Microfinance in the districts of Djibouti

Micro France in action
Aicha (left) in her fabric and boubou gown store with Filsan (right)


1 July 2009

It is 9 a.m. in an alley in Balbala, an immense area on the outskirts of Djibouti City. People hurry to and fro in front of the shop run by Nima Moussa Warfa, as they embark on a shopping expedition, engaged in a quest for rice, pasta, flour, and other basic foodstuffs.

Aicha Doualeh greets people searching for fine fabrics and boubou gowns of all colours that have been imported from Dubai and India. Despite the heat, there are many people visiting the flea-market in the middle of the morning.

Lacking access to traditional financing arrangements, the businesses run by Nima and Aicha have flourished even though they are still quite small. This is why, in order to ensure the success of their venture and sometimes simply in order to make ends meet, these two women rely on the microcredits which they obtain from the credit union.

Thanks to the support of UNDP, the credit union opened in January 2009 and its personnel received training. This assistance was delivered through UNDP's programme of support for the Djibouti Social Development Agency, the national entity in charge of implementing the national poverty reduction strategy.

Formed through the consolidation of 15 microfinance institutions, the credit union had about 1,600 customers at the time of its inception. Six months later, in June 2009, the customer base had risen to 3,041, of whom 90 percent were women, with a repayment rate of 98 percent.

One of these customers, Nima, points to a small house in sheet metal across the way from her shop.  “I used to live over there but as I borrowed money and as my business grew, I was able to build this house,” she explains, showing a stone dwelling nearby. She started out with a loan of 30,000 francs (US$170) and, having proven her ability to save and her creditworthiness, she will soon borrow 500,000 francs (US$2,825).

Nima has a number of other projects under way. She is in the process of getting another house built that she will rent out in the PK12 district on the outskirts of the city. Not without a degree of pride, she shows a sewing machine that she bought for herself and with which she makes garments in response to orders placed with her by people living in the district. She is also in a position to meet the needs of her loved ones; her young son is confined to home. “Caring for him is something I also do. He is ill because he was in a fire,” she adds.

Like Nima, another customer named Aicha is borrowing about 500,000 francs. “This is helping me with the business end of things and will enable me to increase my inventory of boubou gowns,” she says.

This year, UNDP renewed the programme with the aim of pursuing institutional, technical, and managerial capacity building efforts among microfinance institutions, including the credit union. This initiative directly benefits the poorest and most vulnerable members of society. Microfinance gives these people access to the resources they need to engage in their business activities and to raise their standard of living.