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The African Country More Urban Than Germany, but Abysmally Poor

The African Country More Urban Than Germany, but Abysmally Poor

By Charu Sudan Kasturi


The world’s looking at Djibouti — and overlooking its fundamental contradiction. 

By Charu Sudan Kasturi

When Germany industrialized rapidly from the end of the 19th century through the first few decades of the 20th century, it also urbanized quickly. Today, it is Europe’s economic engine and the world’s fourth-largest economy. But a tiny, poor African country is still pipping Germany in the ranks of urbanized societies: Djibouti.

The country with the area of New Jersey sits on the Horn of Africa at the mouth of one of the world’s most important waterways — the Red Sea — and 77 percent of its 940,000 citizens live in cities. That’s 1 percent higher than Germany, according to the World Bank.

What makes Djibouti unique, though, is how it combines urbanization with such poverty that its per capita gross national income is one-fortieth of Germany’s.

No other nation as poor as Djibouti is as urbanized.

Indeed, no other nation in its lower-middle-income status — 54 countries with an annual per capita GNI between $1,025 and $4,035 — is as urbanized. Djibouti, with its latest reported per capita income of $1,030, barely even makes it to the lower-middle-income band; even war-torn Yemen is more affluent. And while Djibouti’s GNI ranks 165 in the world, every country more urbanized than it ranks in the top 100.

That seemingly baffling contradiction has an explanation, though, and it lies in a combination of geography, climate, politics — and geopolitics. The country is highly urbanized “out of necessity,” says Ahmed Soliman, a researcher at London’s Chatham House who specializes in the Horn of Africa. Small, rocky and with little rainfall, the country has less than 386 square miles of arable land. “The country has little rural productivity,” says Soliman. That Djibouti, like many other countries, is rurally underdeveloped only exaggerates the population flow to the nation’s few urban hubs.

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People shop at the Balasrambu market in Djibouti. 

Source SIMON MAINA/Getty

Other poor countries aren’t as urbanized because “a dependence on agriculture keeps much of the population dispersed across the arable landscape,” says Gordon McGranahan, a research fellow at the Institute of Development Studies in Brighton, U.K, whose work focuses on the correlation between urbanization and development.


Urban Djibouti, on the other hand, is in the global spotlight like never before. Located on a crucial artery of global trade, the country has emerged as a hub for naval and military bases of countries looking to secure their interests while battling piracy and terrorism. The U.S., France and Japan each have long-term leases for bases, and China opened its first overseas military facility there last year. Beijing has financed an Addis Ababa–to–Djibouti railway line and the new port of Doraleh. “Urbanization is increasing because port activities, transshipping and construction are the mainstays of the economy,” says Soliman, while cautioning that Djibouti’s “rent-seeking” economic model will last only as long as its neighbors don’t catch up with their own ports and services.

Djibouti’s strategic and economic ambitions are still to be matched by internal political reforms.

Ahmed Soliman, researcher, Chatham House  

The reason for Djibouti’s poverty lies in its politics, say experts. Ismail Omar Guelleh, the country’s 71-year-old president, has been in power since 1999, winning a fourth term in 2016. He controls state revenues and institutions, using patronage to ensure the loyalty of elites and the security forces, says Soliman. Half the working population is unemployed, and a quarter of the population lives in extreme poverty. “Djibouti’s strategic and economic ambitions are still to be matched by internal political reforms,” says Soliman. And because the international community cares most about stability in the strategically vital nation when it comes to using its ports and services, don’t count on external pressure on Guelleh to reform.

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A street in the center of Djibouti (above) and dwellings of nomads in Djibouti today.

Source Shutterstock

For sure, the relationship between urbanization and economic development is “not generally linear,” says McGranahan. But, he adds, “if you look across countries, there will be a significant correlation between the level of urbanization and income per capita.”

The data bear that out.

After all, many other countries are far more urbanized than Djibouti. Among fellow “small states” — described by the World Bank as countries with populations of less than 1.5 million — eight nations are more urbanized, including Luxembourg, San Marino, Palau, Nauru, Malta, Iceland, Bahrain and Gabon. But even Gabon, in West Africa, the poorest of these more urbanized small nations, is an upper-middle-income country with a per capita GNI of $7,210 — seven times that of Djibouti’s. (The World Bank, using its Atlas method, classifies countries with per capita incomes between $4,036 and $12,475 as upper-middle-income nations, while those with a per capita GNI above $12,476 are called high-income states.)

The 30 countries poorer than Djibouti also are far less urbanized. The most urbanized among them is Haiti, with 60 percent of its population in cities and towns. 

It’s where the warm waters of the Arabian Sea meet the Red Sea, a place where the world’s powers want a foothold, that the correlation between urbanization and economic development emphatically breaks down. Given the factors — and the geopolitical stakes — it’s hard to see that changing soon.

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