Coastweek 29 June 2016
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.