By the end of 2023 AD, the Somali economy witnessed three facts that changed its face in 2024 AD, making it a promising economy for the first time. After decades of devastation in light of a brutal civil war, drought and devastating floods, Somalia is on the cusp of an unprecedented revival since 1990 AD.
The first of these facts is Somalia’s accession to the East African Community on November 24, 2023. This is a regional group headquartered in Arusha, Tanzania, and includes: Congo, Kenya, Rwanda, South Sudan, Uganda, and Tanzania. This provides neighboring markets for Somalia, as well as greater capabilities in combating terrorism, which enhances stability, but this requires it to coordinate policies, standards, and rules regulating trade.
Safe environment for investment
The second important factor: It is the vote of the United Nations Security Council on the resolution to lift the arms embargo that was imposed on Somalia since 1992, which helps build capabilities that establish security on its lands and borders.
The third fact is that on December 13, 2023, Somalia’s creditors, led by the International Monetary Fund and the World Bank, announced the cancellation of $4.5 billion, paving the way for Somalia’s return to the global financial system, after three decades of the collapse of the central state – amid fighting between clan warlords – leading to the cancellation of Somalia’s debts almost in March 2024 by the member states of the Paris Club.
But the reality now indicates that the Somali government has the ability to impose more control over Somali lands, after it was accused of being a government besieged inside the capital, Mogadishu. This control contributed to relieving pressure on the private sector, on which the Al-Shabaab movement imposed financial levies. This increased – on the other hand – the tax revenue, with the beginnings of providing a safe environment for investment. However, the fuel for the Al-Shabaab movement was the spread of unemployment among 67% of Somali youth.
Therefore, providing job opportunities is an inevitable goal, and the migration of young people under harsh conditions constitutes the destruction of human capabilities in Somalia.
Droughts and floods are devastating factors that lead to the instability of the Somali economy. This happened in November 2023, when floods in southwestern Somalia led to the displacement of 300,000. The severe drought that Somalia experienced also caused damage to the agricultural sector, which It affected 6.2 million Somalis, and food security became in a very critical situation, making humanitarian aid an urgent necessity, but many international bodies also expressed observations related to the need to coordinate humanitarian aid and monitor its distribution.
Promising potential
This is what prompted the government of Somalia to build a community protection policy since 2019 AD, when the protection program was known (Baxnano), and this program provided cash transfers to 200,000 poor families living in rural areas, knowing that agriculture represents 65% of the Somali economy, with promising potential to increase Agricultural exports, after the government began to solve some export obstacles, such as the certificate of origin, and others.
Fishing is a promising sector for Somalia, with 6,000 Somali vessels and 13,000 foreign vessels fishing in Somali territorial waters.
Somalia relies on 3,898 kilometers of beaches, the longest in Africa. Some experts estimate Somalia’s losses in the fishing sector at $300 million annually, while Somalia’s revenues from the fishing sector amount to $135 million annually. However, in 2018 AD, the government signed an agreement regarding revenues generated from fishing licenses, but Somalia must develop its ports for fishing vessels, as well as develop its fishing fleet, in addition to building fish canning and freezing industries, especially since its coasts are rich in fish species that are in high demand internationally. When the fishing sector is regulated, Somalia is expected to earn $500 million annually from catching more than 200,000 tons of fish.
black gold
Livestock represents an important source of exports, especially sheep, and Somalia depends on exporting them to the Gulf countries. Its exports in 2020 were estimated at $500 million, and Somalia seeks to raise its export capabilities in this field at an accelerated pace.
The civil war had a dark side that destroyed Somalia, but this war pushed many Somalis to immigrate to many countries of the world. Now in some countries, such as Britain, Somalis work from bus drivers to university professors, and have even become distinguished writers and thinkers in a number of countries. The remittances of this diaspora to Somalia. Estimated at 1.2 billion dollars annually, this is a modest number, and I estimate that this number ranges between 3 to 4.3 billion dollars annually, which has contributed strongly to the survival of Somalia.
In 1990 AD, oil exploration companies suspended their work in Somalia, but from 2013 AD to 2016 AD international companies conducted a survey of Somalia’s capabilities in oil and natural gas, and estimated Somali oil at 30 billion barrels, and Somalia’s shores are promising in this field, and in March 2024 AD, Turkey signed an agreement to explore for oil off the coast of Somalia, to begin in 2025.
Somalis appreciate the international aid that has helped Somalia return to its usual effectiveness, including that provided by the Qatar Development Fund. In 2017, it provided $200 million for a number of development projects in Somalia in the fields of education and infrastructure, accompanied by the reconstruction of state institutions with the same support, such as the government presidency building.
This Qatari support was a motive for Somalia’s return, and the European Union contributed 98.2 million euros to revive the Somali economy. This was accompanied by the increasing effectiveness of the Somali Central Bank, starting with increasing the licenses of banks operating in Somalia, the latest of which was the Bank of Egypt, tightening control over financial transactions via mobile phone, and regulating the movement of money.
All of the above is accompanied by concerns about the stability of security, with the withdrawal of African Union peacekeeping forces from Somalia in 2025, and waiting for a full recovery in light of internal divisions that are still severe, and these divisions are hindering growth in a number of promising sectors such as tourism.
The opinions expressed in the article do not necessarily reflect the editorial position of Al Jazeera Network.
