Djibouti has secured fresh World Bank funding to tackle one of the most severe water shortages in the Horn of Africa, as climate pressures deepen across the region.

The World Bank said it had approved a $35 million grant to help expand access to safe and reliable water in rural parts of the country, where supply remains limited and uneven.

The funding will support the Djibouti Groundwater Resilience and Water Supply Project (DJIRESA), which will finance the construction and rehabilitation of rural water systems. The project is expected to provide basic drinking water services to about 127,000 people, while improving climate resilience for around 167,000 others.

Djibouti is among the most water-stressed countries globally, with renewable water resources estimated at just 185 cubic metres per person per year, far below the 500 cubic metre threshold for absolute scarcity. 

In many areas, groundwater is being depleted faster than it can naturally recharge, a trend worsened by rising temperatures, erratic rainfall, and increasing salinity.

The impact is most visible in rural communities, where only 47 per cent of residents have access to basic drinking water, compared with 83 per cent in urban areas, reflecting years of underinvestment outside cities.

Beyond infrastructure, the project will focus on fixing long-standing weaknesses in how water systems are managed. Many rural facilities fall into disrepair due to poor maintenance and limited technical capacity. The programme will introduce more structured operations and maintenance systems, alongside training and institutional support for government agencies.

It will also establish a national groundwater information system to improve data collection and planning, linked to a regional platform coordinated by the Intergovernmental Authority on Development (IGAD). The regional body will receive additional support to strengthen cross-border data sharing and water management.

The initiative forms part of a wider $455 million World Bank-backed programme covering countries across the Horn of Africa, including Ethiopia, Kenya and Somalia, where climate shocks have intensified water and food insecurity. Across the region, prolonged droughts and erratic rainfall have disrupted farming and pastoral livelihoods. In Ethiopia, millions remain food insecure, while Kenya and Somalia continue to face repeated drought cycles that have damaged crops and livestock.

For Djibouti, the economic risks are also rising. Drought alone can cost the country up to 4 per cent of its gross domestic product, according to the World Bank, while longer-term climate impacts could weigh even more heavily on growth and livelihoods.

Djibouti's Minister of Economy and Finance, Ilyas Moussa Dawaleh, said the investment would help address a critical development challenge.

"Access to water is essential to the well-being of our citizens and to the country's development," he said.

World Bank representative Fatou Fall added that improving water access was both a humanitarian and economic priority, particularly for rural and pastoral communities most exposed to climate shocks.