Financing herding, market gardening and fishing in Djibouti
Djibouti has no agricultural bank or specialised rural credit: herders, market gardeners and fishers mainly fund their work through family savings, the CPEC cooperatives, a few FDED loans and donor-backed public programmes.
Farming held back by aridity
With scarce rainfall and extreme temperatures, less than one percent of Djibouti's territory can be cultivated. The country imports most of its food through the port, and agriculture accounts for a very small share of gross domestic product.
Afar and Issa pastoral herders
Camels, goats and sheep are the main rural wealth in the regions of Dikhil, Ali Sabieh, Tadjourah and Obock. Livestock serves as living savings: people sell an animal to meet an expense rather than borrow.
The Ambouli gardens and irrigated plots
Around the Ambouli wadi on the edge of Djibouti City, and in a few irrigated plots inland, market gardeners grow tomatoes, onions, chillies and fodder. Their needs centre on pumps, boreholes, farm inputs and fencing.
Small-scale fishing in the Gulf of Tadjourah
Fishers in Djibouti City, Tadjourah and Obock work rich waters that are little exploited. Buying a boat, an outboard motor or insulated cool boxes is the main investment, and commercial banks rarely finance it.
No agricultural bank in Djibouti's system
The list of BCD-licensed institutions includes no bank dedicated to agriculture. Commercial banks see pastoral herding and small-scale farming as too risky, given the widespread lack of land titles and of regular, verifiable income.
The North and South CPEC in rural areas
The popular savings and credit cooperatives of the North and the South are the financial institutions closest to rural people. Microcredit from the savings cooperatives funds small purchases of animals, inputs or fishing gear.
Herder, grower and fisher cooperatives
Organising into a cooperative of herders, growers or fishers makes it easier to access shared equipment, training and public support. A structured group also inspires more confidence in a microfinance institution than a lone producer does.
Public projects and international partners
The ministry responsible for agriculture and fisheries runs programmes with donors on water mobilisation, support for fishers and help for herders. These projects often provide equipment or grants rather than loans that must be repaid.
FDED for an agri-food business
A processing unit, a small camel milk dairy or a cold room for fish falls more under business financing. The Fonds de Développement Économique de Djibouti can then be approached with a complete business plan.
Droughts and no agricultural insurance
Recurrent droughts decimate herds and ruin harvests, and index insurance is not widespread in Djibouti. A loan taken without a cash reserve can therefore become impossible to repay after a bad season, as lenders are well aware.
What exists in neighbouring Ethiopia
Ethiopia, which enjoys a more favourable climate, has far more developed rural credit institutions. The page on the farmer loan in Ethiopia shows a model built largely around cooperatives and regional microfinance institutions.
General benchmarks on Djiboutian credit
Before approaching a cooperative or a bank, it helps to understand the role of the BCD, the credit register and the specialised institutions, summarised in the general guide to credit in Djibouti.
Looking for funding for a farming or fishing activity in Djibouti
- Cost your need precisely in DJF: animals, pump, seeds, outboard motor or cold room.
- Contact the CPEC in your region to join and start saving.
- Join or set up a cooperative to gain access to public programmes and shared equipment.
- Ask the ministry's regional services about support projects currently under way.
- For a processing business, prepare a business plan and apply to FDED.
- Keep a cash reserve to get through a drought season.
Charges to plan for when financing a Djiboutian farm
| Item | Benchmark | What makes it vary |
|---|---|---|
| CPEC microcredit | Per the cooperative's rate grid | Prior savings and track record |
| FDED loan | Conditions set by the fund | Nature and size of the project |
| Cooperative membership share | Set by the statutes | Cooperative concerned |
| Irrigation or fishing equipment | Import price in DJF | Supplier and freight cost |
Useful documents for a farming or fishing application
- National identity card
- Residence certificate for the region concerned
- Certificate of membership of a cooperative or producer group
- Plot occupation permit or fishing licence
- Quotes for the equipment to be bought
- Business plan for a processing activity
Pitfalls of agricultural financing in Djibouti
- Borrowing to enlarge a herd just before the dry season, without enough fodder or water to keep it going.
- Buying an outboard motor on credit without budgeting for fuel and maintenance in salt water.
- Counting on a project grant that has not yet been confirmed in writing to repay a loan.
- Paying a so-called middleman who promises a place in a herder support programme in return for fees.
Questions from Djiboutian herders, growers and fishers
Is there an agricultural bank in Djibouti?
No. No agricultural bank or specialised rural credit fund appears among the institutions licensed by the Banque Centrale de Djibouti. Rural people turn to the CPEC, to FDED for structured projects and to donor-supported public programmes.
Can a nomadic herder get a microloan?
It is difficult without a fixed residence or deposited savings. The North and South cooperatives prefer identifiable, settled members. Going through a recognised cooperative or herder group improves the chances of obtaining small-scale financing.
Can fishers in Djibouti finance a boat?
Commercial banks rarely finance this kind of equipment. Fishers rely instead on public programmes supporting small-scale fishing, on cooperatives and, for small amounts, on the popular savings and credit cooperatives in their region.
Can livestock be used as collateral?
Livestock is hard to use as collateral, because animals move, can die in a drought and are difficult to value. Djiboutian lenders therefore prefer joint guarantees, prior savings and membership of a recognised group.