine the future of distribution of economic and military power. In Djibouti it includes new free trade zones, 40% of which are owned by China, to encourage trade for favored industries and bolster market exports. China is also helping to build a railway line running between Djibouti and Ethiopia. Massive Chinese investments of over $15bn since 2008 for infrastructure projects like airports, roads, digital infrastructure in Djibouti creates diplomatic inroads for China into the African market. According to Aboubaker Omar Hadi, chairman of the Djibouti Ports and Free Zones Authority, Djibouti has 'no choice' but to join hands with China for infrastructure development. Like Sri Lanka, Laos, Maldives, Djibouti may also come under China's debt trap with its massive investments.
Djibouti Telecom has a monopoly on all telecom services, including fixed lines, mobile, internet, and broadband. Being a meeting point of several international cable systems that pass through the Red Sea and the Indian Ocean, Djibouti Internet Exchange is one of the best connected in the region. Despite that, the connectivity and broadband services of Djibouti remains to be very expensive for its citizens. This clubbed with large-scale job losses and the consequent restriction on disposable incomes among Djiboutians greatly impedes their full growth potential in any sector.