BAKU, November 20, 2024 - Increasing exposure to extreme heat, droughts, and floods pose serious risks to livelihoods in Djibouti as well as for the country's long-term economic growth. Without swift action, Djibouti could lose up to 6 percent of its GDP annually by 2050, equal to nearly four years of today's economic output, according to the World Bank Group's first Djibouti Country Climate and Development Report (CCDR).
The report provides a detailed roadmap for how Djibouti can transform these climate challenges into opportunities for sustainable growth and economic diversification, highlighting the importance of infrastructure investment, action on water and food security, and energy sector reform.
Djibouti shares many climate risks with other countries of the region, but Djibouti's role as the major port for the Horn of Africa makes the resilience of its transport infrastructure important to the entire region. Also, economic activity is concentrated in low-lying coastal Djibouti City, making protection against coastal flooding from sea level rise a key priority.
"Climate change is no longer a distant threat but an immediate challenge for Djibouti. But with identified strategic investments and policy actions, the country can leverage the important investments it has already made to pave the way towards sustainable, low-carbon development, ensuring that its people and its economy are more resilient to climate shocks," said Stéphane Guimbert, World Bank Country Director for Djibouti. "The World Bank is committed to supporting Djibouti as it tackles these risks, and builds a resilient economy that benefits all Djiboutian, especially the most vulnerable."
The International Development Association (IDA), the World Bank's fund for the world's low-income countries, has been a key partner in supporting Djibouti's development journey. The Djibouti CCDR emphasizes the crucial role of IDA support in helping the country secure the substantial investments required to adapt to climate change over the next 25 years.
"This report emphasizes the opportunity for Djibouti to accelerate investments as we move to the goal of 100 percent renewable energy very soon," said Ilyas Moussa Dawaleh, Minister of Economy and Finance, in charge of Industry - Republic of Djibouti. "Our main objective is to reduce energy costs and expand access to it. We must ensure that all Djiboutians benefit from reliable and affordable energy. Djibouti is full of multiple renewable energy resources including solar, wind, geothermal and green hydrogen."
Djibouti has already made important infrastructure investments that can enable it to become a resilient hub for the region, ensure livability in a hotter and drier climate, and diversify its economy. These include investments in ports, rail, and roads, clean energy generation, water desalination and a water pipeline connection. The CCDR concludes that additional investments, capacity building in public sector management, and policies that incentivize private sector participation are needed to ensure that Djibouti reaps the full benefits of these investments.
Overall investment needs could exceed $2.8 billion, while even a limited set of priority adaptation actions requires US$1.1 billion in additional funds. Such investment can be consistent with Djibouti's goal of achieving both growth and debt sustainability if it is accompanied by economic reform and if additional adaptation resources are provided on a concessional basis. International support is particularly warranted given the regional importance of the resilience of Djibouti's economy.
"Private sector solutions are indispensable to support Djibouti's climate adaptation and resilience ambitions. Building on recent investments, such as the Goubet wind farm, Djibouti can unlock critical resources to scale green infrastructure, enhance water security, and strengthen its energy transition through an ambitious business climate reform agenda," said Cheick-Oumar Sylla, IFC's Director for North Africa and the Horn of Africa. "IFC is committed to working alongside Djibouti to build a pipeline of bankable, climate-smart projects that will drive inclusive growth and safeguard the economy against future climate shocks."
World Bank Group Country Climate and Development Reports:
The World Bank Group's Country Climate and Development Reports (CCDRs) are core diagnostic reports that integrate climate change and development considerations. They will help countries prioritize the most impactful actions to reduce greenhouse gas (GHG) emissions and boost adaptation while delivering on broader development goals. CCDRs build on data and rigorous research and identify main pathways to reduce GHG emissions and climate vulnerabilities, including the costs and challenges as well as benefits and opportunities from doing so. The reports suggest concrete, priority actions to support the low-carbon, resilient transition. As public documents, CCDRs aim to inform governments, citizens, the private sector, and development partners and enable engagements with the development and climate agenda. CCDRs will feed into other core Bank Group diagnostics, country engagements, and operations to help attract funding and direct financing.
