DJIBOUTI: FY10 BFIF PROGRAM PROPOSAL

UNCLAS DJIBOUTI 000066

SIPDIS
STATE FOR EEB/CBA D. WINSTEAD
NAIROBI FOR FCS
KTBD
EWMN

E.O. 12958: N/A
TAGS: BEXP BTIO EINV ETRD ECON DJ
SUBJECT: DJIBOUTI: FY10 BFIF PROGRAM PROPOSAL

REF: 10 STATE 126674; 09 DJIBOUTI 1508


1. SUMMARY AND ACTION REQUEST. Embassy Djibouti, a non-Commercial
Service post, requests USD 3,500 in FY10 BFIF funds (ref A) to
organize a three-day workshop on entrepreneurship in Djibouti before
October 2010. The proposed workshop--to be executed in collaboration
with the Djiboutian National Investment Promotion Agency (NIPA)--will
include sessions on legal framework, transparency and best practices
in accounting, and female entrepreneurship. Post will invite several
U.S. companies working in Djibouti to participate in the workshop,
and key sessions will focus on best practices for working with U.S.
business. By providing a forum for interaction with U.S. business in
Djibouti, post hopes to better equip young Djiboutian entrepreneurs
to partner with U.S. and other foreign companies in Djibouti.
Several U.S. companies work in Djibouti as contractors for the U.S.
military at Djibouti's Camp Lemonnier, the only U.S. military base in
sub-Saharan Africa. Targeted participants will include university
students, entrepreneurs, selected ministries and government agencies,
the Djibouti Chamber of Commerce, and the banking community. The
proposed workshop would support several core Mission Strategic Plan
goals, including Investing in People, Economic Growth, and Governing
Justly and Democratically.
END SUMMARY AND ACTION REQUEST.

--------------
JUSTIFICATION
--------------


2. Djibouti continues to combat serious challenges of poverty, food
insecurity, and unemployment. However, its vibrant service-based
economy has registered positive growth rates for several years (ref
B). Absent cultivable land or a strong industrial sector, Djibouti
imports most basic goods, and has developed a service-based economy
centered around the world-class Port of Djibouti, managed by Dubai
Ports World. Djibouti's assets include a strategic geographic
location, an open trade regime, a stable currency, and substantial
tax breaks for investors. The GODJ has actively and successfully
courted foreign direct investment, and growing investment inflows
have the potential to create jobs and reduce Djibouti's 59 percent
unemployment rate. To help ordinary Djiboutians benefit from the
country's growing economy, the GODJ has begun promoting
entrepreneurship, including through innovative micro-credit programs,
and also by allowing for significant growth in the credit markets of
the private banking sector. Djibouti has a young population, with
over 75 percent of Djiboutians under 25 years of age. This new
generation needs training, resources, and encouragement to build a
future based on private entrepreneurship, rather than dated ideas of
security in a government job, or the bleak alternative of poverty and
unemployment. Djiboutian women, long very active in the informal
sector, also need training and resources to shift and grow their
business into the formal sector.


3. The Djibouti Chamber of Commerce's Business Directory lists over
600 local businesses in Djibouti. The vast majority of these
enterprises use rudimentary management and accounting tools.
Djibouti's unemployment rate is estimated at over 59 percent in urban
settings, and is even higher in rural areas. The University of
Djibouti counts more than 3,000 registered students, all of whom will
be looking for a job in the coming two to three years. The Government
of Djibouti is currently the country's main employer, followed by the
port, public firms, and foreign military forces. Government and
public sectors cannot be expected to absorb a large influx of new
graduates. Entrepreneurship must become a key tool to combat
Djibouti's staggering unemployment rates. The purpose of the
proposed workshop is to help introduce current and future
entrepreneurs to the tools that can help them professionalize,
sustain, and expand their businesses. A further objective of this
workshop is to take a closer look at Djibouti's laws and regulations
governing entrepreneurship, encourage women entrepreneurs, and create
conditions favorable to future partnerships between U.S. and
Djiboutian business.

--------------
EXPECTED IMPACT
--------------


4. One of the major expected impacts of the proposed workshop would
be to plant and encourage a culture of entrepreneurship among young
Djiboutian college graduates. In the past, some U.S. companies
working in Djibouti have reported a lack of professionalism among
local companies. The proposed workshop will help remedy this
situation by raising awareness among local entrepreneurs on best
practices, transparency, and expected standards when dealing with

U.S. companies. Djiboutian business leaders have repeatedly
expressed a strong interest in commercial relationships with U.S.
businesses. Post anticipates that this workshop will allow for
fruitful contacts between U.S. businesses and their Djiboutian
counterparts. In addition, post anticipates that this workshop will
shed some light on the constraints facing local enterprises, and fuel
momentum toward institutional solutions. Finally, post anticipates
that the proposed workshop will begin the ground work for a future
"Guide for the Djiboutian Entrepreneur." Post has received positive
feedback from several possible collaborators and invitees in the
Djiboutian business community and Djiboutian government on the
proposed workshop concept, and anticipates that the event would draw
strong participation and high-level support.

--------------
MILESTONES AND COST DETAILS
--------------


5. The three-day workshop is tentatively planned for October, 2010.
The first day will begin with a presentation by a business lawyer and
a senior representative of the Ministry of Commerce on the judicial
and legal framework governing the activities of entrepreneurs in
Djibouti. It will be followed by a session about the opportunities
and constraints facing entrepreneurs, led by a panel of
representatives from the National Investment Promotion Agency, the
commercial banking community, the Djibouti Economic Development Fund,
and the private sector. The second day will focus on accounting and
auditing, addressed by a panel comprised of an accounting firm, the
Chamber of Commerce, and a representative of the GODJ Tax Department.
Each session will be followed by questions and discussions. The
last and flagship day will be devoted to U.S. business experience in
Djibouti, and advice from U.S. companies on how to work with U.S.
business. The workshop will conclude with a set of recommendations
compiled from the presentations and discussions of the previous two
days.


6. The cost details are as follows:

Advertisement: USD 500
Coffee Breaks (3 days): USD 1,000
Conference Room Rental (3 days): USD 1,500
Publication of Conference Follow-Up Materials: USD 500

Total: USD 3,500

--------------
POINTS OF CONTACT
--------------


7. Post points of contact for this proposal are: Political/Economic
Officer Rebecca Hunter (HunterRK@state.gov) and Economic/Commercial
Specialist Abdi Mahamoud (mahamouda@state.gov)
SWAN