The World Bank Group reports in its latest Country Private Sector Diagnostic for Djibouti that the African nation could unlock as much as US$ 240 million and 1,300 jobs if it implements reforms to the country’s regulatory framework, energy provisioning, and market access, to attract private data center investments.
While home to as many as eight subsea cables, Djibouti only has two data centers nearing full utilization. Despite three additional facilities under development, the World Bank’s diagnostic highlights several market factors are holding back foreign investment. These constraints include limited visibility in the data center licensing process, limited flexibility in energy provision, and a state owned entity exercising extreme control over the wholesale internet capacity market.
“Djibouti must now move from an economic model that monetizes its strategic location to one that transforms this geographical advantage into productive capacity. By combining infrastructure and connectivity with affordable energy, industry, digital services, modern logistics, and exports, we can open a new chapter of development,” said Ilyas Moussa Dawaleh, Minister of Economy and Finance for Djibouti.
The World Bank Group notes that the country has the opportunity to leverage its digital connectivity and renewable energy potential to stoke investment. It says that the passing of the 2025 Digital Code is likely to support market development and promote the country’s digital transformation. However, the country make its data center licensing and operation decrees clear under this new code.
“Djibouti’s development story has often been told through its strategic location and its role as a regional gateway. This diagnostic highlights another part of that story: the opportunity to leverage the country’s renewable energy potential, digital connectivity, and tourism assets to support private investment and create more jobs for Djiboutians,” said Ousmane Dione, World Bank Vice President for the Middle East and North Africa.
The diagnostic further reports that the country can unlock up to US$ 390 million in private investment through solar energy. The country’s electricity pricing is said to be a systemic issue that constrains industrial development. Even if data center operators want to bring their own power to projects, capacity limits restrict the adoption of commercial off-grid solar solutions.
In order to foster investment in renewable energy, Djibouti may need to consider adjusting self-generation capacity limits, clarifying power purchase agreement procedures and feed-in tariffs, strengthen its regulatory institutions, and support skills development. As more data center operators bring their own power to projects, especially across the African continent, this should be a priority for the nation.
Africa’s data center market is set to grow in value from US$ 1.95 billion in 2025 to US$ 4.36 billion by 2031. According to Mordor Intelligence, this growth will be fueled by demand from enterprises and governments for sovereign hosting, backed by subsea cable additions, 5G availability, and data-residency rules. If Djibouti aims to take a piece of that pie, it needs to work harder to implement the necessary reforms.