Djibouti Economics and Business

In 1979, President Gouled of Djibouti, abbreviated as DJU by, signed a trade and transport agreement with Ethiopia and Somalia. Priority was given to the participation of the Afars in the government and in the newly formed army as part of the attempt to create national unity. The ruling party was reorganized and local administrations created to stimulate interest in active participation in the country’s political life. Foreign aid was concentrated on irrigation projects and on improving conditions for refugees from the war in Ogadén.

According to COUNTRYAAH, Gouled’s government received assistance from Saudi Arabia, Kuwait, Iraq and Libya. Gouled was able to elegantly manage the interests of his country, whose only resource was its strategic location on the Red Sea. After eight years of independence, Djibouti maintained the desire to continue an independent line, thus disappointing expectations that the country would soon be incorporated into either Ethiopia or Somalia.

Despite diplomatic success, Gouled continued to struggle with internal problems, the most serious of which were the problems between the Afars and the Issa. The Afars, who made up 35% of the population, complained of being exposed to political and economic discrimination. The Issa, which represented 60%, held key positions in the government, rejected the accusations of nepotism and welcomed the reprisals Gouled launched against the opposition. Following the dissolution of the Djibouti Popular Liberation Movement in 1979, the Afars in 1981 tried to organize themselves in the Djibouti People’s Party, which was also banned.

In October of that year, President Gouled sought to amend the constitution with a view to introducing a one-party system. The RPP government party thus became the only permitted party, while all others were deprived of the right of election on the grounds that these were racist or religious parties that posed a threat to national unity.

Note: the capital city of Djibouti is Djibouti with a population of 568 800 (UN estimate 2019). Other major cities include Dikhil, Tadjoura.

In 1983, the first steps were taken towards a radical transformation of Djibouti’s economy, which transformed the country into a “Hong Kong of the Middle East”. The vision was to make Djibouti an international financial market with a duty-free port. Six foreign banks set up branches in Djibouti, where the primary attraction was the strong currency supported by the large deposits – in dollars – in North American banks.

Djibouti Economics and Business

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