COUNTRY NAME: Somali Democratic Republic
LAND AREA: 627,337 km2
POPULATION: 9,8 million (2009 est.)
LANGUAGE: Somali (official), Arabic, Italian, English
CURRENCY: 1 Somliland Shiling (SOS) = 100 Cent; 1 EUR = 2.221,76 SOS (Nov. 2010)
MAIN CITIES: Mogadishu (capital), Hargeysa, Kismaayo
NATIONAL DAY: 26 July – Independence Day
TIME ZONE: Standard Time is GMT + 3
Covering a land area of 637,657km2, the Republic of 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 driven by factional conflicts and the lack of a functioning national administration which have acted as major breaks on inward investment and economic development. As a result few reliable up-to-date statistics are available about the Somali economy.
It can be safely stated that 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 joined the League of Arab States in 1974. In 1991, the northern region broke away unilaterally to form the unrecognised Somaliland based around the city of Hargeisa. A Transitional Federal Government (TFG) was formed in January 2005 with regional governments in Somaliland (NW) and Puntland (NE). This transitional government represents Somalia at the UN, the League of Arab States and the African Union. A UN brokered peace agreement was unveiled in Djibouti in the summer of 2008. The international community is now taking action to reverse the stagnation that has been the consequence of two decades of instability in Somalia. An African Union Summit urged more support for the Transitional Federal Government as the legitimate authority in Somalia. The international community has also been urged to honour pledges made to support Somalia during the Brussels Donors’ Conference held in April 2009 where $200 million was pledged for reconstruction efforts. The UN is calling on the international community to invest in building the country’s security institutions and improve the capacity to deliver public services and employment, which would have a positive impact on the Somali people. Projects to encourage youth employment and enhance the livelihoods of ordinary Somalis should also be a priority.
Somalia’s economy has been described as stronger than that of many countries in Africa in terms of gross domestic product and imports and exports, participants at a United Nations-backed meeting held in Dubai said. Despite the crisis that Somalia continues to face, its government was commended by the UN for having put in place more transparent and accountable financial management measures. In a move that should help generate greater donor confidence, Somalia contracted auditing firm PricewaterhouseCoopers to assist with tracking and reporting on the use of public funds and thus help improve transparency, the UN reported in July 2009. The UN is initiating a series of projects to help Somalia move beyond the current emergency and ensure that its people experience some benefit from the peace process. Current projects include increasing access to basic services such as water, health and education, improving livelihoods through rapid employment generation, rehabilitation of key infrastructure and other rapid-impact recovery programmes. The economy could be boosted through livestock and livestock products, agriculture, money transfer, telecommunications, infrastructure, oil and gas, mining, transport and even tourism, according to the UN Political Office for Somalia (UNPOS). Sudan recently pledged its support to help rebuild Somalia’s financial and economic infrastructure as the country seeks to establish real peace and stability. Despite the lack of an effective central government, however, Somalia has maintained a healthy informal economy, largely based on livestock, money transfer companies, and a growth in telecommunications. The extensive Somali community overseas helps sustain an economy weakened by years of strife and turmoil. Somalia’s small industrial sector, based on the processing of agricultural products, has largely been looted and sold as scrap metal. Somalia’s service sector also has grown. Telecommunication firms provide wireless services in most major cities and offer the lowest international call rates on the continent. Mogadishu’s main market offers a variety of goods from food to the newest electronic gadgets. Hotels continue to operate and are supported with private security. Somalia’s arrears to the IMF continued to grow. Statistics on Somalia’s GDP, growth, per capita income, and inflation must be viewed with more than a degree of scepticism. The Somali International Financial Centre (SIFC), an agency created by the transitional government, offers a tax-free offshore international banking regime. There are also laws providing for offshore insurance and e-commerce. The SIFC is committed to strict confidentiality and world class regulatory standards; there is a modern money-laundering law. The Central Bank of Somalia was based in Mogadishu. Remittance services represent a large industry in Somalia. Somali entrepreneurs overseas who fled because of the war contribute around $1 billion annually to the country’s economy. In the absence of a formal banking sector, money exchange services have burgeoned, handling between $500 million and $1
billion in remittances annually.
Agriculture is the most important sector, with livestock normally accounting for about 40% of GDP and some 65% of export earnings. Livestock, hides, fish, charcoal, and bananas are Somalia’s principal exports, while sugar, sorghum, corn, qat, and machined goods are the principal imports. Livestock has traditionally accounted 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 country’s population. 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 the country’s 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. 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. Somalia began exports of bananas to countries of the European Union, but the trade has suffered from the protracted instability. 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 in the small domestic textile industry. 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 has been almost completely destroyed or dismantled during the conflict, but several private sector providers are growing and Internet services are 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 representative offices in Dubai and the UK. 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.
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 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 $700mn and $1bn per annum.
Source: Austro-Arab Trade Directory 2011.
The mentioned data are subject to modification. No responsibility is taken for the correctness of the details provided.
Last modified: 28 January 2011