Classified as a lower-middle income economy by current World Bank records, Djibouti’s financial sector has grown thanks to the financial regulations applied in 2000, 2005 and 2011, which were introduced in order to create a modernized financial market. According to the current numbers from the Central Bank of Djibouti, the total assets of the financial sector amount to around $1.5 billion, with banking assets representing 95% of this.
The banking sector has achieved significant growth in recent years, accounting for more than 10% of total GDP. The arrival of new banks, generally owned by foreigners, have accelerated competition and brought the total number of banks to eleven. Before 2006, there were only two banking groups operating in the country. Amongst the banks operating in the country, Banque pour la Commerce et l’Industrie – Mer Rouge (BCIMR) and the Bank of Africa (BOA Red Sea, formerly known as Banque Indosuez) are still the most dominant banks, making up around 80% of total deposits. Following the implementation of a new banking law in 2005, the minimum capital requirements for banking institutions were adjusted to $1.6 million, which led to an important growth in the total amount of capital.
Customer deposits recorded an increase in recent years, as a result of new regulations related to the public and private sectors. According to the latest statistics, total customer deposits increased from $1.088 billion to $1.1 billion in 2013, representing a growth of 7.7% in just one year.
The total amount of domestic credits grew by an annual rate of 2.1% in 2013, increasing from $510 million to $523 million in a year. Private companies are the main contributors, making up 87% of the total, showing an increase of 15.6% from 2012 to 2013, while credits to the state took second place with 10%, and credits to the public sector were lower, at only 3% of the total.
According to the current numbers from the Central Bank of Djibouti, the total assets of the financial sector amount to around $1.5 billion, with banking assets representing 95% of this.
Islamic finance has been a growing force in the Djiboutian economy, since the government introduced a new banking law in 2011, based on Sharia principles. The Governor of the Central Bank of Djibouti, Ahmed Osman Ali, stated that as Djibouti was an Islamic country it is perfectly positioned to take a leading role in the African Islamic finance sector. Almost 95% of the total population is Muslim and many people do not want to use conventional banks for religious reasons. Today, there are already four Islamic banks operating in the country, representing more than 15% of total banking assets. The sector is mostly dominated by foreign groups from Egypt, Yemen and the United Arab Emirates, as well as domestic shareholders and Somalian entrepreneurs. East Africa Bank (formerly known as Dahabshill Bank International) has the biggest share of the capital generated from Islamic finance in the country, with around 70%.
Islamic banks accounted for $312 million of the market, with an annual growth rate of 20% in 2013. In the same year, their deposits reached $186 million, 12% of the country’s total. In addition, the number of beneficiaries of Islamic finance loans doubled between 2012 and 2014. Their credit portfolio has shown a low rate of non-performing loans, estimated at 1.56% and this is lower than the average for domestic credits.
|Banks||Year of Entry||Origin||Type|
|Banque pour le Commerce et l’Industrie - Mer Rouge||1957||France & Djibouti||Conventional|
|Bank of Africa (BOA Red Sea)||2010||Continental||Conventional|
|International Commercial Bank (ICB)||2006||Malaysia||Conventional|
|Saba Islamic Bank (SIB)||2006||Yemen & UAE||Islamic|
|Banque de Depots et de Credits de Djibouti||2008||Switzerland||Retail Banking|
|Salaam African Bank (SAB)||2008||Regional||Islamic|
|Cooperative Agricultural & Credit Bank (CAC)||2009||Yemen||Conventional|
|Dahabshiil Bank International S.A.||2009||Somalia||Islamic|
|Warka Bank for Investment & Finance||2010||Lebanon & Iraq||Conventional|
|Exim Bank of Djibouti||2010||Tanzania||Conventional|