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Economy of Somalia

From Academic Kids

Somalia has a market economy. It lacks natural resources and faces major development challenges, and recent economic reverses have left its people increasingly dependent on remittances from abroad. Its economy is pastoral and agricultural, with livestock — principally camels, cattle, sheep, and goats — representing the main form of wealth. Livestock exports in recent years have been severely reduced by periodic bans, ostensibly for concerns of animal health, by Arabian Peninsula states. Drought has also impaired agricultural and livestock production. Because rainfall is scanty and irregular, farming generally is limited to certain coastal districts, areas near Hargeisa, and the Juba and Shebelle River valleys. The modern sector of the agricultural economy consists mainly of banana plantations located in the south, which have used modern irrigation systems and up-to-date farm machinery.

A small fishing industry has begun in the north where tuna, shark, and other warm-water fish are caught, although fishing production is seriously affected by poaching and the lack of ability to grant concessions because of the absence of a generally recognized government. Aromatic woods — frankincense and myrrh — from a small and diminishing forest area also contribute to the country's exports. Minerals, including uranium and likely deposits of petroleum and natural gas, are found throughout the country, but have not been exploited commercially. Petroleum exploration efforts, at one time under way, have ceased due to insecurity and instability. Illegal production in the south of charcoal for export has led to widespread deforestation. With the help of foreign aid, small industries such as textiles, handicrafts, meat processing, and printing are being established.

The absence of central government authority, as well as profiteering from counterfeiting, has rapidly debased Somalia's currency. By the spring of 2002, the Somali shilling emitted by the TNG had fallen to over 30,000 shillings to the U.S. dollar.

There are no railways in Somalia; internal transportation is by truck and bus. The national road system nominally comprises 22,100 kilometers (13,702 mi.) of roads that include about 2,600 kilometers (1,612 mi.) of all-weather roads, although most roads have received little maintenance for years and have seriously deteriorated.

Air transportation is provided by small air charter firms and craft used by drug smugglers. A number of airlines operate from Hargeisa. Some private airlines, including Air Somalia and Daallo Airlines, serve several domestic locations as well as Djibouti and the United Arab Emirates. The UN and other NGOs operate air service for their missions.

The European Community and the World Bank jointly financed construction of a deepwater port at Mogadishu (currently closed). The Soviet Union improved Somalia's deepwater port at Berbera in 1969. Facilities at Berbera were further improved by a U.S. military construction program completed in 1985, but they have become dilapidated. During the 1990s the United States renovated a deepwater port at Kismayo that serves the fertile Juba River basin and is vital to Somalia's banana export industry. Smaller ports are located at Merca, Brava, and Bossaso. Absence of security and lack of maintenance and improvement are major issues at most Somali ports.

Radiotelephone service is available to both to regional and international locations. The public telecommunications system has been destroyed or dismantled, however it has been rebuilt privately and is superior to what existed before. Somalia is linked to the outside world via ship-to-shore communications (INMARSAT) as well as links to overseas satellite operators by private telecommunications operators (including cellular telephone systems) in major towns. Radio broadcasting stations operate at Mogadishu, Hargeisa, and Galkayo, with programs in Somali and some other languages. There are two television broadcast stations in Mogadishu and one in Hargeisa.

GDP: purchasing power parity - $4.361 billion (2004 est.)

GDP - real growth rate: 2.1% (2004 est.)

GDP - per capita: purchasing power parity - $500 (2004 est.)

GDP - composition by sector:
agriculture: 65%
industry: 10%
services: 25% (2000 est.)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices): note - businesses print their own money, so inflation rates cannot be sensibly determined (2003 est.)

Labor force: 3.7 million (very few are skilled laborers)(1993 est.)

Labor force - by occupation: agriculture (mostly pastoral nomadism) 71%, industry and services 29%

Unemployment rate: NA%

Budget:
revenues: $NA
expenditures: $NA, including capital expenditures of $NA

Industries: a few light industries, including sugar refining, textiles, petroleum refining (mostly shut down), wireless communication

Industrial production growth rate: NA%

Electricity - production: 245.1 million kWh (2001)

Electricity - production by source:
fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 227.9 million kWh (2001)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 0 kWh (1998)

Agriculture - products: bananas, sorghum, maize, rice, sugar cane, mangoes, coconuts, sesame seeds, beans; cattle, sheep, goats; fish

Exports: $79 million f.o.b. (2002 est.)

Exports - commodities: livestock, bananas, hides, fish, charcoal, scrap metal

Exports - partners: UAE 37.2%, Yemen 22.3%, Oman 10.1%, China 6%, Kuwait 4.4%, Nigeria 4% (2003)

Imports: $344 million f.o.b. (2002 est.)

Imports - commodities: manufactures, petroleum products, foodstuffs, construction materials, qat

Imports - partners: Djibouti 33.9%, Kenya 15.5%, Brazil 6.6%, UAE 5.1%, Thailand 4.2% (2003)

Debt - external: $2.6 billion (2000 est.)

Economic aid - recipient: $60 million (1999 est.)

Currency: Somali shilling (SOS)

Exchange rates: Somali shillings (So. Sh.) per US$1 - 2,620 (January 1999), 7,500 (November 1997 est.), 7,000 (January 1996 est.), 5,000 (1 January 1995), 2,616 (1 July 1993), 4,200 (December 1992)
note: the Republic of Somaliland, a self-declared independent country not recognized by any foreign government, issues its own currency, the Somaliland shilling (So. Sh.)

Fiscal year: NA

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