Somalia is classified by the United Nations as the most backward country. Despite two decades of civil war, the country has maintained an informal economy, primarily based on livestock, remittances/money transfers from abroad, and telecommunications. Due to the scarcity of official government statistics and recent civil war, it is difficult to measure economic size or growth. For 1994, the CIA forecasts GDP on purchasing power parity (PPP) to $ 3.3 billion. In 2001, it was estimated at $ 4.1 billion. In 2009, the CIA estimated that PPP GDP had grown to $ 5.731 billion, with a real projected growth rate of 2.6%. In 2014, the International Monetary Fund estimates economic activity has risen 3.7 percent mainly driven by growth in the primary and secondary sectors. According to the 2007 UK Chamber of Commerce report, the private sector has seen growth, particularly in the services sector. In contrast to pre-civil war periods when most services and industry sectors are run by governments, there is substantial, though not measurable, private investment in commercial activity; it has been financed largely by the Somali diaspora, and includes trade and marketing, remittance services, transportation, communications, fishing equipment, aviation, telecommunications, education, healthcare, construction and hotels.
According to the United Nations Development Program (UNDP) Somalia, in 2012 this country has some of the lowest development indicators in the world, and the value of Human Development Index (IPI) "very low" 0.285. It will rank among the lowest in the world if comparable data is available, and when adjusted for the significant inequality that exists in Somalia, its HDI is even lower. UNDP notes that "inequality across different social groups, the main drivers of conflict, has widened".
The Somali economy comprises traditional and modern production, with a gradual shift to more modern industrial engineering. According to the Central Bank of Somalia, about 80% of the population are nomadic or semi-nomadic herders, who keep goats, sheep, camels and cattle. The nomads also collect resins and candies to supplement their income.
According to the World Bank, Somali economy has suffered as a result of the failure of the country that accompanied the civil war in that country. Some economists, including libertarian Peter T. Leeson, argue that the collapse of the state has really helped improve the economic welfare, because the former state of Somalia was a predator.
Video Economy of Somalia
Economic indicators
According to the African Development Bank, Somalia "is characterized by a lack of basic economic and social statistics that are severe". This situation has been exacerbated by civil wars and institutional collapse, although even before the failure of the Somali state, data is often unreliable.
The World Bank reported that Somalia's GDP was $ 917.0 million in 1990 and its population was 10.81 in 2014, and classified it as a low-income country. The United Nations Statistics Division reported GDP figures of $ 1.306 billion for 2012, compared to $ 2,316 billion in 2005 and $ 1.071 billion in 2010.
According to the Central Bank of Somalia, around the 2000s World Bank per capita GDP according to the World Bank is $ 226, a slight decrease in real terms from 1990. The 2012 Human Development Report estimates GDP per capita to $ 284, compared to the average in sub-Africa -Sahara $ 1,300 per capita. This per capita GDP figure is the fourth lowest in the world. Approximately 43% of the population lives on less than 1 US dollar a day, with about 24% of those found in urban areas and 54% living in rural areas.
According to the United Nations Development Program (UNDP) Somalia, in 2012 this country has some of the lowest development indicators in the world, and the value of Human Development Index (IPI) "very low" 0.285. It will rank among the lowest in the world if comparable data is available, and when adjusted for the significant inequality that exists in Somalia, its HDI is even lower. UNDP notes that "inequality across different social groups, the main drivers of conflict, has widened". The UN has classified Somalia as the least backward country since its Development Policy Committee began grouping the countries in this way in 1971.
An International Monetary Fund mission to Somalia reported GDP growth forecasts of 3.7% in 2014 and CPI inflation of -71.10%, and projected growth of 2.7% and inflation by 4% by 2015. The report notes that provide that the security situation of Somalia continues to increase moderately and there is no drought, economic growth in the medium term should average 5%, but "growth will remain inadequate to improve poverty and gender inequality".
Maps Economy of Somalia
Country failures and economic welfare
According to the World Bank, within two years after the outbreak of the civil war in 1988, Somali state institutions collapsed and "the vast majority of infrastructure and economic and social assets were destroyed". In 2003 the Bank said that while there were no countries and institutions, the private sector of Somalia experienced impressive growth, but that "most of these sectors are now stagnant or their growth is hampered by lack of investment, trained workers and the absence of a legal framework and relevant regulations to enforce rules and regulations, common standards and quality control ". The report notes the difficulty of encouraging and utilizing domestic savings for investment, due to the lack of formal financial services and regulatory bodies. The lack of state institutions, the Bank argues, resulted in the prevention of access to international capital markets.
In an article published in 2007, the libertarian economist Peter T. Leeson argued that the state of Somalia is a predator, and its collapse has increased the economic welfare of its citizens, with 14 of the 18 key development indicators becoming more positive in the 2000-2005 period than in 1985-1990. Similarly, economists Benjamin Powell, Ryan Ford and Alex Nowrasteh argue that the economic performance of Somalia, relative to other African countries, has increased over the period without a country. Ersun Kurtulus states that Leeson and Powell, Ford and Nowrasteh's articles provide "the strongest evidence to show that Somalia has been much better under anarchy than under the Barre regime". Kurtulus argues that this author may provide a valid explanation of the situation in Somalia, but that "the argument seems to derive from a hypothesis rooted in the liberal conceptualization of the state rather than in quantitative analysis that establishes a negative correlation between state predation indicators and economic and social well-being." Kurtulus points out that the collapse of the repressive state can increase personal and civil liberties, but that such accounts "overstate the endogenous factors that are in the domestic arena, while ignoring exogenous factors operating at the regional and international levels".
Agriculture
Agriculture is the most important economic sector. It accounts for about 65% of GDP and employs 65% of the workforce. Livestock contributes about 40% to GDP and more than 50% of export earnings. Other major exports include fish, charcoal and bananas; sugar, sorghum and corn are the products for the domestic market. According to the Central Bank of Somalia, total goods imports are approximately $ 460 million annually, and have recovered and even surpassed aggregate imports before the start of the civil war in 1991. Exports, which total approximately $ 270 million per year, have also exceeded aggregate aggregate aggregate but still lead to a trade account deficit of about $ 190 million dollars per year. However, this trade deficit is far exceeded by remittances sent by Somalis in the diaspora, which has helped maintain import levels.
With the advantage of being located near the Arabian Peninsula, Somali traders are increasingly beginning to challenge traditional Australian dominance over the Arabian Gulf livestock and meat markets, offering quality animals at very low prices. In response, the Arabian Gulf states of Persia have begun making strategic investments in the region, with Saudi Arabia building livestock export infrastructure and the United Arab Emirates buying large farms. In addition, fishing fleets from Europe and Asia have reached commercial fishing agreements in the northern Puntland region.
With Somalia exporting 3 million sheep in 2012, direct exports to the Middle East have exceeded Australia's 2 million exports. According to Australia's Bureau of Agriculture and Natural Resources and Science, 99% of the country's livestock exports go to the Middle East. However, since 2006, there was a 10% decrease "due to increased competition in export markets from African and Eastern European sheep export". More than 5 million livestock are exported in 2014, the highest number in 20 years.
Frankincense and nuts are important export products for Somalia. Together with Ethiopia and Kenya, Somalia is one of the three largest suppliers in the world from these products.
Manufacturing
The simple industrial sector, based on the processing of agricultural products, accounts for 10% of Somalia's GDP.
Prior to the outbreak of the civil war in 1991, approximately 53 small, medium and large enterprises owned by countries were at peace, with subsequent conflicts destroying many of the remaining industries. However, mainly as a result of large local investments by the Somali diaspora, many of these small-scale factories have been reopened and newer ones have been created. The latter includes the northern cannery and meat processing plant, as well as about 25 factories in the Mogadishu area, which produce pasta, mineral water, candy, plastic bags, fabrics, leather and leather, detergents and soaps, aluminum, foam mattresses and pillows, fishing, packing, and stone processing.
In 2001, investment in light manufacturing has been expanded in Bosaso, Hargeisa and Mogadishu, in particular, showing growing business confidence in the economy. For this purpose, in 2004, a Coca-Cola bottling plant worth $ 8.3 million was opened in Mogadishu, with investors coming from different parts of Somalia. Various other sectors have also attracted foreign investment from the likes of General Motors and Dole Fruit.
Aviation industry
Following the start of the civil war, all Somali Airlines operations were officially suspended in 1991. By 2014, there are more than six private airlines belonging to Somalia that fill this void. These include Daallo Airlines, Jubba Airways, African Express Airways, East Africa 540, Central Air, and Hajara. Daallo and Jubba join as Airways Alliance in Africa by 2015.
Despite reports of preparations to launch Somali Airlines in 2012 and 2013, Al Arabiya's report on the merger of Daallo Airlines and Jubba Airways in February 2015 says there is no official Somalia airline after the death of Somali Airlines in 1991.
Construction
As a result of improving security conditions in Mogadishu, the Economist Intelligence Unit reported in 2015 that new infrastructure development and repairs to previously abandoned villas took place in the city. However, the Central Intelligence Agency The World Factbook states that the development has not spread to other parts of Somalia, and that security is a major concern for businesses in Mogadishu.
Telecommunications and media
The Somali telecommunication system was destroyed during a battle that took place in 1991. In 2010 various new telecommunications companies provided this lost infrastructure. Funded by Somali businessmen and backed by expertise from China, Korea and Europe, this newborn telecommunication company offers affordable mobile phone and internet services that are not available in many other parts of the continent. Customers can make money transfers and other banking activities via mobile phones, and easily get wireless internet access. However, the operations of the company are limited by the ongoing battle.
In 2004, the installation time for the home phone was three days, while in Kenya in the south, the waiting list had been for years. Interviewed in 2004, telecommunications companies "despair" to have effective governance: "it all starts with security." There are currently about 25 main channels per 1,000 people, and the availability of local phone lines ( tele-density ) is higher than in neighboring countries; three times larger than in nearby Ethiopia. The leading Somali telecommunication companies include Golis Telecom Group, Hormuud Telecom, Somafone, Nationlink, Netco, Telcom and Somali Telecom Group. Hormuud Telecom itself grosses about $ 40 million per year. To curb competitive pressure, the three companies signed an interconnection agreement in 2005 that allowed them to set prices and expand their networks.
The 2010 report states that the expansion of Somalia's telecommunications industry provides one of the clearest signs that the country's economy is growing.
In 2005, there were also 20 private Somali newspapers, 12 radio and television stations, and many websites offering information to the public.
Finance
The Central Bank of Somalia is the official Somali monetary authority. In terms of financial management, it is in the process of assuming the task of both formulating and applying monetary policy. In 2013 the African Development Bank judged that the Central Bank of Somalia "is hampered by a lack of human, material and financial resources", but it will be able to reduce the rate of inflation after taking control of monetary policy and issuing new currency. At the moment Somaliland also has a central bank, although its main role is to serve as a treasury for the government and to print currency.
Due to a lack of confidence in the local currency, the US dollar is widely accepted as a medium of exchange alongside Somali shilling. Nevertheless, the dollarization of large Somali shillings has caused inflation. The central bank said it would end the inflationary environment while taking full control of monetary policy and replace current circulating currencies introduced by the private sector.
Somalia has not had central monetary authority for more than 15 years between the outbreak of the civil war in 1991 and the re-establishment of the next Central Bank of Somalia in 2009. Bank-to-bank transfers were not possible, leading to the emergence of private money transfer operators (MTOs) acting as an informal banking network.
These remittance companies (hawalas ) have become major industries in Somalia, with about $ 1.6 billion USD annually sent to the territory by Somalis in diaspora through money transfers. The latter include Dahabshiil, Qaran Express, Mustaqbal, Amal Express, Kaah Express, Hodan Global, Olympic, Amana Express, Iftin Express and Tawakal Express. Most are important members of the Somali Money Transfer Association (SOMTA), an umbrella organization that regulates the community money transfer sector, or its predecessor, the Somali Financial Companies Association (SFSA). Somalia is the fourth largest country in the world to rely on remittances. Most remittances are sent by Somalis to overseas to families in Somalia. It accounts for 20% â € <â € <-50% of the Somali economy.
Dahabshiil is the largest of the Somali money transfer operators (MTO), having seized most of the markets left behind by Al-Barakaat. The company has its headquarters in London and employs over 2000 people in 144 countries, with 130 branches in the UK alone, over 130 branches in Somalia, and 400 global branches, including one in Dubai. The company provides a variety of financial services to international organizations, as well as to large and small businesses as well as individuals. After Dahabshiil, Qaran Express is Somalia's largest fund transfer company. The company has its headquarters in London and Dubai, with 175 agents worldwide, 66 agents in Somalia and 64 in London, and does not charge any money to send charity funds. Mustaqbal is the third most prominent Somali MTO, with 8 agents in Somalia and 49 in the UK. Like Dahabshiil and Qaran Express, it also has a world-renowned presence.
Because the reformed Central Bank of Somalia fully assumes its monetary policy responsibilities, some existing money-transfer companies are expected in the near future to seek licenses and thereby develop into complete commercial banks. It will serve to expand the national payment system to include official checks, which in turn are expected to strengthen the effectiveness of monetary policy use in domestic macroeconomic management.
With a significant increase in local security, Somali expatriates are beginning to return to the country for investment opportunities. Coupled with modest foreign investment, the flow of funds has helped increase Somali shillings in value. As of March 2014, the currency has appreciated nearly 60% against the US dollar over the previous 12 months. Somali shilling is the strongest among the 175 global currencies traded by Bloomberg, up nearly 50 percent higher than the next strongest global currency during the same period.
Stock exchange
The Somali Stock Exchange (SSE) is the national Somali exchange. Founded in 2012 by Somali diplomat Idd Mohamed, extraordinary Ambassador and permanent representative for the UN. SSE was established to attract investment from both Somalia-owned companies and global companies to accelerate the ongoing post-conflict reconstruction process in Somalia.
In August 2012, SSE signed a Memorandum of Understanding with the Nairobi Securities Exchange (NSE) to assist in technical development. The agreement includes identifying the appropriate skills and support. Sharia-compliant sukuk bonds and halal equities are also expected as part of the deal as Somalia's stock market grows.
As of November 2014, the Somali Exchange has set up administrative offices in Mogadishu, Kismayo, and other urban centers in Somalia. The stock is scheduled to open officially in 2015. Initially, seven Somalia-owned companies from the financial services, telecommunications and transportation sectors are expected to list their shares here for prospective global investment.
Natural resources
Somalia has unexplored reserves of natural resources, including uranium, iron ore, lead, gypsum, bauxite, copper, salt and natural gas. Due to its proximity to oil-rich Arab Gulf countries such as Saudi Arabia and Yemen, the country is also believed to contain unexploited oil reserves. A survey in Northeast Africa by the World Bank and Britain put Somalia in second place after Sudan as a major producer. Australian and Chinese oil companies have been granted permission to find petroleum and other natural resources in the country. A listed oil group in Sydney, Range Resources, anticipates that Puntland province in the north has the potential to generate 5 billion barrels (790 ÃÆ'â € "span> 10 : none "> ^ 6 m 3 ) up to 10 billion barrels (1,6 ÃÆ'â €" 10 9 xm 3 ) from oil. As a result of this development, Somali Petroleum Company was created by the federal government.
In the late 1960s, UN geologists also discovered major uranium deposits and other rare mineral deposits in Somalia. The discovery is the largest of its kind, with industry experts estimating deposits in more than 25% of the world's known uranium reserves of 800,000 tonnes today. In 1984, the IUREP Orientation Stage Mission to Somalia reported that the country had 5,000 tonnes of uranium resource (RAR), 11,000 tonnes of uranium estimated additional resources (EAR) in calcrete deposits, and possibly up to 150,000 tonnes of speculative resource uranium (SR) in sandstone and calcrete deposits. Somalia simultaneously evolved into the world's major uranium supplier, with American, UAE, Italian and Brazilian mineral companies competing for extraction rights. In 2014, Kilimanjaro Capital holds a stake in 1,161,400 acres of Amsas-Coriole-Afgoi (ACA) Block, which includes uranium exploration. In addition to uranium, unspecified quantities of yttrium, rare earth elements and expensive minerals, are also found in the country.
In mid-2010, the Somali business community promised to invest $ 1 billion in the national gas and electricity industry over the next five years. Abdullahi Hussein, director of the newly established Trans-National Gas and Electricity Company, estimates that the investment strategy will create 100,000 jobs. The new company was established through the merger of five Somali companies from the trade, finance, security and telecommunications sectors. The first phase of the project started within six months of the establishment of the company, and trained youth to supply electricity to the economic and community areas. The second phase begins in mid to late 2011 and sees the plant's construction in a special economic zone designed for fishing, agriculture, animal husbandry and mining industries.
In 2012, the Farole government gave the go-ahead for the first official petroleum exploration project in Puntland and Somalia widely. Led by a Canadian oil company, Africa Oil and partner, Range Resources, early drilling at Shabeel-1 well at Puntland's Dharoor Block in March this year managed to produce oil.
According to the Central Bank of Somalia, when the nation embarked on a reconstruction path, the economy is expected to not only match the level of pre-civil war but also to accelerate growth and development because of untapped Somali natural resources.
See also
- Oil exploration in Puntland
References
Bibliography
- Mauri, Arnaldo, Banking Development in Somalia , SSRN 958442 (1971).
External links
- Somali economy in Curlie (based on DMOZ)
- Somalia's latest trade data at ITC Trade Map
- CIA World Factbook: Somalia
Source of the article : Wikipedia
0 Comments