Somalia has a Gross Domestic Product (GDP) of approximately 6.2 billion dollars, with growth of nearly 2.5% expected in 2018. The GDP growth in 2018 and 2019 is projected to be driven by recovery in agriculture, greater private sector investment, and improved security. Additionally, import and export activities play a crucial role in Somalia’s economy. The economy is largely controlled by the private sector, with most people living under the subsistence level and engaged in small-scale businesses. The private sector has demonstrated impressive resilience in areas such as telecommunications, financial services, construction, livestock and fisheries.
Main Employment Sectors
Agriculture: Agriculture is the most important economic sector. It accounts for approximately 60% of the GDP and employs 65% of the workforce. Somalia has 8.5 million hectares of arable land, most of which is near the rivers Juba and Shebelle.
The livestock sector is central to the economic and cultural life of the Somali people, as it provides food and income for most of the population. Livestock represents approximately 40% of the GDP and more than 50% of export earnings. In 2015 alone, Somalia exported 5.3 million heads of livestock after lifting an export ban imposed by Saudi Arabia in 2008.
Service: Services is a growing sector in Somalia. Telecommunications, financial services and construction are among the largest service industries, but the sector also includes electricity and water supply, wind and solar power, retail trade, trucking, car hire, hotels, television and radio broadcasting, vehicle repair, well drilling, and security services, among others.
The financial sector of Somalia is emerging and consists of the Central Bank of Somalia (CBS) and 6 privately owned banks licensed by the CBS. Twelve licensed money transfers also operate in the country.
According to the World Bank, remittance is crucial for the growth of the Somali economy. Remittance contributes to both the national economy and impoverished households. Through remittance services, two million Somali diasporas scattered around the world send an estimated 1.5 billion dollars annually to their families in Somalia.
Mobile Finance: Innovative mobile financing schemes facilitate access to financial services in the country because the conventional banking system is limited. According to the World Bank, 73% of the population uses mobile money, whereas only 15% of the population has accounts with formal banks. Mobile money is also used domestically for international remittance.
The telecommunications sector has remained afloat, despite central government regulations. In 2016, the number of mobile subscriptions in Somalia was estimated to be 6.65 million. The telecommunication companies in Somalia earn approximately 1 billion dollars of profit annually.
Given Somali’s long coast and the fact that its economy is dominated by imports, port services play a significant role in the country’s economy, as they create opportunities for hundreds of people. These services are also a source of tax revenue for federal and regional authorities. The capacity of the country’s ports is expanding substantially alongside the country’s economic development. Currently, the main functional seaports are the Mogadishu, Berbera, Bossaso and Kismayo ports.
Somalia has untapped reserves of natural resources, including uranium, iron ore, tin, gypsum, bauxite, copper, salt and natural gas. Due to its proximity to the oil-rich Gulf Arab states, such as Saudi Arabia and Yemen, the nation is also believed to contain substantial unexploited oil reserves. Somali waters are home to some of the richest fishing grounds in Africa, with vast potential for fisheries and coastal development. Although not among the top three contributors to the country’s GDP, the Somali coastline is the longest in Africa and among the most blessed waters. With appropriate investment and management, the Somali fishing industry has high potential for growth and job creation.