Somalia

Currency

The official currency of Somalia from the year 1962 has been Somalia Shilling, and its symbol is Sh.So. The currency ranks as one of the worst currencies globally, and its exchange rate against the U.S. Dollar is significantly high. Currently, 1 Somali Shilling is equal to 0.0017 US Dollars (X.E., 2020).

Major Economic Features

Since Gelayadh came into power in the year 2000, the population of Somalia has been steadily growing at 3% per year. In the year 2020, the population of Somalia is estimated to be at 15.89 million, an increase from the 2013 value of 10 million (World Population Review, 2020). Somalia is quickly growing with up to 3% annual growth in population and a fertility rate of 6.26 kids per woman, the fourth largest globally. Its population size ranks its 73rd globally (World Population Review, 2020).

The Somalia population is majorly young, with 42.87% of the population aged between 0 and 14 years. In the 0-14 years age bracket 2, 410, 215 are male, while 2,416,629 are female. The second-largest age group is the 15-24 age group that constitutes 19.35% of the entire population. In this age group there are 1,097,358 males and 1,081,762 females (Index Mundi, 2019). The third-largest age group is the 25-54 age group that makes up 31.23% of the population. Of this population 1,821, 823 are males and 1,694,873 are females (Index Mundi, 2019). The fourth-largest age group is the 55-64 age bracket that is 4.35% of the population. In this age group, 245,744 are males, and 243,893 are females. The smallest population group is those aged 65 years and above who only make up 2.19% of the population. Of those aged above 65 years, 95,845 are males, and 150,887 are females (Index Mundi, 2019).

Despite the absence of effective national governance in Somalia, the country maintains an informal economy, which is majorly based on telecommunications, remittance companies, and livestock. The most important industry in Somalia is the Agricultural sector, with livestock making up 40% of the country’s GDP and more than half of its export earning (Central Intelligence Agency, 2017).

In the year 2017, the country exported approximately $198M, rendering it the 175th greatest exporter globally. The value of export, however, represented a -12.9% annual decrease in export from a value of $385M in the year 2012. The Somali export is led by Sheep and Goats, which represents 44.4% of the overall export, followed by Bovine, which represents 22.1% of the total export (OECD, 2017). In the same year, the import of Somalia was $2.23 billion, which ranked it as the 149th greatest importer globally. Since the year 2012, Somali’s imports have expanded at an annual rate of 16.1% from a value of $1.06 billion (OECD, 2017). Its imports are lead by Raw Sugar, which accounts for 11.8% of its overall imports, followed by Rice that makes up 7.41%. Somalia’s top exporters are Oman where exports 69%, China where it exports 5.9%, Japan where it exports 5.6%, France where it exports 5.5% and Bulgaria where it exports 4.0%. As for imports, the top importers are China and India that makes up 21%, Oman, which makes up 14%, Turkey, which makes up 6.3% and Kenya, which constitute 8.5% (OECD, 2017). Somalia became a member of The Common Market for Eastern and Southern Africa in the year 2018. It is also a member of the Community of Sahel–Saharan States, East African Community, and Southern African Development Community (Ntara, 2016).

According to World Bank, in the year 2018, the Somali population was 55.03, and this population, which is majorly made up of nomads and semi-pastoralists that depend on livestock for their livelihood (FAO, 2019). Also, residents of rural Somalia rely on petty agriculture, day labor, and rarely on remittance for their livelihood. Poor living conditions, competition for natural resources such as pasture and agricultural land as well as drought are, however, fueling fighting in the rural areas that are pushing individuals towards the urban sectors (IDMC, 2018). In urban Somalia, there is a development of airline flights, supermarkets, gas stations, telecommunication services as well as money transfer/remittance services which offers employment for the urban residence (IDMC, 2018).

Economic Policies

The civil wars in Somalia that are slowly harming its economy bears a lasting mark of the former colonial power of the region who thrust modern cultural and physical boundaries that emerged as the rift for conflict (CJA, 2020). After the beginning of the civil war in the year 1991, Somaliland declared independence from Somalia (Dalsan Radio, 2020). Somalia has persistently prevented Somaliland from getting independence, even making it impossible for them to sign an international trade agreement.

After independence, access to water and land were nationalized by state laws, and significant restrictions were imposed on livestock trade. As such, rural farmers and nomads were stripped of their productive assets (Besteman, 1996). Title registration that is state-controlled became the only way of holding land, and this leads to the nationalization of the most fertile land of the nation, which was later transferred, businessmen and politicians. With their source of income taken away from the majority of people begun to rely on state aid for their survival.

Several international organizations impact the Somali economy. For instance, The World Bank supports the government institutions in Somalia to enhance good governance, create jobs, and hasten economic recovery. Through the Somali New Deal Compact agreed to by the international community for assistance delivery to Somalia, the organization facilitated increasing delivery via Somali institutions (The World Bank, 2020). The organization also facilitated the New Partnership for Somalia of the year 2017 that dealt with economic recovery, inclusive politics, national security, and humanitarian issues. Somalia is open to foreign trade that accounts for up to 81% of GDP ((OECD, 2017). As such, any international trade agreement that affects the products it majorly trades in and its key trade partners is likely to affect its economy.

Economic Conditions

The 2019 GDP of Somalia was $4.96 billion, an increase from the 2018 value of $4.72 billion. These figures show that the economy is doing well, and the average Somali citizen is better off (Statista, 2020). The GNP of the year 2018 was 4.68 billion, a growth from 4.47 billion of 2017 (Alfred, 2020). These values signify growth in the value of the country’s output. In the year 2019, the unemployment rate of Somalia is 13.96%, an increase from the 2018 value of 13.91%. The increase in the unemployment rate in the year 2019 follows an increase in the year 2018 that was preceded by a plunge in unemployment in the year 2014, 2015, and 2016. In 2014 unemployment fell by 0.05%; in 2015, it fell by 0.15%, and in 2016 it fell by 0.35. According to the Human Development Index of the year 2012, Somalia was ranked as one of the poorest nations globally. The poverty rate of Somalia was 68% in the year 2018 with 67% of the youth being unemployed. (Worldbank, 2019). The high poverty rate in Somalia is due to the high degree of insecurity and low level of development caused by the challenges caused by the humanitarian situation of Somalia. Its level is external debt was at 5.1 billion in 2017(Gridneff, 2019). These statistics show that despite its growth in GDP and GNP, Somalia will face challenges acquiring external debts, is not creating enough fresh employment, and a small percentage of the population benefits from the growth in GDP. Also, the statistics show that despite the growth in employment being small, the employment statistics of Somalia were promising as the government increased employment between the years 2014 and the year 2016.

Technology

After the civil war outbreak in Somalia in the year 1991, the government stopped regulating the telecom network, and this lead to the emergence of a large number of private mobile phone corporations. Since there are no regulatory laws, state control, and license providers, these operators provide extensive coverage all over the country and offer affordable equipment, internet services, and mobile phones, which have allowed local communities to remain connected (UNHCR, 2020). They also give citizens mobile funds transfer services.

In the year 2017, the initial 4G network was launched in the capital of Somalia by Somnet. The services allowed Somali citizens to resume Internet services through their cell phones that were halted in the year 2004 when Alshabaab, a militant group, threatened Hormud Telecommunication Company to end its 3G services in Somalia (Kenyan Wall Street, 2017). When the 3G sim card was halted, the Somalia citizens were compelled to use wifi models that are significantly cumbersome, unlike sim cards (Kenyan Wall Street, 2017). The introduction of 4G Internet technology has become very important to a large number of Somalis who live in the diaspora since it has eased their communication with their motherland. In Africa, Somalia, mobile corporations offer the cheapest rate for its telecommunication services (Ref World, 2015). This has been facilitated by the intense competition in its telecommunication sector. The intense competition has also fuelled the rapid growth that the telecommunication sector of Somalia has experienced.

Conclusion

From the analysis, it is evident that the Somali economy is suffering. The currency of the country is very weak, it is heavily dependent on its agricultural sector for export and livelihood, the existing policies in Somalia are not favoring the Somali citizens, and the unemployment, poverty as well as the foreign debt of the country is very high. Nevertheless, deregulation has supported its technology sector. Its rapidly expanding young population also presents a promising labor market. Further, the rapidly expanding remittance and telecommunication sector, as well as the intervention of international communities, is positively impacting the economy.

Reference

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Besteman, C. (1996) “Violent Politics and the Politics of Violence: The Dissolution of the            Somali Nation-State.” American Ethnologist, Vol. 23, No. 3 August: 581.

Central Intelligence Agency. (2017). The World Factbook. Retrieved from:             https://www.cia.gov/library/publications/the-world-factbook/geos/so.html

Gridneff, I. (2019). Can Somalia Find the Debt Relief Necessary for Development? Retrieved     from: https://theglobalobservatory.org/2017/07/somalia-development-debt-london-                      conference/

The Centre for Justice & Accountability. (2020). Somalia: Colonial Legacy. Retrieved from:             https://cja.org/where-we-work/somalia/related-resources/somalia-colonial-legacy/

Dalsan Radio. (2020). Somalia: Hope for Truce As Somalia and Somaliland Leaders Meet.           Retrieved from: https://allafrica.com/stories/202002140002.html

FAO. (2019). Gender and Land Rights Database. Retrieved from: http://www.fao.org/gender-     landrights-database/country-profiles/countries-list/general-        introduction/en/?country_iso3=SOM

Index Mundi. (2019). Somalia Demographics Profile 2019. Retrieved from:             https://www.indexmundi.com/somalia/demographics_profile.html

Kenyan Wall Street. (2017). Somalia Gets First 4G Internet. Retrieved from: https://www.african-            markets.com/en/news/east-africa/Somalia/Somalia-gets-first-4g-internet

Ntara, C. K. (2016). African Trading Blocs And Economic Growth: A Critical Review Of The                 Literature, International Journal of Developing and Emerging Economies, 4 (1):1-21

OECD. (2017). Somalia. Retrieved from: https://oec.world/en/profile/country/som/

IDMC. (2018). Unsettlement: Urban displacement in the 21st century. Retrieved from:     https://www.internal-displacement.org/sites/default/files/inline-files/201811-urban-      displacement-mogadishu.pdf

Ref World. (2015). Somalia: Prevalence of Cell Phones and Internet Cafes in Mogadishu,             Including the Ability to Use Cell Phones for Financial Transfer (2012-February 2015).     Retrieved from: https://www.refworld.org/docid/550c35904.html

Statista. (2020). Somalia: Gross domestic product (GDP) in current prices from 2014 to 2024 (in billion U.S. dollars). Retrieved from: https://www.statista.com/statistics/863078/gross- domestic-product-gdp-in-somalia/

The World Bank. (2020). The World Bank in Somalia. Retrieved from:             https://www.worldbank.org/en/country/somalia/overview

UNHCR. (2020). Somalia: Prevalence of cell phones and Internet cafes in Mogadishu, including the ability to use cell phones for financial transfers (2012-February 2015). Retrieved from:             https://www.refworld.org/docid/550c35904.html

Worldbank. (2019). Somalia. Retrieved from:           http://pubdocs.worldbank.org/en/752311492188170790/mpo-som.pdf

World Population Review. (2020). Somalia Population 2020. Retrieved from:                                            http://worldpopulationreview.com/countries/somalia-population/

X.E. (2020). X.E. Currency Converter: 1 USD to SOS = 575.482 Somali Shillings. Retrieved from: https://www.xe.com/currencyconverter/convert/?Amount=1&From=USD&To=SOS