Economy of Somalia

By | April 29, 2022

According to businesscarriers, Somalia is one of the poorest and least developed countries in the world. Its economy has been devastated by a civil war lasting over 10 years. The main branch of the economy is cattle breeding, the country occupies one of the first places in Africa in terms of the number of livestock per capita. Livestock products provide approx. 40% of GDP and approx. 65% export. Nomads and semi-nomads make up the majority of the population. Only 1/8 of the country’s territory is suitable for agriculture, but only 5% is cultivated. They grow sorghum, corn, bananas, vegetables, rice, sugar cane, mangoes. Collection of aromatic resins in con. 1980s – OK. 2/3 of the world volume, in the beginning. 1990s production of aromatic resins – more than 2 thousand tons per year. According to FAO estimates for 1998, animal husbandry (thousand heads): cattle 5300, sheep 13500, goats 12500, pigs 4, donkeys 19, mules 18, camels 6100.

GDP by purchasing power of currency (2001) 4.1 billion US dollars, GDP per capita (2001) 550 US dollars. Inflation St. 100% (businessmen print their own money) (2001). Sectoral structure of the economy in terms of contribution to GDP (2000,%): agriculture 65, industry 10, services 25. According to 1993 estimates, the labor force is 3.7 million people, of which 71% are employed in agriculture (mostly nomads), in industry and services 29%.

Industry is underdeveloped. The main industries are mining (salt) and processing (production of sugar, canned food, pasta and flour, textiles, cigarettes and matches, oil products, electricity). There are no railways, the length of roads is 22,100 km, with a surface – 2608 km. The main seaports are Mogadishu, Berbera, Kismayo, and Marka. International airports in Mogadishu and Berbera, domestic airports in Kismayo, Hargeisa, Burao, Bosasso and Alula.

A native currency, the Somaliland shilling, was introduced in Somaliland. The financial system is destroyed by the civil war. In the south of the country, the state banking system was transformed into private enterprise. For example, in 1996, Somali businessmen opened the Bank of Somalia in the capital, Barakaat, with branches in other parts of the country. In November 2001, the US froze his funds, suspecting him of links to al-Qaeda. In 1997, the Somali-Malaysian Commercial Bank was opened.

In conditions of anarchy, the service sector in the country survives and even grows. Money exchange points operate throughout the country. Retail trade is concentrated in the informal sector of the economy. The main market of the capital, Bakara, offers a variety of goods (from food to new electronic equipment). Hotels operate, guarded by the police. The state telecommunications system is almost completely destroyed, but private companies offer services in many large cities. International communications available from Mogadishu via satellite (2001). Telephones – 15,000 (2000), radios – 470,000 (1997), televisions – 135,000 (1997), Internet users – 200 (2000). Tourism as an industry is not working because of the war.

Social sphere: mass chronic unemployment is a consequence of the civil war, mass resettlement, migration and the destruction of the system of wage labor and public service. Data on the cost of living and indicators of the dynamics of consumer prices refer to 1980 – early. 90s Consumer price index in 1988-92 (1980=100) 66.5, for Mogadishu (1988, 1985=100) 292.9.

Main export items: live cattle, hides and skins, bananas, fish, scrap metal (1999). The main export trading partners (2000) are Saudi Arabia (29%), Yemen (28%), United Arab Emirates (29%). Main import items: foodstuffs, oil products, manufactory, building materials, cat. The main import partners (2000) are Djibouti (27%), Kenya (12%), India (9%). The state system of foreign trade is destroyed.

External debt 2.6 billion US dollars (2000, estimate), after 1990 debt payments ceased.

Economy of Somalia