The World Bank approved two new projects totaling $70 million from the International Development Association (IDA), to help Djibouti foster more inclusive economic growth and strengthen regional integration.
The first operation, the Second Djibouti-Power System Interconnection Project approved aims to enhance regional connectivity through improved low-cost and clean electricity transmission between Ethiopia and Djibouti. The $55 million operations will support the construction of a second double-circuit high voltage electricity power transmission line to connect the high voltage substation at Galafi, at the border with Ethiopia, to Nagad substation, near Djibouti-Ville. This new electricity line will help to stabilize power flows and make the systems more reliable. The project, limited to the Djiboutian side of the interconnection line, will be financed in parallel by the African Development Bank (AfDB) in Djibouti and Ethiopia.
“Increasing power interconnections is particularly important to boost inclusive growth, jobs, and the transition to a green economy,” notes Boubacar-Sid Barry, World Bank Resident Representative in Djibouti.”By increasing access to cheaper and cleaner energy, the new project contributes to improving people’s lives and mitigating climate change.”
By increasing the electricity exchange capacity between the two countries, Djibouti will benefit from Ethiopia’s renewable energy surplus, reducing the cost of its thermal production as well as its dependence on fossil fuels. Over time, the project will enable Djibouti to produce and export excess renewable energy, including solar and wind power, within the region, strengthening the country’s position as a regional trade hub. The project is also expected to attract private sector investments and create new jobs and economic opportunities, especially for women.
“Infrastructure investments play an important role in reducing poverty,” says Boutheina Guermazi, World Bank Director of Regional Integration for Sub-Saharan Africa, the Middle East, and Northern Africa. “The project will help increase household income and create jobs, not only in Djibouti, but across the Horn of Africa. By strengthening cross-border connectivity, the project contributes towards building a resilient and more prosperous region.”
The second operation, the Djibouti Skills Development for Employment Project aims at equipping young Djiboutians with the skills required to access the labor market and ensure better employment prospects for all. Approved on March 23, 2022, the new $15 million financing comprises $10 million in IDA credit and a $5 million grant from the IDA 19 Window for Host Communities and Refugees (WHR).
The Project is expected to increase enrollment in technical and vocational education and training programs from 4,700 to about 8,000 students, of which 40% are women. The operation will support productive skills development programs based on labor market needs for refugees and vulnerable people so they can have better access to jobs. It will directly link training to labor market opportunities in order to improve employment outcomes as well as the quality, relevance, and efficiency of Djibouti’s training system.
“The new operations are critical to support the priorities of Djibouti’s National Development Program to promote inclusion, connectivity, and institutions for inclusive and sustainable growth,” said Ilyas Moussa Dawaleh, Minister of Economy and Finance, in charge of Industry. “This is an important step toward reducing social exclusion and ensuring that all people have adequate access to services. The projects will also address the high costs of input and low labor skills hindering the private sector’s ability to create sustainable and high paying jobs.”
The World Bank’s portfolio in Djibouti consists of 16 projects totaling US$384 million in financing from IDA. The portfolio is focused on education, health, social safety nets, energy, rural community development, urban poverty reduction, the modernization of public administration, governance, regional infrastructure, and private sector development with an emphasis on women and youth.