Djibouti Credit Infrastructure Modernization

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In response to a formal request from the Central Bank of Djibouti (BCD) in May 2024, the International Finance Corporation (IFC) is providing technical assistance to modernize Djibouti's immovable and movable collateral registry systems and enhance its credit reporting infrastructure. This one-year project will complement the ongoing PAREFIT initiative led by the French Development Agency (AFD), which focuses on developing the SWIFT system, improving the credit risk information system, and updating key regulatory frameworks. However, the PAREFIT project does not address the collateral registry systems, which are critical for strengthening Djibouti’s financial sector and meeting international standards. IFC’s intervention will support the BCD in upgrading these systems to enable better management of credit and collateral, while also promoting broader financial inclusion and stability. The project will focus on assessing and modernizing the legal and regulatory framework for collateral registries and credit reporting in Djibouti. It will begin with a diagnostic exercise to identify gaps and opportunities for improvement in the current infrastructure. Key activities will include upgrading the immovable and movable collateral registries, expanding the coverage of the credit reporting system to include all lenders and financial institutions, and providing capacity-building support to the Central Bank of Djibouti. This will involve in-country training sessions and international study tours to share best practices and technical knowledge. By strengthening these systems, the project will enhance Djibouti’s financial transparency, reduce credit risks, improve lender performance, and contribute to a more resilient credit market. The modernization of the collateral and credit reporting infrastructure will enable more effective micro- and macroprudential supervision by the Central Bank of Djibouti. The expected outcomes include reduced default rates, improved access to credit, and greater stability in Djibouti's financial sector, ultimately fostering long-term economic growth.