Doing Business 2020 Djibouti

Economy Profile Djibouti

Page 1 Doing Business 2020 Djibouti

Economy Profile of Djibouti Doing Business 2020 Indicators (in order of appearance in the document)

Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company

Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system

Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs

Registering property Procedures, time and cost to transfer a property and the quality of the land administration system

Getting credit Movable collateral laws and credit information systems

Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance

Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling processes

Trading across borders Time and cost to export the product of comparative advantage and import auto parts

Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes

Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency

Employing workers Flexibility in employment regulation and redundancy cost

Page 2 Doing Business 2020 Djibouti

About Doing Business

The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level.

The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle.

Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators.

By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy.

In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation. These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked.

The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world.

To learn more about Doing Business please visit doingbusiness.org

Page 3 Doing Business 2020 Djibouti

Ease of Doing Business in Region Middle East & North Africa DB RANK DB SCORE Djibouti Income Category Lower middle income

Population 958,920 112 60.5

City Covered Djibouti Ville

Rankings on Doing Business topics - Djibouti

44

87 103 117 123 121 132 133 147 144

Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits

Topic Scores

84.3 69.4 64.6 58.3 40.0 52.0 62.7 59.4 48.4 65.9

Starting a Business (rank) 123 Getting Credit (rank) 132 Trading across Borders (rank) 147 Score of starting a business (0-100) 84.3 Score of getting credit (0-100) 40.0 Score of trading across borders (0-100) 59.4 Procedures (number) 6 Strength of legal rights index (0-12) 8 Time to export Time (days) 14 Depth of credit information index (0-8) 0 Documentary compliance (hours) 60 Cost (number) 39.7 Credit registry coverage (% of adults) 0.4 Border compliance (hours) 72 Paid-in min. capital (% of income per capita) 0.0 Credit bureau coverage (% of adults) 0.0 Cost to export Documentary compliance (USD) 95 Dealing with Construction Permits (rank) 87 Protecting Minority Investors (rank) 103 Border compliance (USD) 605 Score of dealing with construction permits (0-100) 69.4 Score of protecting minority investors (0-100) 52.0 Time to export Procedures (number) 16 Extent of disclosure index (0-10) 8.0 Documentary compliance (hours) 50 Time (days) 146 Extent of director liability index (0-10) 8.0 Border compliance (hours) 118 Cost (% of warehouse value) 4.8 Ease of shareholder suits index (0-10) 10.0 Cost to export Building quality control index (0-15) 12.0 Extent of shareholder rights index (0-6) 0.0 Documentary compliance (USD) 100 Extent of ownership and control index (0-7) 0.0 Border compliance (USD) 1,055 Getting Electricity (rank) 121 Extent of corporate transparency index (0-7) 0.0 Score of getting electricity (0-100) 64.6 Enforcing Contracts (rank) 144 Procedures (number) 4 Paying Taxes (rank) 133 Score of enforcing contracts (0-100) 48.4 Time (days) 52 Score of paying taxes (0-100) 62.7 Time (days) 695 Cost (% of income per capita) 831.2 Payments (number per year) 35 Cost (% of claim value) 34.0 Reliability of supply and transparency of tariff index (0-8) 0 Time (hours per year) 76 Quality of judicial processes index (0-18) 5.5 Total tax and contribution rate (% of profit) 37.9 Registering Property (rank) 117 Postfiling index (0-100) 25.2 Resolving Insolvency (rank) 44 Score of registering property (0-100) 58.3 Score of resolving insolvency (0-100) 65.9 Procedures (number) 6 Recovery rate (cents on the dollar) 44.0 Time (days) 24 Time (years) 1.5 Cost (% of property value) 5.6 Cost (% of estate) 11.0 Quality of the land administration index (0-30) 7.0 Outcome (0 as piecemeal sale and 1 as going 0 concern) Strength of insolvency framework index (0-16) 13.5

Page 4 Doing Business 2020 Djibouti

Starting a Business

This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city.

To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators.

The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

Procedures to legally start and formally operate a company To make the data comparable across economies, several assumptions about the business and the (number) procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: Registration in the economy’s largest business city • -Is a limited liability company (or its legal equivalent). If there is more than one type of limited • Postregistration (for example, social security registration, liability company in the economy, the limited liability form most common among domestic firms is company seal) chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office. • Obtaining approval from spouse to start a business or to leave -Operates in the economy’s largest business city. For 11 economies the data are also collected for the home to register the company the second largest business city. • Obtaining any gender specific document for company -Performs general industrial or commercial activities such as the production or sale to the public of registration and operation or national identification card goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily Time required to complete each procedure (calendar days) polluting production processes. • Does not include time spent gathering information -Does not qualify for investment incentives or any special benefits. -Is 100% domestically owned. • Each procedure starts on a separate day (2 procedures cannot -Has five business owners, none of whom is a legal entity. One business owner holds 30% of the start on the same day) company shares, two owners have 20% of shares each, and two owners have 15% of shares • Procedures fully completed online are recorded as ½ day each. • Procedure is considered completed once final document is -Is managed by one local director. received -Has between 10 and 50 employees one month after the commencement of operations, all of them domestic nationals. • No prior contact with officials -Has start-up capital of 10 times income per capita. -Has an estimated turnover of at least 100 times income per capita. Cost required to complete each procedure (% of income per -Leases the commercial plant or offices and is not a proprietor of real estate. capita) -Has an annual lease for the office space equivalent to one income per capita. • Official costs only, no bribes -Is in an office space of approximately 929 square meters (10,000 square feet). -Has a company deed that is 10 pages long. • No professional fees unless services required by law or commonly used in practice The owners: Paid-in minimum capital (% of income per capita) -Have reached the legal age of majority and are capable of making decisions as an adult. If there • Funds deposited in a bank or with third party before registration is no legal age of majority, they are assumed to be 30 years old. or up to 3 months after incorporation -Are in good health and have no criminal record. -Are married, the marriage is monogamous and registered with the authorities. -Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population.

Page 5 Doing Business 2020 Djibouti

Starting a Business - Djibouti

Standardized Company

Legal form Limited Liability Company

Paid-in minimum capital requirement No minimum

City Covered Djibouti Ville

Indicator Djibouti Middle East & OECD high Best Regulatory North Africa income Performance

Procedure – Men (number) 6 6.5 4.9 1 (2 Economies)

Time – Men (days) 14 19.7 9.2 0.5 (New Zealand)

Cost – Men (% of income per capita) 39.7 16.7 3.0 0.0 (2 Economies)

Procedure – Women (number) 6 7.1 4.9 1 (2 Economies)

Time – Women (days) 14 20.3 9.2 0.5 (New Zealand)

Cost – Women (% of income per capita) 39.7 16.7 3.0 0.0 (2 Economies)

Paid-in min. capital (% of income per capita) 0.0 8.9 7.6 0.0 (120 Economies)

Figure – Starting a Business in Djibouti – Score

70.6 86.4 80.2 100.0

Procedures Time Cost Paid-in min. capital

Figure – Starting a Business in Djibouti and comparator economies – Ranking and Score

DB 2020 Starting a Business Score

0 100

93.5: Oman (Rank: 32)

87.8: Egypt, Arab Rep. (Rank: 90)

84.3: Djibouti (Rank: 123)

84.0: Regional Average (Middle East & North Africa)

71.7: Ethiopia (Rank: 168)

52.9: Eritrea (Rank: 185)

Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators.

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Figure – Starting a Business in Djibouti – Procedure, Time and Cost

Time (days) Cost (% of income per capita) 14 30

12 25

10 20

8 15 6 Time (days) 10 4 Cost (% of income per capita) 5 2

0 0 1 2 3 * 4 5 6 Procedures (number)

*This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

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Details – Starting a Business in Djibouti – Procedure, Time and Cost

No. Procedures Time to Complete Associated Costs

1 Deposit the initial capital at the bank and obtain a receipt 2 days no charge Agency : Bank The bank must check the origin of the funds and the purpose of the initial capital. The parties must submit a document stating their intent to start a new business.

2 Draft the company's articles of association with a lawyer 3 days DJF 100,000 Agency : Notary or lawyer There is no legal obligation to draft the company statutes with a lawyer and since February 2014, statute templates are available online at the ODPIC website (www.odpic.info). However, most entrepreneurs still draft the company statutes with a lawyer. Lawyers and notaries charge approximately FCFA 90,000 to draft the statutes.

3 Reserve the company name with ODPIC, register with the Companies Registry, publish the 5 days See procedure comments notice of commencement of activity, register the articles of association with the Hôtel des Impôts, register for taxes Agency : Guichet Unique Djibouti implemented a new Guichet Unique in 2017. In order to register a new company at the Guichet Unique, the following documents are required: - forms CN1 and RC1 - 2 certified copies of the articles of association - 2 copies of the bank deposit receipt - 2 sworn statement copies or 2 copies of the criminal record.

The information provided by the entrepreneur is then transferred internally to the Guichet Unique’s institutional partners, namely the ODPIC, the Hôtel des Impôts, and the CNSS. Entrepreneurs can ask to register the company’s articles of association, obtain the reservation of the company name, register with the Companies Registry and obtain a professional license (patente) during their registration at the Guichet Unique.

The Guichet Unique is also in charge of the publication of the notice of commencement of activity in its website (http://www.guichet-unique.dj/annonces-legales).

The registration fees are: DJF 18,000 registration fees (immatriculation), DJF 5000 name reservation, DJF 1000 service fee of the Guichet Unique, DJF 10,000 for the registration of the articles of association and DJF 1000 per page for the stamp duty

4 Pay the fees with the payment agent 1 day (simultaneous with No cost Agency : Guichet Unique previous procedure) After his/her interaction with front desk, the user then interacts with the payment agent, to whom he/she pays the fees for all agencies (ODPIC, the Hôtel des Impôts, and the CNSS)

5 Create a company seal, letterhead and books 3 days DJF 2,000 - 3,000 (for seal Agency : Seal-making shop and letterhead) + DJF Creating a company seal, letterhead and books can be done at the Seal-maker for DJF 2000 - 5,000 - 7,000 (books) 3000 (for seal and letterhead) + DJF 5000 - 7000 (books).

6 Register employees with the Caisse Nationale de la Sécurité Sociale 1 day 0 Agency : Caisse Nationale de la Sécurité Sociale

Takes place simultaneously with previous procedure.

Page 8 Doing Business 2020 Djibouti

Dealing with Construction Permits

This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information

What the indicators measure Case study assumptions

Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates The construction company (BuildCo): Submitting all required notifications and receiving all necessary • - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest inspections business city. For 11 economies the data are also collected for the second largest business city. • Obtaining utility connections for water and sewerage - Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects • Registering and selling the warehouse after its completion or engineers. BuildCo is not assumed to have any other employees who are technical or licensed Time required to complete each procedure (calendar days) experts, such as geological or topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse upon its • Does not include time spent gathering information completion. • Each procedure starts on a separate day—though procedures that can be fully completed online are an exception to this rule The warehouse: • Procedure is considered completed once final document is - Will be used for general storage activities, such as storage of books or stationery. received - Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be • No prior contact with officials located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of income per - Will have complete architectural and technical plans prepared by a licensed architect. If capita) preparation of the plans requires such steps as obtaining further documentation or getting prior • Official costs only, no bribes approvals from external agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory Building quality control index (0-15) requirements). • Quality of building regulations (0-2) The water and sewerage connections: • Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water • Quality control during construction (0-3) delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage • Quality control after construction (0-3) infrastructure, a septic tank in the smallest size available will be installed or built. - Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow • Liability and insurance regimes (0-2) of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and • Professional certifications (0-4) a peak wastewater flow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection.

Page 9 Doing Business 2020 Djibouti

Dealing with Construction Permits - Djibouti

Standardized Warehouse

Estimated value of warehouse DJF 19,230,342.20

City Covered Djibouti Ville

Indicator Djibouti Middle East & OECD high Best Regulatory North Africa income Performance

Procedures (number) 16 15.7 12.7 None in 2018/19

Time (days) 146 123.6 152.3 None in 2018/19

Cost (% of warehouse value) 4.8 4.4 1.5 None in 2018/19

Building quality control index (0-15) 12.0 12.5 11.6 15.0 (6 Economies)

Figure – Dealing with Construction Permits in Djibouti – Score

56.0 65.4 76.2 80.0

Procedures Time Cost Building quality control index

Figure – Dealing with Construction Permits in Djibouti and comparator economies – Ranking and Score

DB 2020 Dealing with Construction Permits Score

0 100

75.2: Oman (Rank: 47)

71.2: Egypt, Arab Rep. (Rank: 74)

69.4: Djibouti (Rank: 87)

61.7: Regional Average (Middle East & North Africa)

59.7: Ethiopia (Rank: 142)

0.0: Eritrea (Rank: 186)

Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators.

Page 10 Doing Business 2020 Djibouti

Figure – Dealing with Construction Permits in Djibouti – Procedure, Time and Cost

Time (days) Cost (% of warehouse value) 3 140

120 2.5

100 2

80 1.5

60 Time (days) 1 40 Cost (% of warehouse value) 0.5 20

0 0 1 2 3 4 5 6 7 8 9 10 11 12 * 13 * 14 15 * 16 Procedures (number)

*This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Page 11 Doing Business 2020 Djibouti

Figure – Dealing with Construction Permits in Djibouti and comparator economies – Measure of Quality

16 14.0 14 12.0 12.5 12 11.0 11.0 10 8 6

Index score 4 2 0 No Practice Djibouti Egypt, Eritrea Ethiopia Oman Middle Arab East Rep. & North Africa

Details – Dealing with Construction Permits in Djibouti – Procedure, Time and Cost

No. Procedures Time to Complete Associated Costs

1 Obtain lot plan and a certificate of registration 2 days no charge Agency : Cadastre - Direction des Domaines et Conservation foncière BuildCo must obtain a certified zoning map and a certificate of registration in order to apply for a permis de remblai.

2 Apply and obtain a "permis de remblai" (embankment) at the Direction de l'Habitat et 7 days no charge l'Urbanisme Agency : Department of Housing and Urban Development (Direction de l'Habitat et l'Urbanisme) To apply and obtain an embankment permit, BuildCo must submit: • A letter • A registration certificate issued by the Direction des Domaines et de la Conservation Fonciere • A location plan/urbanisme plan issued by the cadastre service at the Direction des Domaines et de la Conservation Fonciere

Upon this request, the Direction de l'Habitat et l'Urbanisme will issue a "permis de remblai" and its volume.

3 Apply for the certificate of compliance for embankment 1 day no charge Agency : Direction de l'Habitat et l'Urbanisme Once the works for the embankment are authorized, BuildCo must request the certificate of compliance from the Direction de l'Habitat et l'Urbanisme (DHU). In order to do so, BuildCo must file a copy of the permis de remblai and an application letter.

DHU will inspect the site to verify that the specifications for the embankment were respected. If satisfied, the request for a certificate of compliance is transmitted to the Laboratoire Central du Bâtiment et de l'Equipement (LCBE). LCBE will verify the compactness of the soil.

4 Receive inspection to verify the compactness of the embankment from the LBCE 1 day DJF 90,000 Agency : LBCE- Laboratoire Central du Bâtiment et de l'Equipement The LBCE -- Laboratoire Central du Bâtiment et de l'Equipement -- will inspect the embankment. If LBCE is satisfied that the compactness is adequate, they will transmit the signed request to DHU for the issuance of the certificate of compliance for the embankment.

5 Obtain certificate of compliance for the embankment (certificat de conformite de remblai) 14 days no charge Agency : Direction de l'Habitat et l'Urbanisme Once the signed document from LBCE is received, the Direction de l'Habitat et l'Urbanisme will issue the certificate of compliance (certificat de conformité de remblai) for BuildCo.

6 Request and obtain final ground plans (plan de masse cadastral) 7 days DJF 83,610 Agency : Sous Direction de la Conservation Foncière (de la Direction des Domaines et de la Conservation Foncière) After obtaining the permit and certificate of compliance for the embankment, BuildCo must request and obtain the final ground plans at the Sous Direction de la Conservation Foncière (de la Direction des Domaines et de la Conservation Foncière). A tax on embankment must be paid.

This map defines the boundaries of the land and must be attached to the application for the building permit, or else the application will not be accepted by the DHU. Sub-Directorate of Lands and Land Conservation will identify a date to issue the Plan de Masse Cadastral and the final pegs installation on the lot.

7 Obtain building permit 15 days DJF 480,759 Agency : Direction de l'Habitat et l'Urbanisme BuildCo must submit 6 copies of the file for the building permit request to the DHU (Direction de l'Habitat et l'Urbanisme).

The 2.5% tax that the company must pay is divided as follows: • 1.5% for analysis of the request for the building permit • 1.0% for the surveillance of the concrete structure (study and works)

Page 12 Doing Business 2020 Djibouti

8 Request and receive foundation inspection from the Direction de l'Habitat et l'Urbanisme, 14 days no charge Sous-direction Contrôle et Réglementation Agency : Direction de l'Habitat et l'Urbanisme, Sous-direction Contrôle et Réglementation The works begin when the concrete plans are accepted by the Sous-direction Contrôle et Réglementation. An inspection takes place when slabs are laid. This procedure is not mandatory but is standard practice.

9 Receive first concrete test from the LBCE- Laboratoire Central du Bâtiment et de 7 days DJF 172,800 l'Equipement (at foundation level) Agency : LBCE- Laboratoire Central du Bâtiment et de l'Equipement Construction testing occurs at each phase of the building process. Concrete crushing test is done at 7 days, then at 14 days and final one at 21 days.

10 Receive second resistance test from the LBCE- Laboratoire Central du Bâtiment et de 7 days no charge l'Equipement (for the ground level) Agency : LBCE- Laboratoire Central du Bâtiment et de l'Equipement This is the second concrete crushing test done 7 days after the first one.

11 Receive final resistance test from the LBCE- Laboratoire Central du Bâtiment et de 7 days no charge l'Equipement (for the first level) Agency : LBCE- Laboratoire Central du Bâtiment et de l'Equipement This is the final concrete crushing test done 7 days after the second test was done.

12 Request and receive an electrical certificate of compliance 4 days no charge Agency : Direction de l'Habitat et l'Urbanisme To obtain the certificate of conformity after construction is complete, it is mandatory to obtain an electrical certificate of compliance issued by the Department of Housing and Urban Development. The electrical certificate of compliance can be requested once the internal wiring is done in compliance with the standards.

Officers from the Sous-Direction de l'Urbanisme will conduct a site visit and the electrician will explain the internal wiring to the officers. The inspection takes place one day after the request for the certificate of compliance. After 1-2 days, the Sous-Direction de l'Urbanisme issues the electrical certificate of compliance.

Request and receive an earthquake certificate issued by the Direction de l'Habitat et 2 days no charge 13 l'Urbanisme Agency : Direction de l'Habitat et l'Urbanisme To obtain the certificate of conformity after construction is complete, it is mandatory to obtain an earthquake certificate issued by the Direction de l'Habitat et l'Urbanisme. BuildCo can request this certificate by visiting the agency in person. The earthquake certificate is obtained as soon as the different slabs have been casted from the Sous-Direction Contrôle de la Direction de l'Habitat et de l'Urbanisme on the basis of "good casting." The certificate is issued the next day after verification of compliance with seismic standards. BuildCo does not have to wait for the completion of the construction to request this certificate.

Request and receive an alignment certificate 2 days no charge 14 Agency : Direction des Domaines et de la Conservation Foncière To obtain the certificate of conformity after construction is complete, it is mandatory to obtain an alignment certificate issued by the Direction des Domaines et de la Conservation Foncière.

15 Request and receive water and sewage connection 60 days USD 500 Agency : Office Nationale des Eaux de Djibouti (ONED) BuildCo is responsible for laying the pipes and connecting them to the main line. The water company provides the meter at no charge.

Submit all certificates of compliance and obtain final certificate of compliance (certificat de 14 days no charge 16 conformité) Agency : Ministry of Housing (Ministère de l’Habitat) Compliance of new construction is confirmed by the issuance of a Certificate of General Conformity issued by the Department of Housing and Urban Development at the end of the work. This certificate attests the conformity of the building in accordance to the approved building permit. Several compliance certificates must be submitted: earthquake, sanitation, alignment, foundation and electrical

Takes place simultaneously with previous procedure.

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Details – Dealing with Construction Permits in Djibouti – Measure of Quality

Answer Score

Building quality control index (0-15) 12.0

Quality of building regulations index (0-2) 2.0

How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0 of charge; In official gazette.

Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 1.0 accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals.

Quality control before construction index (0-1) 1.0

Which third-party entities are required by law to verify that the building plans are in compliance with existing Licensed engineer. 1.0 building regulations? (0-1)

Quality control during construction index (0-3) 3.0

What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections at various 2.0 phases; Risk-based inspections.

Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice; Mandatory inspections are done most of the time during construction.

Quality control after construction index (0-3) 3.0

Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, in-house 2.0 plans and regulations? (0-2) engineer submits report for final inspection.

Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice.

Liability and insurance regimes index (0-2) 1.0

Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use Architect or engineer; 1.0 (Latent Defect Liability or Decennial Liability)? (0-1) Professional in charge of the supervision; Construction company.

Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 0.0 problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain insurance .

Professional certifications index (0-4) 2.0

What are the qualification requirements for the professional responsible for verifying that the architectural plans Minimum number of 1.0 or drawings are in compliance with existing building regulations? (0-2) years of experience; University degree in architecture or engineering.

What are the qualification requirements for the professional who supervises the construction on the ground? (0- Minimum number of 1.0 2) years of experience; University degree in engineering, construction or construction management.

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Getting Electricity

This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

Procedures to obtain an electricity connection (number) To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining all necessary clearances and permits The warehouse: Completing all required notifications and receiving all necessary • - Is owned by a local entrepreneur and is used for storage of goods. inspections - Is located in the economy’s largest business city. For 11 economies the data are also collected for • Obtaining external installation works and possibly purchasing the second largest business city. material for these works - Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway. • Concluding any necessary supply contract and obtaining final supply - Is a new construction and is being connected to electricity for the first time. - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square Time required to complete each procedure (calendar days) feet). The plot of land on which it is built is 929 square meters (10,000 square feet).

• Is at least 1 calendar day The electricity connection:

• Each procedure starts on a separate day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- • Does not include time spent gathering information kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW). - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution Reflects the time spent in practice, with little follow-up and no • network and is either overhead or underground, whichever is more common in the area where the prior contact with officials warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other Cost required to complete each procedure (% of income per owners’ private property because the warehouse has access to a road. capita) - Does not require work to install the internal wiring of the warehouse. This has already been • Official costs only, no bribes completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The monthly consumption: The reliability of supply and transparency of tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours • Duration and frequency of power outages (0–3) a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours • Tools to monitor power outages (0–1) (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. • Regulatory monitoring of utilities’ performance (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation purposes only 30 days are used. • Financial deterrents limiting outages (0–1) • Transparency and accessibility of tariffs (0–1)

Price of electricity (cents per kilowatt-hour)*

• Price based on monthly bill for commercial warehouse in case study

*Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity.

Page 15 Doing Business 2020 Djibouti

Getting Electricity - Djibouti

Standardized Connection

Name of utility Electricité de Djibouti (EDD)

Price of electricity (US cents per kWh) 26.2

City Covered Djibouti Ville

Indicator Djibouti Middle East & OECD high Best Regulatory North Africa income Performance

Procedures (number) 4 4.4 4.4 3 (28 Economies)

Time (days) 52 63.5 74.8 18 (3 Economies)

Cost (% of income per capita) 831.2 419.6 61.0 0.0 (3 Economies)

Reliability of supply and transparency of tariff index (0-8) 0 4.4 7.4 8 (26 Economies)

Figure – Getting Electricity in Djibouti – Score

83.3 85.2 89.7 0.0

Procedures Time Cost Reliability of supply and transparency of tariff index

Figure – Getting Electricity in Djibouti and comparator economies – Ranking and Score

DB 2020 Getting Electricity Score

0 100

87.1: Oman (Rank: 35)

77.9: Egypt, Arab Rep. (Rank: 77)

72.4: Regional Average (Middle East & North Africa)

64.6: Djibouti (Rank: 121)

60.1: Ethiopia (Rank: 137)

0.0: Eritrea (Rank: 187)

Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity.

Figure – Getting Electricity in Djibouti – Procedure, Time and Cost

Time (days) Cost (% of income per capita) 800 50

700

40 600

500 30 400

Time (days) 20 300

200 Cost (% of income per capita) 10 100

0 0 1 2 3 4 Procedures (number)

*This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures Page 16 Doing Business 2020 Djibouti reflected here, see the summary below.

Figure – Getting Electricity in Djibouti and comparator economies – Measure of Quality

8 7 7 6 5 5 4.4 4 3

Index score 2 1 0 0 0 No Practice Djibouti Egypt, Eritrea Ethiopia Oman Middle Arab East Rep. & North Africa

Page 17 Doing Business 2020 Djibouti

Details – Getting Electricity in Djibouti – Procedure, Time and Cost

No. Procedures Time to Complete Associated Costs

1 Submit application to Electricité de Djibouti and await inspection 10 calendar days DJF 0 Agency : Electricité de Djibouti (EDD) The application is typically submitted to Electricité de Djibouti (EDD) in person at the single window or one of their agencies. A detailed load schedule should be attached to the application. The applicant will also need to show the original building permit and property title - for which the utility will immediately make a copy.

Once the application is lodged, it is sent to the design and planning office of EDD. They will proceed to send a technician on-site to determine the specifications of the connection.

2 Receive external inspection by Electricité de Djibouti and await estimate 5 calendar days DJF 0 Agency : Electricité de Djibouti (EDD) Electricité de Djibouti (EDD) inspects the site to determine (i) the feasibility and specifications of the connection and (ii) the amount the customer will need to pay for the connection fees. Following the inspection, the quote is transferred internally - from the secretariat to the service manager to, finally, the customer service department. The client will, in turn, be notified that the estimate is ready, which he/she needs to pay directly on-site.

3 Pay estimate and obtain external works from Electricité de Djibouti 30 calendar days DJF 2,777,274 Agency : Electricité de Djibouti (EDD) It is preferable to apply Tariff 3 (Low Voltage) which is more advantageous than Tariff 11 (MT).

After paying the connection fees, EDD will proceed to carry-out the external connection works. And for an electricity connection for the warehouse considered in this case study, an overhead connection to the low voltage is most likely.

4 Sign supply contract and obtain final connection 7 calendar days DJF 419,546.52 Agency : Electricité de Djibouti (EDD) When the external works are completed, the client needs to sign a supply contract and deposit his/her "avance sur consommation" (security deposit) at one of the agencies of EDD. After this, EDD can proceed with the electricity supply turn-on.

Takes place simultaneously with previous procedure.

Page 18 Doing Business 2020 Djibouti

Details – Getting Electricity in Djibouti – Measure of Quality

Answer

Reliability of supply and transparency of tariff index (0-8) 0

Total duration and frequency of outages per customer a year (0-3) 0

System average interruption duration index (SAIDI) ..

System average interruption frequency index (SAIFI) ..

What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI N/A

Mechanisms for monitoring outages (0-1) 1

Does the distribution utility use automated tools to monitor outages? Yes

Mechanisms for restoring service (0-1) 1

Does the distribution utility use automated tools to restore service? Yes

Regulatory monitoring (0-1) 0

Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? No

Financial deterrents aimed at limiting outages (0-1) 0

Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? No

Communication of tariffs and tariff changes (0-1) 1

Are effective tariffs available online? Yes

Link to the website, if available online https://www.edd.dj/assets/ upload-docs/tarifs.pdf

Are customers notified of a change in tariff ahead of the billing cycle? Yes

Note:

If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index.

If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index.

If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index.

Page 19 Doing Business 2020 Djibouti

Registering Property

This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

Procedures to legally transfer title on immovable property To make the data comparable across economies, several assumptions about the parties to the (number) transaction, the property and the procedures are used.

• Preregistration procedures (for example, checking for liens, The parties (buyer and seller): notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). Registration procedures in the economy's largest business city. • - Are located in the periurban (that is, on the outskirts of the city but still within its official limits) • Postregistration procedures (for example, filling title with area of the economy’s largest business city. For 11 economies the data are also collected for the municipality) second largest business city. - Are 100% domestically and privately owned. Time required to complete each procedure (calendar days) - Perform general commercial activities. • Does not include time spent gathering information The property (fully owned by the seller): • Each procedure starts on a separate day - though procedures - Has a value of 50 times income per capita, which equals the sale price. that can be fully completed online are an exception to this rule - Is fully owned by the seller. • Procedure is considered completed once final document is - Has no mortgages attached and has been under the same ownership for the past 10 years. received - Is registered in the land registry or cadastre, or both, and is free of title disputes. • No prior contact with officials - Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required. Cost required to complete each procedure (% of property - Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- value) story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, • Official costs only (such as administrative fees, duties and building codes and legal requirements. The property, consisting of land and building, will be taxes). transferred in its entirety. • Value Added Tax, Capital Gains Tax and illicit payments are - Will not be subject to renovations or additional construction following the purchase. excluded - Has no trees, natural water sources, natural reserves or historical monuments of any kind. - Will not be used for special purposes, and no special permits, such as for residential use, Quality of land administration index (0-30) industrial plants, waste storage or certain types of agricultural activities, are required. • Reliability of infrastructure index (0-8) - Has no occupants, and no other party holds a legal interest in it. • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0)

Page 20 Doing Business 2020 Djibouti

Registering Property - Djibouti

Indicator Djibouti Middle East & OECD high Best Regulatory North Africa income Performance

Procedures (number) 6 5.4 4.7 1 (5 Economies)

Time (days) 24 26.6 23.6 1 (2 Economies)

Cost (% of property value) 5.6 5.6 4.2 0.0 (Saudi Arabia)

Quality of the land administration index (0-30) 7.0 14.6 23.2 None in 2018/19

Figure – Registering Property in Djibouti – Score

58.3 89.0 62.6 23.3

Procedures Time Cost Quality of the land administration index

Figure – Registering Property in Djibouti and comparator economies – Ranking and Score

DB 2020 Registering Property Score

0 100

73.0: Oman (Rank: 52)

63.4: Regional Average (Middle East & North Africa)

58.3: Djibouti (Rank: 117)

55.0: Egypt, Arab Rep. (Rank: 130)

50.9: Ethiopia (Rank: 142)

35.3: Eritrea (Rank: 178)

Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators.

Page 21 Doing Business 2020 Djibouti

Figure – Registering Property in Djibouti – Procedure, Time and Cost

Time (days) Cost (% of property value) 6

20 5

4 15

3

10 Time (days) 2 Cost (% of property value) 5 1

0 0 1 2 3 4 5 6 Procedures (number)

*This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Page 22 Doing Business 2020 Djibouti

Figure – Registering Property in Djibouti and comparator economies – Measure of Quality

18 17.0 16 14.6 14 12 10 9.0 8 7.0 6.5 5.5 6 Index score 4 2 0

Djibouti Egypt, Eritrea Ethiopia Oman Middle Arab East Rep. & North Africa

Details – Registering Property in Djibouti – Procedure, Time and Cost

No. Procedures Time to Complete Associated Costs

1 Buyer and seller go to the notary with the title to draft the sale-purchase agreement 1 day DJF 1,077,517.11; (2% of Agency : Notary property value (mutation The property folder (dossier foncier) is already in possession of the seller. The folder contains the fee) + 3% of property following documents: the property title, a cadastral plan of the property, the acquisition price of the value (transfer fee) + previous sale, the names of the owners, and the surface area of the land. The Notary must draft 40,000 F to 180,000 F the sale and purchase agreement. The costs for any property transfer is 3% of the property value (notary fees) + 1000 F per (law n°005/ AN/18/8èmeL modifying the General Fiscal Code). page (x 6, stamp duties))

2 Notary checks for mortgages or liens on the property 3 days DJF 2,500 Agency : Conservation de la propriété foncière The Notary check that the property has no liens or charges at the land Registry (Service des Domaines - Conservation de la Propriété Foncière) and asks for a complete list of documents affecting the property (fiche de renseignement sur un titre foncier).

3 Notary proceeds to tax authorities to check status of the property and capital gains 7 days no charge Agency : Tax Authority The Notary submits a copy of the sale-purchase agreement to the Tax Authority to determine the capital gain. After receiving the capital gains tax (if there any to be paid), the notary could convene the parties for the signature of the sale-purchase agreement.

Tax Authority must always be consulted to determine the capital value as a requirement before the signing of the sale agreement. In the majority of cases, the tax authorities re-estimate the selling price (70% of cases) for the payment of the additional amount of capital gain, and this step can take up to a week.

4 Parties return to the notary to sign the sale-purchase agreement 1 day (already paid in Procedure Agency : Notary 1) Once the Capital Gains Tax (CGT) has been determined by the tax authority, the notary convenes the two parties to finalize the deed of sale by signing it in front of him. Once this is accomplished, the notary will also sign the deed of sale. The cost of any transfer of ownership is 3% of the value of the property (Law No. 005 / AN / 18 / 8th amending the General Tax Code).

At this point, the buyer only remits a portion of the amount (a deposit) to the seller and if there is a gain, the seller will pay 5% of the amount of the gain.

5 Notary registers the sale agreement with the tax authority. 3 days 3% property value (already Agency : Tax Authority paid in Procedure 1) + The sale-purchase agreement is notarized (acte de vente) and then it's registered with the Tax 1000 F per page (x 6, Authority (bureau de l’Enregistrement et du Timbre). The notary pays the registration fees directly stamp duties already paid at l’Hôtel des Impôts. in Procedure 1) Documents needed for the registration at the Tax Authority: - Taxes clearance certificate (Certificat liberatoire) - Sale-purchase agreement - Proof of payment property transfer fee (3% property value)

6 Notary requests a name change on behalf of the new owner at the Conservation de la 9 days 2% property value (already propriété foncière paid in Procedure 1) Agency : Conservation de la propriété foncière The notary can now request the transfer of the title in the name of the new owner. He will deliver the authenticated deed of sale, a copy of the old title deed, a copy of the identity documents of the buyer and seller, and finally the proof of payment of the transfer tax of 2% of the value of the property. The procedure involves checking all paper records and transaction history for the property. The director of the land registry must sign the papers to make them official. The buyer will obtain the title of ownership with a new page with the details of the last transaction and the change of ownership.

Takes place simultaneously with previous procedure.

Page 23 Doing Business 2020 Djibouti

Details – Registering Property in Djibouti – Measure of Quality

Answer Score

Quality of the land administration index (0-30) 7.0

Reliability of infrastructure index (0-8) 3.0

Type of land registration system in the economy: Title Registration System

What is the institution in charge of immovable property registration? Service des Domaines et de la Conservation Fonciere

In what format are past and newly issued land records kept at the immovable property registry of the largest Computer/Scanned 1.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)?

Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, No 0.0 restrictions and the like)?

Institution in charge of the plans showing legal boundaries in the largest business city: Service des Domaines et de la Conservation Fonciere

In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Paper 0.0 city of the economy—in a paper format or in a computerized format (scanned or fully digital)?

Is there an electronic database for recording boundaries, checking plans and providing cadastral information No 0.0 (geographic information system)?

Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Single database 1.0 kept in a single database, in different but linked databases or in separate databases?

Do the immovable property registration agency and cadastral or mapping agency use the same identification Yes 1.0 number for properties?

Transparency of information index (0–6) 1.5

Who is able to obtain information on land ownership at the agency in charge of immovable property registration Only intermediaries 0.0 in the largest business city? and interested parties

Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, online 0.5 and if so, how?

Link for online access: http://www.ministereb udget.gouv.dj/index.p hp/acceuil

Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable property Yes, in person 0.0 registration in the largest business city made publicly available–and if so, how?

Link for online access:

Does the agency in charge of immovable property registration agency formally commit to deliver a legally Yes, online 0.5 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard?

Link for online access: http://www.ministereb udget.gouv.dj/index.p hp/acceuil

Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency No 0.0 in charge of immovable property registration?

Contact information:

Are there publicly available official statistics tracking the number of transactions at the immovable property No 0.0 registration agency?

Number of property transfers in the largest business city in 2018:

Who is able to consult maps of land plots in the largest business city? Only intermediaries 0.0 and interested parties

Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? Yes, in person 0.0 Page 24 Doing Business 2020 Djibouti

Link for online access:

Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and Yes, online 0.5 if so, how does it communicate the service standard?

Link for online access: http://www.ministereb udget.gouv.dj/index.p hp/acceuil

Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0 cadastral or mapping agency?

Contact information:

Geographic coverage index (0–8) 0.0

Are all privately held land plots in the largest business city formally registered at the immovable property No 0.0 registry?

Are all privately held land plots in the economy formally registered at the immovable property registry? No 0.0

Are all privately held land plots in the largest business city mapped? No 0.0

Are all privately held land plots in the economy mapped? No 0.0

Land dispute resolution index (0–8) 2.5

Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties?

Legal basis: Article 13 of the Law n°006/ AN/18/8èmeL modifying the article 60 of the law n°177/ AN/91/2èmeL.

Is the system of immovable property registration subject to a state or private guarantee? No 0.0

Type of guarantee:

Legal basis:

Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry?

Legal basis:

Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)?

If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Lawyer;

Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5

If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Lawyer;

Is there a national database to verify the accuracy of government issued identity documents? No 0.0

What is the Court of first instance in charge of a case involving a standard land dispute between two local Tribunal civil businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located in the largest business city?

How long does it take on average to obtain a decision from the first-instance court for such a case (without More than 3 years 0.0 appeal)?

Are there publicly available statistics on the number of land disputes at the economy level in the first instance No 0.0 court?

Number of land disputes in the economy in 2018:

Equal access to property rights index (-2–0) 0.0

Do unmarried men and unmarried women have equal ownership rights to property? Yes

Do married men and married women have equal ownership rights to property? Yes 0.0 Page 25 Doing Business 2020 Djibouti

Getting Credit

This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit • Rights of borrowers and lenders through collateral laws (0-10) information index measures rules and practices affecting the coverage, scope and accessibility of • Protection of secured creditors’ rights through bankruptcy laws credit information available through a credit registry or a credit bureau. The strength of legal rights (0-2) index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary Depth of credit information index (0–8) secured transactions system exists. Then two case scenarios, case A and case B, are used to • Scope and accessibility of credit information distributed by determine how a nonpossessory security interest is created, publicized and enforced according to credit bureaus and credit registries (0-8) the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank.

Number of individuals and firms listed in largest credit bureau • In some economies the legal framework for secured transactions will allow only case A or case B as a percentage of adult population (not both) to apply. Both cases examine the same set of legal provisions relating to the use of Credit registry coverage (% of adults) movable collateral.

• Number of individuals and firms listed in credit registry as a Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: percentage of adult population - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned.

The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests).

In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets.

Page 26 Doing Business 2020 Djibouti

Getting Credit - Djibouti

Indicator Djibouti Middle East & OECD high Best Regulatory North Africa income Performance

Strength of legal rights index (0-12) 8 3.1 6.1 12 (5 Economies)

Depth of credit information index (0-8) 0 5.3 6.8 8 (53 Economies)

Credit registry coverage (% of adults) 0.4 15.8 24.4 100.0 (2 Economies)

Credit bureau coverage (% of adults) 0.0 16.3 66.7 100.0 (14 Economies)

Figure – Getting Credit in Djibouti – Score

40.0

Score - Getting Credit

Figure – Getting Credit in Djibouti and comparator economies – Ranking and Score

DB 2020 Getting Credit Score

0 100

65.0: Egypt, Arab Rep. (Rank: 67)

41.8: Regional Average (Middle East & North Africa)

40.0: Djibouti (Rank: 132)

35.0: Oman (Rank: 144)

15.0: Ethiopia (Rank: 176)

0.0: Eritrea (Rank: 186)

Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index.

Page 27 Doing Business 2020 Djibouti

Figure – Legal Rights in Djibouti and comparator economies

9 8 8 7 6 5 5 4 3 3.1 3 Index Score 2 1 1 0 0

Djibouti Egypt, Eritrea Ethiopia Oman Middle Arab East Rep. & North Africa

Page 28 Doing Business 2020 Djibouti

Details – Legal Rights in Djibouti

Strength of legal rights index (0-12) 8

Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents Yes to security interests in movable assets exist in the economy?

Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description Yes of collateral?

Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of Yes collateral?

May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the Yes original assets?

Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; Yes and can the collateral agreement include a maximum amount for which the assets are encumbered?

Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an Yes electronic database indexed by debtor's name?

Does a notice-based collateral registry exist in which all functional equivalents can be registered? Yes

Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No party?

Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? Yes

Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No

Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it?

Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell No the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt?

Figure – Credit Information in Djibouti and comparator economies

9 8 8 7 6 6 5.3 5 4 3 Index Score 2 1 0 0 0 0

Djibouti Egypt, Eritrea Ethiopia Oman Middle Arab East Rep. & North Africa

Page 29 Doing Business 2020 Djibouti

Details – Credit Information in Djibouti

Depth of credit information index (0-8) Credit bureau Credit registry Score

Are data on both firms and individuals distributed? No No 0

Are both positive and negative credit data distributed? No No 0

Are data from retailers or utility companies - in addition to data from banks and No No 0 financial institutions - distributed?

Are at least 2 years of historical data distributed? (Credit bureaus and registries No No 0 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.)

Are data on loan amounts below 1% of income per capita distributed? No No 0

By law, do borrowers have the right to access their data in the credit bureau or No No 0 credit registry?

Can banks and financial institutions access borrowers’ credit information online No No 0 (for example, through an online platform, a system-to-system connection or both)?

Are bureau or registry credit scores offered as a value-added service to help No No 0 banks and financial institutions assess the creditworthiness of borrowers?

Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0.

Coverage Credit bureau Credit registry

Number of individuals 0 1,731

Number of firms 0 1,043

Total 0 2,774

Percentage of adult population 0.0 0.4

Page 30 Doing Business 2020 Djibouti

Protecting Minority Investors

This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

• Extent of disclosure index (0–10): Disclosure, review, and To make the data comparable across economies, a case study uses several assumptions about approval requirements for related-party transactions the business and the transaction. • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for The business (Buyer): prejudicial related-party transactions; Available legal - Is a publicly traded corporation listed on the economy’s most important stock exchange. remedies (damages, disgorgement of profits, disqualification - Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of from managerial position(s) for one year or more, rescission of Buyer where permitted, even if this is not specifically required by law. the transaction) - Has a supervisory board in economies with a two-tier board system on which Mr. James • Ease of shareholder suits index (0–10): Access to internal appointed 60% of the shareholder-elected members. corporate documents; Evidence obtainable during trial and - Has not adopted bylaws or articles of association that go beyond the minimum requirements. allocation of legal expenses Does not follow codes, principles, recommendations or guidelines that are not mandatory. - Is a manufacturing company with its own distribution network. • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder suits indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to • Extent of shareholder rights index (0-6): Shareholders’ rights Buyer’s five-member board. and role in major corporate decisions - Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-7): Governance - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s safeguards protecting shareholders from undue board control distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of and entrenchment Buyer’s assets and is higher than the market value. • Extent of corporate transparency index (0-7): Corporate - The proposed transaction is part of the company’s principal activity and is not outside the transparency on ownership stakes, compensation, audits and authority of the company. financial prospects - Buyer enters into the transaction. All required approvals are obtained, and all required disclosures • Extent of shareholder governance index (0–20): Sum of the made—that is, the transaction was not entered into fraudulently. extent of shareholders rights, extent of ownership and control - The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and and extent of corporate transparency indices directors that approved the transaction. • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices

Page 31 Doing Business 2020 Djibouti

Protecting Minority Investors - Djibouti

Stock exchange information

Stock exchange

Stock exchange URL

Listed firms with equity securities 0

City Covered Djibouti Ville

Indicator Djibouti Middle East & OECD high Best Regulatory North Africa income Performance

Extent of disclosure index (0-10) 8.0 6.4 6.5 10 (13 Economies)

Extent of director liability index (0-10) 8.0 4.8 5.3 10 (3 Economies)

Ease of shareholder suits index (0-10) 10.0 4.7 7.3 10 (Djibouti)

Extent of shareholder rights index (0-6) 0.0 3.2 4.7 6 (19 Economies)

Extent of ownership and control index (0-7) 0.0 3.6 4.5 7 (9 Economies)

Extent of corporate transparency index (0-7) 0.0 3.5 5.7 7 (13 Economies)

Figure – Protecting Minority in Djibouti – Score

52.0

Score - Protecting Minority Investors

Figure – Protecting Minority Investors in Djibouti and comparator economies – Ranking and Score

DB 2020 Protecting Minority Investors Score

0 100

64.0: Egypt, Arab Rep. (Rank: 57)

56.0: Oman (Rank: 88)

52.0: Djibouti (Rank: 103)

51.9: Regional Average (Middle East & North Africa)

16.0: Eritrea (Rank: 185)

10.0: Ethiopia (Rank: 189)

Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index.

Page 32 Doing Business 2020 Djibouti

Figure – Protecting Minority Investors in Djibouti and comparator economies – Measure of Quality

Djibouti 0 8 8 0 10

Egypt, Arab Rep. 6 3 8 6 6 3

Eritrea 0 3 0 5

Ethiopia 0 3 0 2

Oman 3 5 8 5 4 3

OECD high income 5.6 5.6 6.6 4.3 4.5 7.4

Middle East & North Africa 3.5 4.8 6.4 3.6 3.2 4.7

0 5 10 15 20 25 30 35 40 Sub-Indicator Score

Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10)

Page 33 Doing Business 2020 Djibouti

Details – Protecting Minority Investors in Djibouti – Measure of Quality

Answer Score

Extent of conflict of interest regulation index (0-30)

Extent of disclosure index (0-10) 8.0

Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Shareholders 3.0 excluding interested parties

Must an external body review the terms of the transaction before it takes place? (0-1) Yes 1.0

Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0 material facts

Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest

Must Buyer immediately disclose the transaction to the public? (0-2) No disclosure 0.0 obligation

Extent of director liability index (0-10) 8.0

Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0 Buyer? (0-1)

Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Liable if unfair or 2.0 prejudicial

Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Not liable 0.0

Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) Yes 1.0

Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) Yes 1.0

Is Mr. James disqualified upon a successful claim by shareholders? (0-1) Yes 1.0

Can a court void the transaction upon a successful claim by shareholders? (0-2) Voidable if unfair or 2.0 prejudicial

Ease of shareholder suits index (0-10) 10.0

Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? Yes 1.0 (0-1)

Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document

Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) Yes 1.0

Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0

Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0

Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes regardless of 2.0 outcome

Extent of shareholder governance index (0-20)

Extent of shareholder rights index (0-6) 0.0

Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0

Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? Yes 1.0

Must Buyer obtain its shareholders’ approval every time it issues new shares? No 0.0

Do shareholders automatically receive preemption rights every time Buyer issues new shares? Yes 1.0

Do shareholders elect and dismiss the external auditor? Yes 1.0

Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? Yes 1.0

Extent of ownership and control index (0-7) 0.0

Page 34 Doing Business 2020 Djibouti

Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? Yes 1.0

Must the board of directors include independent and nonexecutive board members? Yes 1.0

Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0

Must the board of directors include a separate audit committee exclusively comprising board members? Yes 1.0

Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? Yes 1.0

Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0

Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0

Extent of corporate transparency index (0-7) 0.0

Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0

Must Buyer disclose information about board members’ primary employment and directorships in other Yes 1.0 companies?

Must Buyer disclose the compensation of individual managers? Yes 1.0

Must a detailed notice of general meeting be sent 21 days before the meeting? Yes 1.0

Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? Yes 1.0

Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0

Must Buyer disclose its audit reports to the public? Yes 1.0

Page 35 Doing Business 2020 Djibouti

Paying Taxes

This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information.

What the indicators measure Case study assumptions

Tax payments for a manufacturing company in 2018 (number Using a case scenario, Doing Business records taxes and mandatory contributions a medium size per year adjusted for electronic and joint filing and payment) company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of • Total number of taxes and contributions paid or withheld, filing and payments, time taken to comply with tax laws, time taken to comply with the including consumption taxes (value added tax, sales tax or requirements of postfiling processes and time waiting. goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces Time required to comply with 3 major taxes (hours per year) ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the • Collecting information, computing tax payable second year of operation (calendar year 2018). Taxes and mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if required • Completing tax return, filing with agencies The VAT refund process: - In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times Arranging payment or withholding • income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income Total tax and contribution rate (% of commercial profits) per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred • Profit or corporate income tax in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output • Social contributions, labor taxes paid by employer VAT in June 2018. • Property and property transfer taxes • Dividend, capital gains, financial transactions taxes The corporate income tax audit process: - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, • Waste collection, vehicle, road and other taxes or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the Postfiling Index tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax • Time to comply with VAT refund (hours) liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. • Time to obtain VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks)

Page 36 Doing Business 2020 Djibouti

Paying Taxes - Djibouti

Indicator Djibouti Middle East & OECD high Best Regulatory North Africa income Performance

Payments (number per year) 35 16.5 10.3 3 (2 Economies)

Time (hours per year) 76 202.6 158.8 49 (3 Economies)

Total tax and contribution rate (% of profit) 37.9 32.5 39.9 26.1 (33 Economies)

Postfiling index (0-100) 25.2 53.3 86.7 None in 2018/19

Figure – Paying Taxes in Djibouti – Score

46.7 95.8 83.3 25.2

Payments Time Total tax and contribution rate Postfiling index

Figure – Paying Taxes in Djibouti and comparator economies – Ranking and Score

DB 2020 Paying Taxes Score

0 100

90.2: Oman (Rank: 11)

75.1: Regional Average (Middle East & North Africa)

63.3: Ethiopia (Rank: 132)

62.7: Djibouti (Rank: 133)

55.9: Eritrea (Rank: 153)

55.1: Egypt, Arab Rep. (Rank: 156)

Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold.

Page 37 Doing Business 2020 Djibouti

Figure – Paying Taxes in Djibouti and comparator economies – Measure of Quality

100 93.1 90 85.3 80 70 60 51.6 53.3 50 40 36.3 30 25.2 Index score 20 10 0

Djibouti Egypt, Eritrea Ethiopia Oman Middle Arab East Rep. & North Africa

Page 38 Doing Business 2020 Djibouti

Details – Paying Taxes in Djibouti

Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit)

Social security 12.0 36.0 15.7% gross salaries 17.71 contributions

Corporate 4.0 24.0 25% of profits or 17.68 income tax 1% of turnover (whichever is higher)

Business license 1.0 FD 144,000 fixed fees 0.96 (patente)

Unbuilt property 1.0 25% rental value 0.84 tax

Tax on insurance 1.0 20% Value of 0.42 contracts insurance

Vehicle tax 1.0 FD 35,000 fixed fees 0.22

Local tax (trash 1.0 4.5% built property 0.12 collection etc) rental value

Employee paid - 0.0 jointly 6% gross salaries 0.00 withheld Social security contributions

Fuel tax 1.0 included in price 0.00 small amount of fuel

Stamp duty 1.0 various rates per page or 0.00 small amount transaction

Value Added Tax 12.0 16.0 10% value added 0.00 not included (VAT)

Totals 35 76 37.9

Page 39 Doing Business 2020 Djibouti

Details – Paying Taxes in Djibouti – Tax by Type

Taxes by type Answer

Profit tax (% of profit) 17.7

Labor tax and contributions (% of profit) 17.7

Other taxes (% of profit) 2.6

Page 40 Doing Business 2020 Djibouti

Details – Paying Taxes in Djibouti – Measure of Quality

Answer Score

Postfiling index (0-100) 25.2

VAT refunds

Does VAT exist? Yes

Does a VAT refund process exist per the case study? No

Restrictions on VAT refund process none

Percentage of cases exposed to a VAT audit (%) Not applicable

Is there a mandatory carry forward period? No

Time to comply with VAT refund (hours) No VAT refund per 0.0 case study scenario

Time to obtain VAT refund (weeks) No VAT refund per 0.0 case study scenario

Corporate income tax audits

Does corporate income tax exist? Yes

Percentage of cases exposed to a corporate income tax audit (%) 50% - 74%

Time to comply with a corporate income tax correction (hours) 15.0 75.2

Time to complete a corporate income tax correction (weeks) 23.9 25.4

Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable.

Page 41 Doing Business 2020 Djibouti

Trading across Borders

Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as origin economy 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, • Obtaining, preparing and submitting documents required by suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and destination economy and any transit economies can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of information Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the Border compliance costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. • Customs clearance and inspections Contributors are private sector experts in international trade logistics and are informed about • Inspections by other agencies (if applied to more than 20% of exchange rates. shipments) Assumptions of the case study: • Handling and inspections that take place at the economy’s port - For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in or border the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy. Domestic transport - It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from • Loading or unloading of the shipment at the warehouse or its natural import partner—the economy from which it imports the largest value (price times port/border quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is • Transport between warehouse and port/border the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while shipment is en - The mode of transport is the one most widely used for the chosen export or import product and route the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities.

Page 42 Doing Business 2020 Djibouti

Trading across Borders - Djibouti

Indicator Djibouti Middle East & OECD high Best Regulatory North Africa income Performance

Time to export: Border compliance (hours) 72 52.5 12.7 1 (19 Economies)

Cost to export: Border compliance (USD) 605 441.8 136.8 0 (19 Economies)

Time to export: Documentary compliance (hours) 60 66.4 2.3 1 (26 Economies)

Cost to export: Documentary compliance (USD) 95 240.7 33.4 0 (20 Economies)

Time to import: Border compliance (hours) 118 94.2 8.5 1 (25 Economies)

Cost to import: Border compliance (USD) 1055 512.5 98.1 0 (28 Economies)

Time to import: Documentary compliance (hours) 50 72.5 3.4 1 (30 Economies)

Cost to import: Documentary compliance (USD) 100 262.6 23.5 0 (30 Economies)

Figure – Trading across Borders in Djibouti – Score

55.3 42.9 65.1 76.3 58.1 12.1 79.5 85.7

Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance

Figure – Trading across Borders in Djibouti and comparator economies – Ranking and Score

DB 2020 Trading Across Borders Score

0 100

84.1: Oman (Rank: 64)

61.8: Regional Average (Middle East & North Africa)

59.4: Djibouti (Rank: 147)

56.0: Ethiopia (Rank: 156)

42.2: Egypt, Arab Rep. (Rank: 171)

0.0: Eritrea (Rank: 188)

Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import.

Page 43 Doing Business 2020 Djibouti

Figure – Trading across Borders in Djibouti – Time and Cost

Time (hours) Cost (USD) 140 1200 118 1055 120 1000 100 800 80 72 605 60 600 60 50

400 Cost (USD) Time (hours) 40 20 95 100 200 0 0

Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance

Page 44 Doing Business 2020 Djibouti

Details – Trading across Borders in Djibouti

Characteristics Export Import

Product HS 09 : Coffee, tea, matï and spices HS 8708: Parts and accessories of motor vehicles

Trade partner Egypt United Arab Emirates

Border Djibouti port Djibouti port

Distance (km) 11 11

Domestic transport time (hours) 2 2

Domestic transport cost (USD) 163 165

Details – Trading across Borders in Djibouti – Components of Border Compliance

Time to Complete (hours) Associated Costs (USD)

Export: Clearance and inspections required by 24.0 175.0 customs authorities

Export: Clearance and inspections required by 24.0 186.0 agencies other than customs

Export: Port or border handling 48.0 244.3

Import: Clearance and inspections required by 72.0 430.0 customs authorities

Import: Clearance and inspections required by 0.0 0.0 agencies other than customs

Import: Port or border handling 48.0 625.0

Page 45 Doing Business 2020 Djibouti

Details – Trading across Borders in Djibouti – Trade Documents

Export Import

Bill of lading Bill of Lading

Commercial invoice Commercial invoice

Packing list Customs import declaration

Customs export declaration Electronic cargo tracking note (BESC)

Certificate of origin Packing list

Gate pass Gate pass

Cargo release order SOLAS certificate

SOLAS certificate Proof of insurance

Page 46 Doing Business 2020 Djibouti

Enforcing Contracts

The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

Time required to enforce a contract through the courts The dispute in the case study involves the breach of a sales contract between two domestic (calendar days) businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. • Time to file and serve the case • Time for trial and to obtain the judgment To make the data on the time and comparable across economies, several assumptions about the case are used: • Time to enforce the judgment - The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both Cost required to enforce a contract through the courts (% of located in the economy’s largest business city. For 11 economies the data are also collected for the claim value) second largest business city. - The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of • Average attorney fees adequate quality. • Court costs - The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater. • Enforcement costs - The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater. Quality of judicial processes index (0-18) - The Seller requests the pretrial attachment of the defendant’s movable assets to secure the • Court structure and proceedings (-1-5) claim. - The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods • Case management (0-6) was not adequate. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The Seller enforces the judgment through a public sale of the Buyer’s movable assets.

Page 47 Doing Business 2020 Djibouti

Enforcing Contracts - Djibouti

Standardized Case

Claim value DJF 903,722

Court name Djibouti First Instance Court, Commercial Division

City Covered Djibouti Ville

Indicator Djibouti Middle East & OECD high Best Regulatory North Africa income Performance

Time (days) 695 622.0 589.6 120 (Singapore)

Cost (% of claim value) 34.0 24.7 21.5 0.1 (Bhutan)

Quality of judicial processes index (0-18) 5.5 6.6 11.7 None in 2018/19

Figure – Enforcing Contracts in Djibouti – Score

52.9 61.9 30.6

Time Cost Quality of judicial processes index

Figure – Enforcing Contracts in Djibouti and comparator economies – Ranking and Score

DB 2020 Enforcing Contracts Score

0 100

62.8: Ethiopia (Rank: 67)

61.9: Oman (Rank: 69)

56.0: Regional Average (Middle East & North Africa)

55.9: Eritrea (Rank: 107)

48.4: Djibouti (Rank: 144)

40.0: Egypt, Arab Rep. (Rank: 166)

Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators.

Page 48 Doing Business 2020 Djibouti

Figure – Enforcing Contracts in Djibouti – Time and Cost

Time (days) Cost (% of claim value) 1200 40 34.0 1010 35 1000 26.2 30 800 24.7 695 21.5 25 622.0 589.6 598 600 530 20 490 16.6 15.2 15.1 15 400 Time (days) 10 200 5 Cost (% of claim value) 0 0

Djibouti Egypt, Eritrea Ethiopia Middle OECD Oman Arab East high Rep. & income North Africa

Page 49 Doing Business 2020 Djibouti

Figure – Enforcing Contracts in Djibouti and comparator economies – Measure of Quality

Djibouti 2 0.5 0 3

Egypt, Arab Rep. 2 0 2

Eritrea 1.5 0 1.5

Ethiopia 1.5 1 0 4.5

Oman 2.5 1 0 4

OECD high income 2.5 3.2 2.4 3.6

Middle East & North Africa 2.2 1.1 0.5 2.9

0 2 4 6 8 10 12 14 Sub-Indicator Score

Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5)

Details – Enforcing Contracts in Djibouti

Indicator

Time (days) 695

Filing and service 30

Trial and judgment 365

Enforcement of judgment 300

Cost (% of claim value) 34.0

Attorney fees 17

Court fees 10

Enforcement fees 7

Quality of judicial processes index (0-18) 5.5

Court structure and proceedings (-1-5) 3.0

Case management (0-6) 0.5

Court automation (0-4) 0.0

Alternative dispute resolution (0-3) 2.0

Page 50 Doing Business 2020 Djibouti

Details – Enforcing Contracts in Djibouti – Measure of Quality

Answer Score

Quality of judicial processes index (0-18) 5.5

Court structure and proceedings (-1-5) 3.0

1. Is there a court or division of a court dedicated solely to hearing commercial cases? Yes 1.5

2. Small claims court 0.0

2.a. Is there a small claims court or a fast-track procedure for small claims? No

2.b. If yes, is self-representation allowed? n.a.

3. Is pretrial attachment available? Yes 1.0

4. Are new cases assigned randomly to judges? Yes, but manual 0.5

5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0

Case management (0-6) 0.5

1. Time standards 0.5

1.a. Are there laws setting overall time standards for key court events in a civil case? Yes

1.b. If yes, are the time standards set for at least three court events? Yes

1.c. Are these time standards respected in more than 50% of cases? No

2. Adjournments 0.0

2.a. Does the law regulate the maximum number of adjournments that can be granted? No

2.b. Are adjournments limited to unforeseen and exceptional circumstances? No

2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a.

3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) No 0.0 clearance rate report; (iii) age of pending cases report; and (iv) single case progress report?

4. Is a pretrial conference among the case management techniques used before the competent court? No 0.0

5. Are there any electronic case management tools in place within the competent court for use by judges? No 0.0

6. Are there any electronic case management tools in place within the competent court for use by lawyers? No 0.0

Court automation (0-4) 0.0

1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? No 0.0

2. Is it possible to carry out service of process electronically for claims filed before the competent court? No 0.0

3. Can court fees be paid electronically within the competent court? No 0.0

4. Publication of judgments 0.0

4.a Are judgments rendered in commercial cases at all levels made available to the general public No through publication in official gazettes, in newspapers or on the internet or court website?

4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made No available to the general public through publication in official gazettes, in newspapers or on the internet or court website?

Alternative dispute resolution (0-3) 2.0

1. Arbitration 1.5

1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all its aspects?

1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— No that cannot be submitted to arbitration?

1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes

Page 51 Doing Business 2020 Djibouti

2. Mediation/Conciliation 0.5

2.a. Is voluntary mediation or conciliation available? No

2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig

2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or n.a. conciliation is successful, a refund of court filing fees, income tax credits or the like)?

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Resolving Insolvency

Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s estate) - The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater. • Measured as percentage of estate value - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. • Court fees The hotel cannot pay back the loan, but makes enough money to operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to judicial • Lawyers’ fees liquidation and reorganization proceedings and the extent to which best insolvency practices have • Assessors’ and auctioneers’ fees been implemented in each economy covered. • Other related fees

Outcome

• Whether business continues operating as a going concern or business assets are sold piecemeal

Recovery rate for creditors

• Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered

Strength of insolvency framework index (0- 16)

• Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4)

Page 53 Doing Business 2020 Djibouti

Resolving Insolvency - Djibouti

Indicator Djibouti Middle East & OECD high Best Regulatory North Africa income Performance

Recovery rate (cents on the dollar) 44.0 27.3 70.2 92.9 (Norway)

Time (years) 1.5 2.7 1.7 0.4 (Ireland)

Cost (% of estate) 11.0 14.0 9.3 1.0 (Norway)

Outcome (0 as piecemeal sale and 1 as going concern) 0 ......

Strength of insolvency framework index (0-16) 13.5 6.3 11.9 None in 2018/19

Figure – Resolving Insolvency in Djibouti – Score

47.3 84.4

Recovery rate Strength of insolvency framework index

Figure – Resolving Insolvency in Djibouti and comparator economies – Ranking and Score

DB 2020 Resolving Insolvency Score

0 100

65.9: Djibouti (Rank: 44)

44.0: Oman (Rank: 97)

42.2: Egypt, Arab Rep. (Rank: 104)

34.5: Regional Average (Middle East & North Africa)

30.3: Ethiopia (Rank: 149)

0.0: Eritrea (Rank: 168)

Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index.

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Figure – Resolving Insolvency in Djibouti – Time and Cost

Time (years) Cost (% of estate) 3.5 25 22.0 3.0 3.0 3 2.7 2.5 20 2.5 14.5 14.0 2 1.7 15 1.5 11.0 9.3 1.5 10 7.0

Time (years) 1

5 Cost (% of estate) 0.5 0 0

Djibouti Egypt, No Ethiopia Middle OECD Oman Arab Practice East high Rep. Eritrea & income North Africa

Page 55 Doing Business 2020 Djibouti

Figure – Resolving Insolvency in Djibouti and comparator economies – Measure of Quality

Djibouti 5.5 2.5 4 1.5

Egypt, Arab Rep. 4 2.5 2 1

Eritrea 2 2 1 0

Ethiopia 2 2 1 0

Oman 4 2 1 0

OECD high income 5.3 2.8 2.1 1.9

Middle East & North Africa 3.7 2.3 1.3 0.6

0 2 4 6 8 10 12 14 16 Sub-Indicator Score

Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3)

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”

Figure – Resolving Insolvency in Djibouti and comparator economies – Recovery Rate

50 44.0 45 41.1 40 35 30 27.3 27.3 25 23.3 20 15 10 5

Recovery rate(cents on the dollar) 0 No Practice Djibouti Egypt, Arab Rep. Eritrea Ethiopia Oman Middle East & North Africa

Page 56 Doing Business 2020 Djibouti

Details – Resolving Insolvency in Djibouti

Indicator Answer Score

Proceeding foreclosure Mirage cannot repay the money owed to BizBank, so the bank will start foreclosure proceedings at the First Instance Court. At the end of the procedure, the hotel building will be sold and BizBank will obtain payment.

Outcome piecemeal sale Mirage's assets will be sold piecemeal after the foreclosure procedure to reimburse creditors and the Hotel will cease to exist.

Time (in years) 1.5 The foreclosure proceedings will take approximately 18 months in Djibouti. This estimate includes summoning Mirage, the foreclosure proceedings and the organization of the sale by the bailiff. The estimate also takes into account that there can be challenges during the procedure.

Cost (% of estate) 11.0 Foreclosure proceedings will cost approximately 11% of the value of Mirage. The fees of bailiffs in charge of the public sale (7%) and lawyer fees (4%) constitute the main components of the procedure.

Recovery rate 44.0 (cents on the dollar)

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Details – Resolving Insolvency in Djibouti – Measure of Quality

Answer Score

Strength of insolvency framework index (0-16) 13.5

Commencement of proceedings index (0-3) 2.5

What procedures are available to a DEBTOR when commencing insolvency proceedings? (c) Debtor may file for 0.5 reorganization only

Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (a) Yes, a creditor 1.0 may file for both liquidation and reorganization

What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (a) Debtor is 1.0 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value generally unable to of its assets pay its debts as they mature

Management of debtor's assets index (0-6) 5.5

Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the Yes 1.0 debtor?

Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0

Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0

Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0

Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of Yes 1.0 insolvency proceedings?

Does the insolvency framework assign priority to post-commencement credit? (a) Yes over all pre- 0.5 commencement creditors, secured or unsecured

Reorganization proceedings index (0-3) 1.5

Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5

Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as No 0.0 what they would obtain in a liquidation?

Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote Yes 1.0 separately and are creditors in the same class treated equally?

Creditor participation index (0-4) 4.0

Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency Yes 1.0 representative?

Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? Yes 1.0

Does the insolvency framework provide that a creditor has the right to request information from the insolvency Yes 1.0 representative?

Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting Yes 1.0 creditors' claims?

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”

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Employing Workers

Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business.

The most recent round of data collection was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

Hiring To make the data comparable across economies, several assumptions about the worker and the (i) whether fixed-term contracts are prohibited for permanent business are used. tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the maximum probationary period; (iv) minimum The worker: wage;(v) ratio of minimum wage to the average value added per - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. worker. - Is a full-time employee. - Is not a member of the labor union, unless membership is mandatory. Working hours (i) maximum number of working days allowed per week; (ii) The business: premiums for work: at night, on a weekly rest day and overtime; - Is a limited liability company (or the equivalent in the economy). (iii) whether there are restrictions on work at night, work on a - Operates a supermarket or grocery store in the economy’s largest business city. For 11 weekly rest day and for overtime work; (iv) length of paid annual economies the data are also collected for the second largest business city. leave. - Has 60 employees. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the Redundancy rules food retail sector and they apply even to firms that are not party to them. (i) whether redundancy can be basis for terminating workers; (ii) - Abides by every law and regulation but does not grant workers more benefits than those whether employer needs to notify and/or get approval from third mandated by law, regulation or (if applicable) collective bargaining agreements. party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment.

Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected.

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Employing Workers - Djibouti

Details – Employing Workers in Djibouti

Answer

Hiring

Fixed-term contracts prohibited for permanent tasks? Yes

Maximum length of a single fixed-term contract (months) 12.0

Maximum length of fixed-term contracts, including renewals (months) 24.0

Minimum wage applicable to the worker assumed in the case study (US$/month) 198.4

Ratio of minimum wage to value added per worker 0.7

Maximum length of probationary period (months) 2.0

Working hours

Standard workday 8.0

Maximum number of working days per week 6.0

Premium for night work (% of hourly pay) 0.0

Premium for work on weekly rest day (% of hourly pay) 50.0

Premium for overtime work (% of hourly pay) 0.0

Restrictions on night work? No

Restrictions on weekly holiday? No

Restrictions on overtime work? Yes

Paid annual leave for a worker with 1 year of tenure (working days) 30.0

Paid annual leave for a worker with 5 years of tenure (working days) 30.0

Paid annual leave for a worker with 10 years of tenure (working days) 30.0

Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 30.0

Redundancy rules

Dismissal due to redundancy allowed by law? Yes

Third-party notification if one worker is dismissed? Yes

Third-party approval if one worker is dismissed? No

Third-party notification if nine workers are dismissed? Yes

Third-party approval if nine workers are dismissed? No

Retraining or reassignment obligation before redundancy? No

Priority rules for redundancies? No

Priority rules for reemployment? Yes

Redundancy cost

Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3

Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 4.3

Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 4.3

Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 4.3

Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 0.0

Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 0.0 Page 60 Doing Business 2020 Djibouti

Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 0.0

Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 0.0

Unemployment protection after one year of employment? No

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Business Reforms in Djibouti

From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008.

=Doing Business reform making it easier to do business. = Change making it more difficult to do business.

DB2020

Getting Credit: Djibouti strengthened access to credit by implementing a functional secured transactions system and a unified notice-based collateral registry.

Protecting Minority Investors: Djibouti strengthened minority investor protections by increasing corporate transparency.

Resolving Insolvency: Djibouti made resolving insolvency easier by facilitating the commencement of proceedings and increasing the effectiveness of court processes.

Employing Workers: Djibouti introduced a minimum wage of 35,000 francs ($198) per month.

DB2019

Starting a Business: Djibouti made starting a business easier by creating a one-stop shop for business start-up.

Registering Property: Djibouti made property transfer easier and more transparent by reducing registration fees, implementing strict deadlines to register the sale agreement with the tax authority, scanning the majority of land titles for Djibouti-Ville and by requiring by law that all property sales transactions be registered at the land registry to become opposable to third parties.

Getting Credit: Djibouti strengthened access to credit by introducing the possibility of granting a nonpossessory security right in a single category of movable assets without requiring a specific description of the collateral. Future assets can now be used to secure a loan and security interests automatically extend to the products, proceeds and replacements of the original assets. All debts and obligations can be secured between parties and described in general. Secured creditors are now given absolute priority over other claims, such as labor and tax, outside of bankruptcy proceedings.

Protecting Minority Investors: Djibouti strengthened minority investor protections by requiring greater disclosure of transactions with interested parties, strengthening remedies against interested directors, extending access to corporate information before trial, increasing shareholder rights and role in major corporate decisions, clarifying ownership and control structures and requiring greater corporate transparency.

Enforcing Contracts: Djibouti made enforcing contracts easier by establishing a dedicated division within the court of first instance to resolve commercial cases and by adopting a new Code of Civil Procedure that regulates voluntary conciliation and mediation proceedings, as well as time standards for key court events.

Resolving Insolvency: Djibouti made resolving insolvency easier by making insolvency proceedings more accessible for creditors and granting them greater participation in the proceedings.

DB2018

Starting a Business: Djibouti made starting a business less costly by exempting new companies from professional license fees and reducing fees to register a business and publish the notice of commencement.

Dealing with Construction Permits: Djibouti made obtaining a construction permit easier by reducing the cost of concrete inspections and by implementing decennial liability for all professionals involved in construction projects.

Registering Property: Djibouti made registering property easier by increasing the transparency of the land administration system.

Getting Credit: Djibouti improved access to credit information by adopting a law that creates a new credit information system.

Protecting Minority Investors: Djibouti strengthened minority investor protections by requiring greater disclosure of transactions with interested parties, strengthening remedies against interested directors, extending access to corporate information before trial, increasing shareholder rights and role in major corporate decisions, clarifying ownership and control structures and requiring greater corporate transparency.

DB2015

Dealing with Construction Permits: Djibouti made dealing with construction permits less time-consuming by streamlining the review process for building permits.

DB2014

Starting a Business: Djibouti made starting a business easier by simplifying the company name search and by eliminating the minimum capital requirement as well as the requirement to publish a notice of commencement of activities.

Getting Credit: Djibouti strengthened its secured transactions system by adopting a new commercial code, which broadens the range of movable assets that can be used as collateral.

Resolving Insolvency: Djibouti made resolving insolvency easier through its new commercial code, which allows an insolvent debtor to file for preventive settlement, legal redress or liquidation and sets out clear rules on the steps and procedures for each of the alternatives available.

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DB2012

Dealing with Construction Permits: Djibouti made dealing with construction permits costlier by increasing the fees for inspections and the building permit and adding a new inspection in the preconstruction phase.

Trading across Borders: Djibouti made trading across borders faster by developing a new container terminal.

DB2010

Paying Taxes: Djibouti made paying taxes more complicated for companies by introducing a value added tax on the supply of goods and services.

DB2009

Trading across Borders: Djibouti reduced documentation requirements for exporting and importing, and time for importing, by improving port administration and eliminating some health and technical formalities.

DB2008

Registering Property: Djibouti made property registration faster by improving efficiency at the Service des Domaines.

Trading across Borders: Djibouti made trading across borders easier by implementing an electronic manifest system.

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