Sustainable Tourism Projects
Sustainable Tourism Projects
Business Model Description
Invest in eco- and community-based tourism, including construction and operation of hotels and other infrastructure and services that are environmentally friendly and that rely on local value chains
Expected Impact
Improve job opportunities for rural communities in regions with high tourism potential, and reduce the environmental damage caused by conventional tourism.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Djibouti: Obock
- Djibouti: Tadjourah
- Djibouti: Dikhil
Sector Classification
Services
Development need
Djibouti's economy is dominated by the services sector generating 70% of growth (5). Transport services, especially port activities, are the main growth source and employ most of the workforce (1). As services are becoming more tradable, expanding and diversifying international service exports provide significant opportunities for developing least developed countries (2).
Policy priority
The authorities are continuing the country's development with the goal of setting up a regional hub for trade, logistical and financial services (3). One such attempt is the inauguration of the Djibouti International Free Trade Zone (DIFTZ) in 2018, which is set to be the largest free trade zone in Africa once complete (7).
Gender inequalities and marginalization issues
Consumer services are key to promoting inclusive growth. They provide jobs for the poor, form the backbone of the economy, and offer key opportunities for growth through trade in Djibouti (6).
Investment opportunities introduction
Strong export growth especially in transport and logistics services is expected to improve the current account balance to 2.6% of GDP by 2024. An output growth of 7-8% is expected given the country's strategic location and potential to serve the East African region, especially with logistics and transport-related services (4).
Key bottlenecks introduction
Value added by the services sector, which usually generates 70% of Djibouti's growth, increased only 2% in 2020 compared with 8.2% in 2019 due to the COVID-19 pandemic (5). The absence of efficient services, such as telecom, internet, finance, accounting, legal services and transportation and logistics, hinders overall economic growth and business operations (2).
Hospitality and Recreation
Development need
Djibouti has exceptional natural assets for the tourist development with a unique maritime fauna, geological landscape and rich cultural and archaeological heritage. The subsector is burdened by the lack of tourist infrastructure and qualified personnel, difficulties in accessing credit and insufficient support for promoting tourism (8).
Policy priority
Under Djibouti's Vision 2035, the Government intends to attract 500,000 foreign visitors annually by 2030 and generate 30,000 tourism-related jobs. Accordingly, the authorities aim to boost leisure tourism so that it accounts for 88% of visitors by 2030 whilst acting as a beach destination for landlocked Ethiopia (8).
Gender inequalities and marginalization issues
The majority of infrastructure in Djibouti are in the capital Djibouti City. Investments in eco- and community-based tourism offer opportunities to the rural regions of the country to improve infrastructure and attract job opportunities in the tourism subsector.
Investment opportunities introduction
Djibouti is endowed with rich touristic sights, with its sandy beaches, coral reefs and cultural and historical attractions (9). In April 2018, Djibouti City became the first African metropolis to be named the World Capital of Culture and Tourism by the European Council on Tourism and Trade (10).
Key bottlenecks introduction
The lack of international connections to Djibouti, difficulties in accessing credit, insufficient training of actors in the subsector, lack of sufficient road infrastructure linking sights to the capital are challenges for touristic activities in Djibouti.
Leisure Facilities
Pipeline Opportunity
Sustainable Tourism Projects
Invest in eco- and community-based tourism, including construction and operation of hotels and other infrastructure and services that are environmentally friendly and that rely on local value chains
Business Case
Market Size and Environment
USD 50 million - USD 100 million
10% - 15%
Goal to attract 500,000 foreign visitors annually by 2030.
In 2018, tourism income for Djibouti was USD 57 million. The number increased from USD 7.6 million with an average annual growth rate of 14.14% (16).
In 2013, Djibouti received 63,000 international tourist, ip from 20,100 in 2000 (15). The Government seeks to attract 500,000 foreign visitors annually by 2030 (8).
Indicative Return
15% - 20%
Benchmark projects, like the Little Etosha Lodge and the Tjiri Lodge in Namibia, achieved IRRs of 24.2% and 21.35% (13). Given Djibouti's market dynamics, including the limited infrastructure, returns may be lower.
Investment Timeframe
Medium Term (5–10 years)
According to sectoral articles on global sustainable tourism projects, it takes an estimated 5-7 years for investors to generate a positive return on investment from investing in hotels (17, 18).
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
Djibouti has a high unemployment rate where 38.8% of the working age population do not have jobs. Investments in eco- and community-based tourism provide the potential to offer job opportunities to communities around the tourism projects (19).
The number of tourists visiting Djibouti remains low. High accommodation costs and accessibility are the most pressing issues. Additionally, most tourism infrastructure is built in Djibouti City, yet the sites that have the greatest touristic potential are concentrated in the interior regions (20).
Although Djibouti hosts a high concentration of UNESCO World Heritage sites, vast majority of visitors do not travel for leisure purposes, with 98% of travelers visiting for business related purposes, which has a relatively lower value addition than leisure activities (20).
Gender & Marginalisation
In Djibouti, only 19% of women are employed, compared to 81% of men (19). Employment levels are generally lower in rural areas of the country since most of the economic activity is concentrated in Djibouti City.
Expected Development Outcome
Sustainable tourism projects enhance rural development and increased economic growth from tourism related activities, especially in rural regions.
Sustainable projects increase national and international tourists, without adding pressure on existing destinations and fragile environments.
Sustainable tourism projects enhance protection of the environment and promotion of local cultures through awareness raising and improve knowledge about the protection of the planet and traditions.
Gender & Marginalisation
Eco- and community-based tourism projects offer job opportunities for rural communities where sites are expected to be located. Additional income generating opportunities are also expected to benefit women.
Primary SDGs addressed
8.5.2 Unemployment rate, by sex, age and persons with disabilities
8.9.1 Tourism direct GDP as a proportion of total GDP and in growth rate
38.8% of Djibouti's working age population are unemployed (19). In 2015, the tourism sector supported 4,500 jobs, with less than 2,000 of these in the formal sector (20).
Contribution of trade and tourism sectors to GDP is16.8% (2012) (8).
By 2030, the Government seeks to generate 30,000 tourism related jobs in Djibouti annually (20).
Target to increase share of trade and tourism to 20% of GDP by 2035 (8).
12.b.1 Implementation of standard accounting tools to monitor the economic and environmental aspects of tourism sustainability
N/A
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Indirectly impacted stakeholders
People
Planet
Corporates
Public sector
Outcome Risks
If not managed sustainably, eco- and community-based tourism projects may reach scales that negatively impact on the environment, wildlife and the integrity of the communities.
Impact Risks
Limited infrastructure and gaps in training of service providers may limit the impact of the investment if tourists face challenges in accessing the desired projects.
Complex relationship between tourism operators and communities for the development of the productive value chain may result in challenges with benefit-sharing, which can hinder the ultimate impact.
Impact Classification
What
Sustainable tourism projects improve job opportunities for rural communities in regions with high tourism potential, and reduce the environmental damage caused by conventional tourism.
Risk
While the model of sustainable tourism is proven, sustainability of cultural and natural sights, given the potential pressure to increase the number of tourists, requires consideration.
Impact Thesis
Improve job opportunities for rural communities in regions with high tourism potential, and reduce the environmental damage caused by conventional tourism.
Enabling Environment
Policy Environment
Vision Djibouti 2035, 2014: Highlights international tourism as a priority, where the Government seeks to attract 500,000 foreign visitors annually by 2030 and increase the contribution of the tourism and trade sectors to 20% of GDP by 2035, from 16.8% in 2012 (20, 8).
Obock Regional Development Plan, 2017: Focuses on tourism activities; it seeks to develop tourist platforms, construct special tourist zones, and facilitate the construction of major tourism projects (23).
Strategy for Accelerated Growth and Employment Promotion (SCAPE) 2015-2019, 2014: Highlights the tourism sector's potential to diversify the country's economic base, stemming from rich natural assets and the rising demand for the Red Sea region (25).
Financial Environment
Financial incentives: The Economic Development Fund of Djibouti offers loans of USD 19,700-280,000 with interest rates of 6% or lower; financial support of start-up capital with loans of USD 19,700-39,400 is available to graduates seeking to launch environmentally friendly tourism businesses (20).
Other incentives: Djibouti introduced e-visas for international travelers wishing to visit the country for tourism or commercial purposes; they can be accessed 72 hours after the application has been submitted online.
Regulatory Environment
"Djibouti Investment Code, 2011: Stipulates that no partial or total, temporary or permanent expropriation will take place without equitable compensation for the damages suffered, which can guide eco- and community-based tourism projects (24)."
Law no: 45, 2019: Concerns the strategic direction for promoting tourism, aims to adopt a national strategic framework, and defines the conditions for enabling cultural and environmental tourism as measurable instruments (26).
Law No. 55, 2014: Concerns the organization of the Ministry in charge of trade, SMEs, crafts, tourism and formalization, which is delegated under the Ministry of Economy and Finance (27).
Marketplace Participants
Private Sector
Lac Abbe Hotel and Thermal Spa, Terres d'Amanar (Morocco), Bale Mountain Lodge (Ethiopia).
Government
National Tourism Office of Djibouti (ONTD), Ministry of Tourism, National Investment Promotion Agency (ANPI).
Multilaterals
World Bank (WB), International Monetary Fund (IMF), African Development Bank (AfDB), Multilateral Investment Guarantee Agency (MIGA).
Non-Profit
Djibouti Chamber of Commerce.
Target Locations
Djibouti: Obock
Djibouti: Tadjourah
Djibouti: Dikhil
References
- (1) International Trade Centre (ITC). Services Snapshot Djibouti. 2012. https://www.intracen.org/uploadedFiles/intracenorg/Content/Redesign/Sector/Global_Services_Network_blog/Djibouti.pdf.
- (2) International Trade Centre (ITC). Trade in Services. 2021. https://www.intracen.org/itc/sectors/services.
- (3) AfDB, OECD, UNDP and UNECA. African Economic Outlook - Djibouti. 2012. https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Djibouti%20Full%20PDF%20Country%20Note.pdf.
- (4) International Monetary Fund (IMF). Staff Report and Statement by the Executive Director for Djibouti. 2019. https://www.imf.org%2F~%2Fmedia%2FFiles%2FPublications%2FCR%2F2019%2F1DJIEA2019002.ashx&usg=AOvVaw1RvQ6tvZvxKs6LwvWu6SyA.
- (5) African Development Bank (AfDB). Djibouti Economic Outlook. 2021. https://www.afdb.org/en/countries-east-africa-djibouti/djibouti-economic-outlook.
- (6) International Centre for Trade and Sustainable Development. The Gender Dimensions of Services. 2016. https://www.tralac.org/images/docs/10585/the-gender-dimensions-of-services-ictsd-september-2016.pdf.
- (7) Djibouti Ports & Free Zones Authority. Djibouti International Free Trade Zone. 2019. https://dpfza.gov.dj/facilities/Free-trade-area/djibouti-international-free-trade-zone.
- (8) Republic of Djibouti. Vision Djibouti 2035. 2014. http://ccd.dj/w2017/wp-content/uploads/2016/01/Vision-Nationale.pdf.
- (9) Anadolu Agency. Djibouti: Investments needed to draw more tourist. 2018. https://www.aa.com.tr/en/africa/djibouti-investments-needed-to-draw-more-tourists/1331348.
- (10) Oxford Business Group. Djibouti to capitalise on recent tourism industry accolades, with plans to improve accessibility. 2018. https://oxfordbusinessgroup.com/overview/emerging-destination-authorities-move-capitalise-nation%E2%80%99s-recent-industry-accolades-plans-under-way.
- (11) Bale Mountain Lodge. Ecotourism. 2021. http://www.balemountainlodge.com/index.html.
- (12) Terres d'Amanar. Ecotourism. 2021. http://www.terresdamanar.com/photos-videos.php.
- (13) Feasibility Study on Tjiri Lodge conducted by promoter. N.d. Not publicly available.
- (14) Hôtel et Spa Thermal du Lac Abbé. Project Brochure. N.d. Not publicly available.
- (15) World Bank. International Tourism, Number of Arrivals - Djibouti. 2021. https://data.worldbank.org/indicator/ST.INT.ARVL?end=2013&locations=DJ&start=1995&view=chart.
- (16) Knoema. Djibouti - International Tourism Receipts. 2018. https://knoema.com/atlas/Djibouti/Tourism-receipts.
- (17) World Charter for Sustainable Tourism. The Return on Investment for Sustainable Tourism. 2015. http://www.institutoturismoresponsable.com/events/sustainabletourismcharter2015/index.html%3Fp=1385.html.
- (18) BizCommunity. How building eco-friendly hotels can help develop ROI. 2018. https://www.bizcommunity.com/Article/196/787/183089.html.
- (19) PNUD Djibouti. 2018. Plan Cadre des Nations Unies pour l'Aide de Developpement. 2018-2022. https://www.undp.org/sites/g/files/zskgke326/files/undp/library/corporate/Executive%20Board/2018/First-regular-session/DPDCPDJI3_UNDAF%20Final.pdf.
- (20) Oxford Business Group. 2018. Djibouti to capitalise on recent tourism industry accolades, with plans to improve accessibility. https://oxfordbusinessgroup.com/overview/emerging-destination-authorities-move-capitalise-nation%E2%80%99s-recent-industry-accolades-plans-under-way
- (21) Republic of Djibouti. Plan de development rural de Tadjourah. 2017. https://www.academia.edu/37693836/PLAN_DE_DEVELPPEMENT_RURAL_TADJOURAH_final_08_03_2017_pdf?auto=download.
- (22) Republic of Djibouti. Plan de Development Rural de Dikhil. 2017. https://www.academia.edu/37693834/PLAN_DE_DEVELPPEMENT_RURAL_DIKHIL_final_08-03-2017.pdf.
- (23) Republic of Djibouti. Plan de Development Rural de Obock. 2017. https://www.academia.edu/37693835/PLAN_DE_DEVELPPEMENT_RURAL_OBOCK_final_08_03_2017_pdf.
- (24) Regional Investment Conference Tourism. Country Profile Djibouti. 2007. http://www.bk-conseil.com/espaceinformation/documentation/tourism/Djibouti_Country_Profile.pdf.
- (25) Republic of Djibouti. 2015. Strategy of Accelerated Growth and Promotion of Employment. https://planipolis.iiep.unesco.org/sites/default/files/ressources/djibouti_scape-_anglais.pdf.
- (26) Republic of Djibouti. 2019. Loi N° 45/AN/19/8ème L d'orientation stratégique pour le développement et la promotion du tourisme en République de Djibouti. https://www.presidence.dj/texte.php?ID=45&ID2=2019-04-30&ID3=Loi&ID4=8&ID5=2019-04-30&ID6=n.
- (27) Republic of Djibouti. 2014. Loi N° 55/AN/14/7ème L portant organisation du Ministère délégué auprès du ministère de l'économie et des finances chargé du commerce, des PME, de l'artisanat, du tourisme et de la formalisation. https://www.presidence.dj/texte.php?ID=55&ID2=2014-06-25&ID3=Loi&ID4=12&ID5=2014-06-30&ID6=n#url.