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Country name: Somali Democratic Republic
(official name until 1991) or Somali Republic
Population: 9.1 million (July 2007 estimate)
Land Area: 637,657km2
Languages: Somali (official), Arabic, Italian, English
Currency: Somali shilling (As there is no central bank various
currencies are used, including the Somaliland shilling)
Government Type: Transitional Federal Government (TFG) since 2005
The Republic of Somalia, whose capital is Mogadishu, joined the League of Arab States in 1974. Covering a land area of 637,657km2, Somalia has a long coastline on the Horn of Africa and to the north faces the Arabian peninsula, where traditionally it has had important commercial and trading ties. For many years the country has been riven by factional conflicts and the lack of a functioning national administration which have acted as major breaks on inward investment and aid funding. In 1991, the northern region broke away unilaterally to form the unrecognised Somaliland based around the city of Hargeisa.
Somalia is one of the poorest countries in the world. The UNDP’s Human Development Index ranked it 161 out of 163 countries back in 2001. Conflict, war and continuing insecurity have seriously impacted on access to even the basic services and infrastructure. All this has combined to increase poverty in the country and made welfare conditions worse compared to the days before the civil war.
Somalia is embroiled in conflict with little prospect for peace and stability in the immediate future.
Somalia’s economy operates in the absence of public sector management or regulation and without any formal economic or monetary policies. An informal economy largely based on trans-national trade and livestock exhibits a vibrancy that gives some cause for encouragement. About 50% of the population are pastoral. The urban private sector is also strong, especially in services such as telecommunications. Commercial infrastructure and institutions are functional and relatively sophisticated. This economic activity is underpinned by remittances, estimated to be up to $1 billion per year.
As a result of the chaotic situation prevailing in the country it is impossible to give accurate up-to-date figures concerning economic activities and GDP, although a 2006 estimate puts the GDP at €5 billion. Extreme poverty (a dollar-a-day) is estimated at 43%, but the figure is 10 percentage points higher for rural and nomadic populations. The World Bank reports modest gains in education indicators over recent years, but all still below pre-war levels and extremely low. For example, gross primary school enrolment was only 17% in 2002, and less than 13% for girls. 62.2% of the population is illiterate. Health indicators place Somalia among the worst in Africa. Life expectancy is only 48 years. Under-five and maternal mortality rates are, respectively, a staggering 224 and 16 per 1,000 live births.
Agriculture is the country’s most important sector, with livestock accounting for about 40% of GDP and about 65% of export earnings. Nomads and semi-nomads, who are dependent upon livestock for their livelihood, make up a large portion of the population. After livestock, bananas are the principal export; sugar, sorghum, maize, and fish are products for the domestic market. The small industrial sector, based on the processing of agricultural products, accounts for 10% of GDP.
Livestock remains the main source of income for the people of Somalia but exports have periodically been interrupted by bans imposed by importing countries in the Gulf region, due to outbreaks of livestock disease. Camels, sheep and cows destined for Saudi Arabia and Yemen form the bulk of the country’s agricultural exports. A partnership between the European Commission and the UN Food and Agriculture Organization (FAO) and the World Bank for the provision of support for Somalia’s agricultural sector led to the preparation of a longer term livestock strategy as a framework for further coordinated work in the sector. The World Bank is currently supporting a livestock certification program for Somalia - to seek to build a livestock board to develop standards for inspection and certification of livestock. This should help boost exports.
After livestock, bananas, grown on plantations along the Juba and Shebelle rivers, are the main exports. Over recent years, improved technologies have been introduced to increase production efficiency. Italy has traditionally been a major importer of Somali bananas but the produce is now exported more to countries of the European Union. Unfortunately, banana exports have suffered from the instability that has beset the country in recent years.
Other important crops grown in Somalia include sugar cane, which the country has been seeking to develop for export. Production of seed cotton is another significant crop but the quantity is insufficient for export and is mostly used to meet demand of the country’s Balad textile factory. Maize and sorghum are produced as subsistence crops in the southern part of the country. Fishing was mainly a small-scale subsistence activity until recently, but nowadays fish products like lobster, shark, tuna and sardines are caught for export.
Somalia's public telecommunications system was almost completely destroyed or dismantled during the chaos of conflict, but there are several private sector providers and the Internet services emerging in greater number.
Telcom, a telecommunications network operator in Somalia, was the first major privately owned company providing telecommunications to major cities. The company is headquartered in Mogadishu, and has a representative office in Dubai. The company has an estimated 750 employees.
Somafone Telecommunications Service Company (operating as Somafone) is Somalia's leading mobile telephone operator. It was formed in 2003 as a fully owned subsidiary of Somafone FZ LLC of Dubai Internet City.
The area known as Puntland is served by Netco Ltd, or North Eastern Telecommunications Company, which was established in 1993 in Bosaso Bari region of Somalia. Netco is owned by Ismael Haji Abdi, an MBA graduate from Wisconsin University in the USA. Netco has grown massively in the last 15 years throughout the region and has over 800,000 customers. The company supplies home phones, mobile phone networks and provides Internet services. One of the Netco's plans is to supply electricity throughout Puntland, a project expected to take place within the next five years.
NationLink Telecom is a mobile phone operator in Somalia which was formed in September 1997. The company provides telecommunication services throughout the country and is one of its leading service providers. The company's focus is in the core areas of mobile, fixed lines, Internet and satellite mobile services. The aim of NationLink Telecom is to provide telecommunication services to all Somalis and so help improve people’s lives.
The private wireless companies thrive in most major cities and often provide better services than in neighbouring countries.
Wireless service and Internet cafés are now widely available, although Somalia was in fact the last African country to access the Internet. This occurred in August 2000 and as of 2003 there were only 57 reported websites. Internet usage in Somalia grew 44,900% in the last five years, registering the highest in Africa. Somalia has the cheapest cellular calling rates in Africa, with some companies charging less than a cent a minute. Competing phone companies have agreed on interconnection standards in a deal brokered by the UN funded Somali Telecom Association.
Somalia has deposits of gypsum, gold, silver, nickel, copper, zinc, lead, salt, limestone, uranium and iron ore. Although most of these resources are small, some of the world’s largest deposits of gypsum can be found near Berbera and significant iron ore deposits have been discovered in the country’s Bur region. The mining sector is small and contributes less than 0.5% of GDP.
The tsunamis that hit mainly the north-east region of Somalia, Puntland, in December 2004, caused extensive damage to infrastructure. In addition, it was reported that nearly 300 people died and more than 50,000 people were displaced. A large number of dwellings were damaged or destroyed, and many fishing boats and equipment were lost.
Since the start of the civil war in 1991, the IMF has not had any official contact with Somalia and, thus, was unable to assess the macroeconomic impact or costs of the disaster. The World Bank only resumed official contact after the disaster and had no presence on the ground to contribute to damage or needs assessments. No official estimates of the cost of the tsunami are available. The UN Office of the Coordination of Human Affairs, however, estimated that about $10 million in humanitarian aid was needed in the first half of 2005 to help those who were affected by the disaster.
The rehabilitation of the Somali economy has been moving ahead intermittently but remains frustrated by outstanding security issues and establishing a peaceful environment. Somalia currently lacks functioning financial institutions which are the foundation of any sound economy and would normally provide crucial backup for business initiatives.
There are no commercial banks, no central bank and no credit or savings institutions apart from remittance companies operating in the country. In fact, funds in the form of remittances made by Somalis living abroad constitute the most vitally important means of financial support for the country. It has been estimated by UNDP that remittances transferred by Somali companies abroad amount to between $700millionand $1 billion per annum. Many of these transactions relate to investment, commerce and social development projects. In addition, $360 million is remitted annually to Somali households, which is a lifeline making up to 22.5% of all household income.
In an attempt to provide technical support for the remittance industry, a number of Somali remittance companies, representing 14 major transfer companies from Europe and the US, established the Somali Financial Services Association (SFSA). The organization is based in Dubai but was launched in London in December 2003 where a sizeable resident Somali population that has grown up over the past fifteen years is increasingly involved in business activities. The SFSA was established with the support of UNDP.
Quelle: Ghorfa, Arab-German Chamber of Commerce and Industry e.V.
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