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Djibouti financial sector remains 'fragile despite apparent stability'

DJIBOUTI (Xinhua) -- Djibouti’s financial sector "remains fragile despite apparent stability," a new study by the United Nations Development Program (UNDP) dubbed "African Economic Outlook" has shown.

According to the document, even though Djibouti’s financial sector remained stable in 2014 and 2015, it has demonstrated some vulnerabilities as seen in the deterioration of certain indicators.

"Non-performing loans reached 16.2 percent in June 2014, against 13 percent in 2013, 11.4 percent in 2012 and 9.4 percent in 2011," the study reveals.

The study further revealed that some financial institutions had surpassed the level of exposure to a single borrower.

"Access to financial services remains low despite increase in the number of banks. At the same time, access to loans by individuals and businesses also remains low," the UNDP experts said.

Djibouti’s financial sector grew rapidly between 2006 and 2012, moving from two to ten banks.

For a number of years, Djibouti’s Central Bank has been carrying out reforms initiated under the guide of the International Monetary Fund, to reinforce supervision and regulation of the banking sector.

Djibouti authorities plan to launch a loan credit fund to develop the microfinance sector and promote financial inclusion.


Djibouti president optimistic about country’s economic prospects

DJIBOUTI (Xinhua) -- Djibouti President Ismail Omar Guelleh has said the country’s economy was growing at 6 percent and "could go beyond this rate in coming years."

"This growth should not remain in a single sector and should not be experienced only at one place," Guelleh said when he spoke in the capital during celebrations to mark the country’s 39th independence anniversary.

"It is the responsibility of the government to ensure this growth is inclusive and that it benefits everyone across the national territory. It is the responsibility of government that this growth reinforces our education, health and housing for all policies," the president explained.

He said to achieve the desired development goals, the government will continue implementing the major reforms, by placing more emphasis on decentralization which guarantees equal development for all regions.

"We should also continue investing in the training of our youths to overcome the challenge of unemployment and poverty," Guelleh said.

A former French colony, Djibouti which has a population of less than a million people, got its independence in 1977.

The country is situated along an important maritime route that goes through the Suez canal, the Red Sea and the Indian Ocean. At least 20,000 vessels transit through its coastline every year.

The strategic location makes Djibouti to be an ideal place for the fight against piracy and terrorism. Besides hosting France’s largest foreign military base, Djibouti also hosts the only U.S. military base in Africa as well as Japan’s first foreign military base.

It is estimated that every year, Djibouti receives at least 100 million euros for hosting the military bases.

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