Despite continuous economic growth, this small, strategically located, middle-income, East-African country has high poverty indicators and weak social indicators. Through its development cooperation policy, the EU is supporting Djibouti with a view to improving access to drinking water and sanitation and improving food safety for the population.
Djibouti has a predominantly service-based economy. Its agricultural and industrial sectors are not well developed. However, its geographical situation at the tip of the Horn of Africa at the entrance to the Red Sea, its ports and its free zones play an active role throughout the whole region.
Most of the development cooperation with Djibouti is financed by the European Development Fund.
For the period 2014-2020, funding of €105 million is available for the support programme for Djibouti. The emphasis will be on water and sanitation but also on food safety, resilience and adapting to climate change.
The previous support programme, which covered the period 2008-2013, had a budget of €42.1 million focused on the water, sanitation and energy sectors. These sectors are crucial in a country where 80 % of the population lives in and around the capital. For example, the linking-up of Djibouti's electricity grid with that of Ethiopia should lead to cheaper electricity and better access. This link became operational at the beginning of 2016.
Djibouti also benefits from other European Union programmes funded from different sources (under the budgets for food safety, the environment and the European Instrument for Democracy and Human Rights), as well as from the Instrument contributing to Stability and Peace and EU humanitarian aid.
Furthermore, Djibouti is eligible for projects under the EU Emergency Trust Fund for Africa. Such projects should, in particular, be aimed at developing economic opportunities and creating employment, as well as at managing migration.