The private sector behind the boom
Much of the Somali economy has been based on livestock farming, telecommunications and money transfers and remittances. The business community has had to rely on the stability provided by Xeer, or the traditional law of Somalia, and lawmakers, rather than on a conventional government, due to the massive disruption which has been experienced in the country after the civil war. The Somali economy has been showing signs of an incredible recovery, with a shift to private investment and business rather than the state owned services that were common prior to the war. Commercial activities in Somalia include transportation and airlines, fishing, trade, telecommunications, money transfers, health, hotels, education and construction. However, it’s evaluated the amount of growth and investment that is occurring in the country in the billions.
The Central Bank of Somalia reopened in 2009. The bank has estimated that the current GDP per person is about 333 dollars. About 80 percent of the Somali population is believed to consist of nomadic and semi nomadic people, who rely on livestock production. Agriculture is essential to the Somali economy, producing approximately 65 percent of the country’s GDP and providing employment for about 65 percent of the workforce. 40 percent of the GDP and over 50 percent of exports are composed of livestock farming alone, although bananas, fish and charcoal are also exported and corn, sorghum and sugar are grown for the home market.
Approximately 1.6 billion dollars a year comes into Somalia in the form of remittances sent home from Somalis who are living and working overseas.
Telecommunications is an important sector in the Somali economy, with many small providers having grown up after the civil war to provide the necessary services. Multinational companies including Telenor, ITT and Sprint have worked in partnership with the local providers to offer some of the best mobile and internet services in the continent. Somali telecommunications companies include the Hormuud Telecom, Somali Telecom Group, Telcom, Netco, Somafone, Golis Telecom Group and Nationlink. Hormuud Telecom is the largest, with a gross annual income of approximately 50 million dollars. A number of telecommunications companies in Somalia signed a deal in 2005 to enable a certain amount of cooperation. Somalia also has 12 radio and TV stations, and 20 newspapers as well as a number of online news providers that take advantage of the widespread telecommunications technology in the country.
Energy has also been provided by a number of small, regional and local companies since the civil war. The Trans-National Industrial Electricity and Gas Company is a conglomerate that was established in 2010 to bring together five companies that work in the telecommunications, finance, security and trade sectors in order to provide gas and electricity in Somalia. The company has a budget of 1 billion dollars for investment and hopes to create 100,000 new jobs in Somalia while developing the energy infrastructure.
It is believed that Somalia has one of the largest and untapped reserves of oil and other important natural resources in the world. In 2008, the transitional government created the Somali Petroleum Company in order to help manage the development of a Somali petrochemicals industry.
Industry contributes only 10 percent of the Somali GDP. Investment from the Somali diasporas has helped to reopen a number of manufacturing plants in Somalia which had closed following the outbreak of the civil war. There are now operational meat processing and fish canning factories in the north of the country, and approximately 25-50 factories working around Mogadishu to make confectionary, soaps, fabric, fishing boats, processed stone and other products. A Coca-cola plant opened up in Mogadishu in 2004, and Dole Fruit and General Motors have both also invested in the region.
Many companies in Somalia have tended to be small local or regional operations since the civil war and they have tended to focus on the provision of important services such as electricity, telecommunications and money transfers. However, larger companies that operate on a national and international scale are beginning to become more important, although private companies remain the driving force behind the boom in Somalia more than the state.
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