Economy Of Somalia

Somalia is classified by the United Nations as a least developed country, reflecting its status among the world’s most economically challenged nations. The majority of its population relies heavily on agriculture and livestock for their livelihoods, with pastoralism and subsistence farming forming the backbone of economic activity. This reliance on traditional sectors underscores the limited industrialization and diversification within the country’s economy. The predominance of livestock rearing, including goats, sheep, camels, and cattle, is particularly notable, as these animals represent critical sources of income, food, and trade for Somali households, especially among nomadic and semi-nomadic communities. The economy of Somalia has experienced significant fluctuations over the past several decades, with its gross domestic product (GDP) valued at approximately $13.89 billion as of 2025. This figure represents a substantial increase compared to earlier estimates and reflects ongoing efforts toward economic recovery and growth despite persistent challenges. Historical data from the Central Intelligence Agency (CIA) provides a useful perspective on Somalia’s economic trajectory. In 1994, the CIA estimated Somalia’s GDP at purchasing power parity (PPP) to be around $3.3 billion, a figure that illustrates the country’s limited economic output in the immediate aftermath of the state collapse and civil war that began in the early 1990s. By 2001, Somalia’s GDP had risen to an estimated $4.1 billion, indicating a modest recovery amid continued political instability and infrastructural deficits. This gradual growth trend continued into the late 2000s; in 2009, the CIA estimated Somalia’s GDP at $5.731 billion, with a projected real growth rate of 2.6%. This period marked a tentative return to economic activity, supported by both internal resilience and remittances from the Somali diaspora. The International Monetary Fund (IMF) further documented this progress, noting in 2014 that Somalia’s economic activity expanded by 3.7%. This growth was primarily driven by the primary and secondary sectors, including agriculture, livestock, fisheries, and emerging industrial activities, which collectively contributed to the expanding economic base. The private sector in Somalia has demonstrated remarkable resilience and dynamism, particularly in the years following the civil war. A 2007 report by the British Chambers of Commerce highlighted significant growth in Somalia’s private sector, especially within the service industry. This development contrasted sharply with the pre-civil war period, during which most services and industrial enterprises were government-run and often inefficient due to centralized control and corruption. The post-conflict era saw a shift toward privatization and entrepreneurial activity, with Somali businesspeople and investors playing a central role in revitalizing commercial enterprises. Substantial private investment has occurred in various commercial sectors, although the informal nature of much of this activity means it remains largely unmeasured and undocumented in official statistics. Much of this investment has been financed by the Somali diaspora, whose remittances and capital injections have been vital in supporting trade, marketing, and money transfer services. These financial flows have enabled the establishment and expansion of transportation networks, telecommunications infrastructure, fisheries equipment, airlines, education institutions, healthcare facilities, construction projects, and hotels. The diaspora’s involvement has been instrumental in bridging the gap left by the absence of a fully functioning central government and formal financial institutions. Despite these positive developments, Somalia’s human development indicators remain among the lowest globally. According to the United Nations Development Programme (UNDP) Somalia, the country had a Human Development Index (HDI) value of 0.285 as of 2012. This figure placed Somalia near the bottom of global rankings, underscoring the severe challenges in health, education, and income faced by its population. When the HDI is adjusted to account for significant inequality within the country, the value declines even further. The UNDP has emphasized that widening inequalities across different social groups constitute a major driver of ongoing conflict and instability, complicating efforts to achieve sustainable development and peace. Somalia’s economy exhibits a dual character, combining traditional production methods with a gradual shift toward more modern industrial techniques. While pastoralism and subsistence agriculture remain dominant, there has been a slow but steady adoption of mechanized farming, small-scale manufacturing, and service-based industries. This transition reflects both the pressures of population growth and urbanization and the influence of private sector initiatives that seek to modernize economic activities. Nonetheless, the pace of industrialization remains limited by infrastructural deficits, insecurity, and the absence of a coherent national economic policy. The Central Bank of Somalia reports that approximately 80% of the population are nomadic or semi-nomadic pastoralists who raise livestock such as goats, sheep, camels, and cattle. These pastoral communities move seasonally in search of pasture and water, adapting to the arid and semi-arid environments that characterize much of Somalia’s landscape. In addition to livestock rearing, nomadic populations also engage in the collection of natural products such as resins and gums, which serve as supplementary sources of income. These products, including frankincense and myrrh, have long been traded both domestically and internationally, contributing to the livelihoods of pastoralists and small-scale traders. The broader Somali economy has suffered extensively due to state failure linked to the protracted civil war that began in the early 1990s. The collapse of central authority led to the disintegration of formal institutions, widespread insecurity, and the destruction of infrastructure, all of which severely hampered economic development. The World Bank has documented the adverse effects of this state failure, noting that the absence of effective governance has constrained investment, disrupted markets, and limited access to basic services. The resulting economic fragmentation has posed significant challenges to reconstruction and growth. However, some economists have offered alternative perspectives on the economic consequences of Somalia’s state collapse. Notably, libertarian scholar Peter T. Leeson has argued that the absence of a predatory state apparatus has, paradoxically, improved economic welfare in certain respects. According to Leeson, the collapse of government monopoly and regulatory control ended the exploitative practices that had previously burdened Somali citizens and businesses. This, in turn, allowed for the emergence of informal institutions and market mechanisms that facilitated trade, dispute resolution, and economic exchange in the absence of formal state structures. While this view remains subject to debate, it highlights the complex interplay between governance, conflict, and economic performance in Somalia’s unique context.

Somalia’s economic data has historically been marked by significant challenges, largely due to prolonged conflict and institutional instability. According to the African Development Bank, the country has been “characterized by a severe lack of basic economic and social statistics,” a condition that was exacerbated by the civil war and the collapse of formal state institutions. Even prior to the state’s failure, available data was often unreliable, reflecting systemic difficulties in data collection and governance. This absence of consistent and accurate economic indicators has complicated efforts to assess Somalia’s economic performance and development needs comprehensively. The World Bank reported that Somalia’s gross domestic product (GDP) was valued at $917.0 million in 1990, a figure that provides a baseline for understanding the country’s economic scale before the onset of widespread conflict. By 2014, Somalia’s total population was estimated at 13.42 million, reflecting demographic trends amid ongoing instability. This population continued to grow, reaching approximately 15 million by 2018, which represents a roughly 12% increase over four years. This demographic growth, despite economic hardships, underscores the resilience of the population and the ongoing pressures on resources and services. In 2018, the World Bank estimated Somalia’s annual GDP at $6.2 billion, signaling a substantial increase compared to earlier decades. This economic output placed Somalia in a comparable position to the economies of Guam and the Kyrgyz Republic, although Somalia remained classified as a low-income country. This classification reflects persistent structural challenges, including limited industrialization, reliance on agriculture and livestock, and the impacts of prolonged conflict and governance deficits. The growth in GDP, while significant, has not yet translated into widespread improvements in living standards or economic diversification. The United Nations Statistics Division provided a series of GDP estimates for Somalia during the 2000s and early 2010s, illustrating fluctuations in economic output amid ongoing instability. In 2005, Somalia’s GDP was reported as $2.316 billion, which then declined sharply to $1.071 billion by 2010. By 2012, the GDP had increased again to $1.306 billion. These variations reflect the complex interplay of factors such as conflict dynamics, droughts, and shifting political conditions that influenced economic activity during this period. The volatility in GDP figures also highlights the difficulties in obtaining consistent economic data in a fragile state context. According to the Central Bank of Somalia, Somalia’s GDP per capita during the 2000s, based on World Bank data, was approximately $230. This represented a slight real-term reduction from the 1990 level, indicating that despite some overall GDP growth, the average income per person did not significantly improve over the intervening decades. This stagnation in per capita income underscores the challenges faced by the population in achieving economic advancement and improved living standards, particularly in the context of population growth and ongoing insecurity. The 2012 Human Development Report estimated Somalia’s per capita GDP at $284, a figure that was significantly below the sub-Saharan African average of $1,300 per capita. This placed Somalia as having the fourth lowest GDP per capita globally at that time. The stark disparity between Somalia and regional averages highlights the country’s marginalization in terms of economic development and the severity of its poverty and underdevelopment. Such low income levels are indicative of limited access to basic services, infrastructure deficits, and the broader impacts of protracted conflict. Poverty remains a pervasive issue within Somalia, with approximately 43% of the population living on less than 1 US dollar per day. Of this impoverished population, 24% reside in urban areas while a majority of 54% live in rural areas. This distribution reflects the predominantly rural character of Somalia’s society and economy, where subsistence agriculture and pastoralism remain central livelihoods. The high incidence of poverty in rural areas is often linked to limited access to markets, services, and infrastructure, as well as vulnerability to environmental shocks such as drought. The United Nations Development Programme (UNDP) Somalia reported in 2012 that the country exhibited some of the world’s lowest development indicators, accompanied by a “strikingly low” Human Development Index (HDI) value of 0.285. This HDI score, which combines measures of life expectancy, education, and income, would rank Somalia among the lowest globally if comparable data were available for all countries. The low HDI underscores the multifaceted nature of Somalia’s development challenges, encompassing poor health outcomes, limited educational attainment, and economic deprivation. When adjustments are made to account for significant inequality within Somalia, the HDI value declines even further. The UNDP highlighted that widening inequalities across different social groups constitute a major driver of conflict within the country. These disparities manifest in unequal access to resources, services, and opportunities, exacerbating social tensions and undermining efforts at peacebuilding and development. Addressing these inequalities is therefore critical not only for improving human development outcomes but also for enhancing stability. Since 1971, the United Nations has classified Somalia as a least developed country (LDC) through its Committee for Development Policy. This designation reflects the country’s persistent structural vulnerabilities, including low income, weak human assets, and economic susceptibility to external shocks. The LDC status has implications for Somalia’s eligibility for international support and preferential trade arrangements, which are intended to assist in overcoming development constraints. An International Monetary Fund (IMF) mission to Somalia estimated GDP growth at 3.7% in 2014, signaling a modest economic recovery amid ongoing challenges. However, the mission also reported a Consumer Price Index (CPI) inflation rate of -71.10%, indicating significant deflationary pressures during that period. Such deflation can be symptomatic of weak demand, economic contraction, or disruptions in supply chains, all of which complicate the economic environment. The IMF’s assessment highlighted the fragile nature of Somalia’s economic recovery and the need for sustained improvements in governance and security. The IMF report projected that if Somalia’s security situation were to modestly improve and drought conditions were avoided, medium-term economic growth could average around 5%. Despite this optimistic projection, the report cautioned that such growth would remain insufficient to substantially reduce poverty and gender disparities. This underscores the structural nature of Somalia’s development challenges, where economic expansion alone is unlikely to address deeply entrenched social inequalities and widespread deprivation without complementary policy interventions. In 2016, an estimated 73% of Somalia’s population lived below the poverty line, illustrating the persistence of widespread poverty despite projections of economic growth. This high poverty rate reflects the cumulative impact of decades of conflict, weak institutions, and limited access to basic services and economic opportunities. The prevalence of poverty continues to pose significant obstacles to Somalia’s development and stability, necessitating coordinated efforts to promote inclusive growth and social protection.

The outbreak of civil war in Somalia in 1988 precipitated a rapid and profound collapse of state institutions within a mere two years, as documented by the World Bank. This institutional disintegration led to the widespread destruction of the country’s economic and social infrastructure, effectively dismantling the foundational assets necessary for governance and development. Key sectors such as transportation networks, public utilities, and administrative frameworks were severely compromised or obliterated, leaving Somalia without a functioning centralized authority. The absence of a cohesive state apparatus resulted in a vacuum that significantly undermined the capacity for coordinated economic planning and social service delivery, thereby exacerbating the country’s fragility during this period. Despite the absence of a formal state and its institutions, the Somali private sector demonstrated remarkable resilience and growth by 2003, as reported by the World Bank. This growth was particularly notable given the broader context of state failure, illustrating the adaptability and entrepreneurial spirit within Somali society. However, this expansion was uneven and faced significant constraints; many economic sectors experienced stagnation or were hindered in their development due to chronic deficiencies. Key obstacles included a persistent lack of investment capital, shortages of trained and skilled manpower, and the absence of a relevant legal and regulatory framework. Without enforceable rules, common standards, or mechanisms for quality control, businesses operated in an environment characterized by uncertainty and risk, limiting their potential for sustained growth and integration into broader markets. The 2003 World Bank report further emphasized the challenges Somalia faced in mobilizing and utilizing domestic savings for productive investment. The lack of formal financial services infrastructure, such as banks and credit institutions, coupled with the absence of regulatory agencies to oversee financial transactions, severely restricted the capacity of individuals and enterprises to save securely and access capital. This financial vacuum hindered the development of a robust investment climate, as potential investors were unable to channel funds efficiently into productive ventures. The informal nature of financial dealings, often reliant on traditional mechanisms such as hawala systems, while functional to some extent, could not fully substitute for the benefits provided by formalized financial institutions in promoting economic growth and stability. The absence of recognized state institutions also had profound implications for Somalia’s engagement with the international financial system. According to the World Bank, this institutional void effectively barred Somalia from accessing international capital markets, which are typically contingent upon sovereign guarantees and formal regulatory oversight. Without a legitimate government to negotiate terms, issue sovereign debt, or enter into binding financial agreements, Somalia was excluded from global financial networks that could have provided critical funding for reconstruction and development. This exclusion further isolated the country economically and limited the avenues available for external investment and aid, thereby prolonging the economic hardships associated with state failure. In a 2007 article, libertarian economist Peter T. Leeson presented a contrarian perspective on the consequences of Somalia’s state collapse, characterizing the former Somali state as predatory in nature. Leeson argued that the disintegration of centralized authority actually led to improvements in the economic welfare of Somali citizens. His analysis showed that out of 18 key development indicators, 14 exhibited more positive outcomes during the period from 2000 to 2005 compared to the years 1985 to 1990, which corresponded to the era of Siad Barre’s regime. These indicators encompassed various dimensions of economic and social well-being, suggesting that the absence of a coercive and extractive state apparatus allowed for more organic economic activity and improved living conditions for many Somalis. Supporting Leeson’s findings, economists Benjamin Powell, Ryan Ford, and Alex Nowrasteh also contended that Somalia’s economic performance improved relative to other African states during the years of statelessness. Their research highlighted that, despite the lack of formal governance, Somalia’s economy exhibited signs of dynamism and growth that contrasted with the trajectories of other nations on the continent that maintained centralized governments. This comparative improvement was attributed to the emergence of decentralized, market-driven mechanisms and informal institutions that filled the governance void, enabling economic transactions and social order to persist in the absence of a formal state. Ersun Kurtulus further analyzed the discourse surrounding Somalia’s experience of anarchy, noting that the works of Leeson, Powell, Ford, and Nowrasteh provide some of the most unequivocal empirical evidence suggesting that Somalia fared better economically during the period of statelessness than under the authoritarian rule of Siad Barre. Kurtulus acknowledged that these studies challenge conventional assumptions about the necessity of state institutions for economic development, demonstrating that the collapse of a repressive regime can, under certain conditions, lead to improvements in economic and social welfare. This perspective invites reconsideration of the relationship between state authority and economic performance, particularly in contexts where state power is predatory and extractive. However, Kurtulus also offered a critical appraisal of these arguments, emphasizing that their explanatory framework is rooted in a liberal conceptualization of statehood that prioritizes the negative impacts of state predation on welfare. He argued that while the correlation between state collapse and improved economic outcomes may hold in Somalia’s case, the analysis often lacks rigorous quantitative examination establishing a definitive negative correlation between indicators of state predation and measures of economic and social welfare. Furthermore, Kurtulus contended that these accounts tend to overemphasize endogenous domestic factors—such as the nature of the state and internal governance dynamics—while neglecting exogenous influences operating at regional and international levels. He suggested that external factors, including geopolitical interests, regional conflicts, and international economic policies, also played significant roles in shaping Somalia’s trajectory during and after the collapse of its state institutions. By highlighting the interplay between domestic governance failures and broader external forces, Kurtulus underscored the complexity of Somalia’s economic and social evolution in the context of state failure. The multifaceted nature of Somalia’s experience illustrates that while the collapse of a predatory state can yield certain immediate improvements in personal and civil liberties, the long-term implications for economic welfare are contingent upon a range of factors extending beyond the mere absence or presence of formal state institutions. Consequently, understanding Somalia’s economic welfare during periods of state failure requires a nuanced analysis that integrates both internal dynamics and external geopolitical and economic contexts.

Agriculture has historically constituted the backbone of Somalia’s economy, representing the most significant sector in terms of both gross domestic product and employment. Approximately 65% of Somalia’s GDP derives from agricultural activities, underscoring its central role in the country’s economic framework. This sector also employs around 65% of the labor force, highlighting its importance as a primary source of livelihood for the majority of Somalis. The predominance of agriculture reflects the country’s reliance on its natural resources and traditional economic practices, which have persisted despite various challenges, including political instability and environmental pressures. Within the agricultural sector, livestock production stands out as a particularly vital component. Livestock contributes about 40% to Somalia’s GDP, which makes it the single largest contributor within agriculture. Moreover, the livestock industry generates more than 50% of the country’s export earnings, demonstrating its critical role in foreign exchange and trade. Somalia’s extensive pastoralist communities have long engaged in the rearing of camels, cattle, sheep, and goats, which are well adapted to the arid and semi-arid conditions prevalent across much of the country. The prominence of livestock exports reflects both the quality of Somali animals and the strong demand for them in international markets, particularly in the Middle East. In addition to livestock, Somalia’s principal exports include fish, charcoal, and bananas. These commodities contribute to the diversification of the country’s export base, although their volumes and values are generally lower than those of livestock. Fishing, especially in coastal regions, provides a valuable source of income and employment, with exports of fish products catering to both regional and international markets. Charcoal production, while economically significant, has been subject to environmental concerns due to deforestation. Bananas, historically cultivated in the southern regions, have been a traditional export crop, although production has fluctuated due to instability and infrastructural challenges. On the domestic front, staple crops such as sugar, sorghum, and corn are primarily produced for local consumption, forming the dietary foundation for much of the population. These crops are cultivated mainly in the fertile riverine areas, where irrigation and more favorable climatic conditions support their growth. Trade dynamics in Somalia have evolved considerably since the onset of the civil war in 1991. According to the Central Bank of Somalia, annual imports of goods currently total about $460 million. This figure represents a recovery and even a surpassing of aggregate import levels that existed prior to the outbreak of the civil war. The resilience of Somalia’s trade infrastructure and the adaptability of its commercial networks have facilitated this rebound in import activity. Conversely, annual exports amount to approximately $270 million, which also exceeds pre-war aggregate export levels. Despite this positive trend in both imports and exports, Somalia continues to experience a trade account deficit of about $190 million per year. This persistent deficit reflects the imbalance between the country’s import demands and its export capacity. The trade deficit is substantially offset by remittances sent by Somalis living abroad. These remittances have been crucial in sustaining the country’s import levels, providing a vital source of foreign currency that supports domestic consumption and investment. The Somali diaspora, spread across various countries, has maintained strong economic ties with their homeland, channeling funds that help to stabilize the economy and mitigate the effects of trade imbalances. The inflow of remittances has also contributed to the growth of informal financial systems and has underpinned the resilience of Somalia’s economy despite ongoing challenges. Somalia’s geographic proximity to the Arabian Peninsula has played a strategic role in shaping its livestock trade. Somali traders have increasingly challenged Australia’s traditional dominance in the Persian Gulf Arab livestock and meat market by offering quality animals at very competitive prices. This shift has been facilitated by Somalia’s ability to supply large volumes of livestock that meet the preferences and standards of Gulf markets, as well as by the logistical advantages conferred by geographic closeness. The competition posed by Somali exporters has prompted a reevaluation of market dynamics in the region, with Gulf countries diversifying their sources of livestock imports. In response to this emerging competition, Persian Gulf Arab states have initiated strategic investments in Somalia’s agricultural sector. Notably, Saudi Arabia has undertaken the development of livestock export infrastructure within Somalia, aiming to enhance the efficiency and capacity of animal shipments to Gulf markets. Similarly, the United Arab Emirates has acquired large farmlands in Somalia, reflecting a broader interest in securing agricultural production and food supply chains. These investments signify a growing recognition of Somalia’s potential as a key player in regional livestock trade and underscore the geopolitical and economic interconnections between the Horn of Africa and the Arabian Peninsula. Commercial fishing agreements have also been established in northern Puntland, a semi-autonomous region of Somalia, attracting fishing fleets from Europe and Asia. These agreements have facilitated the expansion of fishing activities and the integration of Puntland’s fisheries into global markets. The presence of foreign fleets reflects the region’s rich marine resources and the strategic importance of its coastal waters. Such partnerships have the potential to enhance local economic development through technology transfer, employment opportunities, and increased export revenues, although they also raise considerations regarding sustainable resource management. The scale of Somalia’s livestock exports has reached remarkable levels in recent years. In 2012, Somalia exported 3 million sheep to the Middle East, surpassing Australia’s export volume of 2 million sheep to the same region. This milestone highlighted Somalia’s growing prominence in the global livestock market and its ability to compete with established exporters. The Australian Bureau of Agricultural and Resource Economics and Sciences reported that 99% of Australia’s livestock exports were destined for the Middle East; however, since 2006, Australian exports had declined by 10%, a trend attributed to increased competition from African and Eastern European sheep exporters. Somalia’s expanding market share reflects both the quality of its livestock and the strategic efforts by Somali traders to capture demand in Middle Eastern countries. By 2014, Somalia had exported more than 5 million livestock, marking the highest volume recorded in 20 years. This peak volume underscored the recovery and growth of the livestock sector following decades of conflict and disruption. The increase in exports was facilitated by improvements in supply chain logistics, market access, and the reestablishment of trade networks. This growth also indicated the resilience of pastoralist livelihoods and the adaptability of Somali producers to changing market conditions. The neighboring region of Somaliland hosts some of the largest livestock markets in the Horn of Africa, locally known as seylad. The markets of Burao and Yirowe are particularly notable, with daily sales reaching up to 10,000 heads of sheep and goats. These markets serve as critical hubs for the aggregation, pricing, and distribution of livestock, drawing animals from across the Horn of Africa. The scale and vibrancy of these markets reflect Somaliland’s strategic role in regional livestock trade and its capacity to facilitate large-scale commercial transactions. Livestock from these markets is frequently shipped to Gulf states via the port of Berbera, which functions as a key export gateway. The port’s infrastructure and geographic location enable efficient transportation of animals to international destinations, supporting the broader livestock export industry. The markets in Burao and Yirowe handle animals sourced not only from Somaliland but also from neighboring regions, highlighting the interconnectedness of pastoralist economies across national boundaries in the Horn of Africa. In addition to livestock, Somalia is a significant global supplier of aromatic resins such as frankincense and myrrh. Together with Ethiopia and Kenya, Somalia ranks among the world’s three largest producers of these valuable natural products. Frankincense and myrrh have been harvested for centuries and continue to be important export commodities, utilized in various industries including perfumery, traditional medicine, and religious rituals. The production of these resins contributes to the livelihoods of communities in arid and semi-arid regions where the Boswellia and Commiphora trees, from which frankincense and myrrh are derived, naturally grow. Somalia’s engagement in fish processing and export is exemplified by the production of the Las Qoray brand of canned tuna fish, which is manufactured in Las Khorey. This enterprise reflects efforts to add value to the country’s abundant marine resources and to participate more fully in international seafood markets. The development of fish processing facilities such as those producing Las Qoray tuna indicates a diversification of Somalia’s export portfolio and the potential for growth in the fisheries sector. The canned tuna brand serves both domestic consumption and export markets, contributing to employment and economic activity in the coastal regions.

The industrial sector in Somalia has historically been modest in scale and primarily centered on the processing of agricultural products, which has constituted about 10% of the country’s Gross Domestic Product (GDP). This sector’s focus on adding value to raw agricultural commodities reflects Somalia’s predominantly agrarian economy, where livestock, crops, and fisheries form the backbone of production. The processing activities ranged from simple transformations such as milling grains to more complex operations like meat and fish canning. Despite its limited size, the manufacturing industry played a crucial role in providing employment and supporting local markets, although it remained underdeveloped compared to other economic sectors. Prior to the outbreak of civil war in 1991, Somalia’s manufacturing landscape included approximately 53 state-owned firms that varied in size from small to large enterprises. These state-owned entities were established with the intent to foster industrial development and reduce reliance on imports by producing goods domestically. However, many of these firms struggled financially due to inefficiencies, inadequate infrastructure, and limited access to capital. The challenges were compounded by a lack of modern technology and managerial expertise, which hindered their ability to compete both locally and regionally. As a result, the industrial sector was characterized by underperformance, with many factories operating below capacity or incurring losses. The onset of civil war in 1991 had a devastating impact on Somalia’s industrial facilities, leading to widespread destruction and the near collapse of the manufacturing sector. The conflict resulted in the abandonment or damage of numerous factories, disruption of supply chains, and a breakdown of institutional frameworks necessary for industrial operations. Infrastructure such as electricity, transportation, and water supply, which are critical for manufacturing activities, suffered severe degradation during the years of instability. The insecurity and political fragmentation further discouraged investment and led to a mass exodus of skilled labor, exacerbating the decline of industrial production. Despite these challenges, the Somali diaspora played a pivotal role in the gradual revival of the manufacturing sector through substantial local investment. Members of the diaspora, often having accumulated capital and business experience abroad, began channeling resources back into Somalia to reopen small-scale manufacturing plants and establish new enterprises. This influx of investment was instrumental in rebuilding economic activity at the grassroots level and demonstrating confidence in Somalia’s potential for recovery. The diaspora’s engagement extended beyond mere financial contributions, encompassing the transfer of knowledge, technology, and managerial skills essential for sustainable industrial development. Among the new manufacturing enterprises that emerged in the post-conflict period were fish-canning and meat-processing plants, particularly in northern Somalia. These facilities capitalized on the region’s rich marine resources and livestock populations, aiming to add value to primary products and access export markets. The establishment of such plants not only created employment opportunities but also contributed to improving food security and generating foreign exchange earnings. The focus on fish-canning and meat processing reflected a strategic alignment with Somalia’s comparative advantages and natural resource endowments, fostering a more diversified industrial base. In the Mogadishu area alone, approximately 25 factories operated, producing a wide array of products that catered to both local consumption and regional trade. These factories manufactured items including pasta, mineral water, confections, plastic bags, fabric, hides and skins, detergent and soap, aluminum goods, foam mattresses and pillows, fishing boats, packaging services, and stone processing. This diversity of products underscored the adaptability and entrepreneurial spirit of Somali manufacturers who sought to meet the varied demands of consumers despite infrastructural and logistical constraints. The presence of such varied manufacturing activities in the capital also highlighted the role of urban centers as hubs of industrial and commercial revival. By 2001, investments in light manufacturing had expanded significantly in key cities such as Bosaso, Hargeisa, and Mogadishu, signaling a growing business confidence in Somalia’s economic prospects. These urban centers became focal points for industrial growth due to their strategic locations, access to ports, and relatively stable security environments compared to other parts of the country. The expansion of light manufacturing included sectors such as textiles, food processing, and consumer goods, which were less capital-intensive and more adaptable to the prevailing economic conditions. This trend indicated a gradual normalization of economic activities and an increasing willingness among both local and diaspora investors to commit resources to Somalia’s industrial development. A notable milestone in Somalia’s manufacturing sector was the inauguration of a Coca-Cola bottling plant in Mogadishu in 2004, representing an $8.3 million investment. This venture involved investors from various constituencies within Somalia, reflecting a collaborative effort to reestablish large-scale industrial operations. The Coca-Cola plant symbolized renewed confidence in Somalia’s market potential and the ability to attract significant capital inflows despite ongoing challenges. It also demonstrated the potential for multinational corporations to engage in the Somali economy, providing a boost to local manufacturing capabilities and supply chains. Foreign investment has played an increasingly important role in Somalia’s manufacturing and related sectors, with international companies such as General Motors and Dole Fruit participating in the economy. General Motors’ involvement typically centered on the importation and assembly of vehicles, which supported transportation infrastructure and commercial activities. Dole Fruit’s engagement related to the export of agricultural produce, linking Somali farmers to global markets and encouraging the development of agro-processing industries. The participation of such multinational corporations indicated Somalia’s gradual integration into global economic networks and the attractiveness of its natural resources and strategic location for foreign investors. This influx of foreign capital and expertise contributed to the diversification and modernization of the manufacturing sector, offering prospects for sustained economic growth.

Somali Airlines officially suspended all operations in 1991, a direct consequence of the outbreak of the civil war in Somalia that year. The escalating conflict rendered the continuation of the national carrier’s activities untenable, as widespread violence and political instability severely disrupted civil infrastructure and governance. The airline, which had previously served as Somalia’s official flag carrier, was unable to maintain its routes, fleet, and personnel amid the deteriorating security situation. This suspension marked the end of an era in Somali civil aviation, leaving the country without a formal national airline for many years to come. In the years following the collapse of Somali Airlines, the void in the domestic and regional air transport market was gradually filled by a growing number of Somali-owned private airlines. By 2014, more than half a dozen such carriers had emerged, reflecting both the resilience of the Somali entrepreneurial spirit and the increasing demand for air travel within and beyond Somalia’s borders. Among these private airlines were Daallo Airlines, Jubba Airways, African Express Airways, East Africa 540, Central Air, and Hajara. Each of these companies established operations independently, offering a mixture of domestic flights and regional services to destinations in East Africa and the Middle East. Their emergence helped restore vital air connectivity disrupted by years of conflict and the absence of a national flag carrier. The competitive landscape of Somali aviation underwent a significant transformation in 2015 when two of the largest private carriers, Daallo Airlines and Jubba Airways, merged to form the African Airways Alliance. This strategic consolidation aimed to pool resources, streamline operations, and enhance service offerings in an increasingly competitive regional market. The merger combined the networks, fleets, and expertise of both airlines, creating a stronger entity capable of expanding route options and improving operational efficiency. The African Airways Alliance represented a new chapter in Somali civil aviation, signaling a move toward greater cooperation among private carriers in the absence of a government-owned flag carrier. Despite occasional media reports and public discussions in 2012 and 2013 about the possibility of relaunching Somali Airlines as the country’s official national airline, these plans never materialized into an operational entity. Various proposals and government statements hinted at ambitions to revive the flag carrier, recognizing its symbolic and practical importance for national unity and economic development. However, persistent challenges—including political instability, lack of infrastructure, and financial constraints—prevented the reestablishment of Somali Airlines. Consequently, after its cessation of operations in 1991, Somalia remained without an official national flag carrier for decades, relying instead on the private airlines that had filled the market gap. This absence of a formal Somali flag carrier was confirmed by external media coverage, such as that by Al Arabiya in February 2015. Their report on the merger between Daallo Airlines and Jubba Airways into the African Airways Alliance explicitly noted that no official Somali national airline had existed since the demise of Somali Airlines. This acknowledgment underscored the continued reliance on private sector initiatives to provide air transport services in Somalia, reflecting the broader challenges faced by the country in reestablishing state-controlled institutions in the aftermath of prolonged conflict. The situation highlighted the complex interplay between political realities and economic necessities in the Somali airline industry.

In 2015, the Economist Intelligence Unit highlighted that improved security conditions in Mogadishu had played a pivotal role in facilitating the construction of new infrastructure and the repair of previously abandoned villas within the city. This marked a notable shift from earlier years when ongoing conflict and instability had severely hindered urban development efforts. The enhanced security environment allowed both local and international investors to engage more confidently in rebuilding projects, contributing to a gradual revitalization of the capital’s physical landscape. As a result, construction activities in Mogadishu encompassed a range of initiatives, including residential renovations, commercial building projects, and the rehabilitation of public facilities, reflecting a broader trend toward urban renewal after decades of turmoil. Despite these positive developments within Mogadishu, the Central Intelligence Agency’s publication, The World Factbook, indicated that such construction and development activities had not extended significantly to other regions of Somalia. While the capital experienced a relative stabilization that encouraged infrastructural growth, many other parts of the country continued to face challenges related to insecurity, political fragmentation, and limited governance capacity. These factors contributed to a persistent disparity in development, with rural and peripheral areas remaining largely underdeveloped and lacking the investment necessary for substantial construction projects. The uneven distribution of infrastructural progress underscored the complex nature of Somalia’s recovery, where improvements in one area did not necessarily translate into nationwide advancement. The World Factbook further emphasized that security continued to be a significant concern for businesses operating in Mogadishu, potentially limiting broader economic and infrastructural growth despite the gains made in the capital. While the improved security situation enabled increased construction activity, the threat of sporadic violence, terrorism, and political instability remained a constant risk for investors and entrepreneurs. Such conditions often resulted in higher operational costs, including the need for enhanced security measures and insurance, which in turn constrained the scale and pace of development projects. Consequently, the construction sector in Mogadishu, though growing, faced ongoing challenges that tempered its potential to drive widespread economic expansion. This precarious security environment underscored the fragile nature of Somalia’s recovery and the critical need for sustained improvements to support long-term infrastructure development across the country.

Somalia’s telecommunications infrastructure suffered a catastrophic collapse during the violent conflict that erupted in 1991, which led to the destruction of virtually all existing systems and facilities. The civil war dismantled the centralized telecommunications network, leaving the country without functional landlines, mobile services, or internet connectivity. This breakdown in communication infrastructure profoundly affected both economic activities and social interactions, as the absence of reliable telecommunication hindered business operations, governance, and everyday communication. The collapse also isolated many regions within Somalia, making coordination and information dissemination exceedingly difficult during a period marked by instability and fragmentation. Despite these challenges, by 2010, Somalia witnessed a remarkable resurgence in its telecommunications sector, driven primarily by the initiative and investment of Somali entrepreneurs. These new telecommunications companies emerged to fill the void left by the destroyed infrastructure, establishing networks that provided essential services to a population eager for connectivity. The revitalization of the sector was bolstered by international support and technical expertise from a diverse array of countries and organizations, including the People’s Republic of China, Japan, the European Union, and South Korea. This external assistance contributed to the modernization of equipment, the introduction of new technologies, and the training of personnel, enabling Somali firms to leapfrog traditional stages of telecommunications development. The telecommunications firms that arose during this period offered mobile phone and internet services at prices that were notably affordable, especially when compared to many other African nations where such services remained prohibitively expensive or inaccessible. These companies introduced innovative solutions that extended beyond basic voice communication, enabling customers to conduct money transfers and banking transactions via mobile phones, which was particularly transformative given the limited presence of formal banking institutions in Somalia. Additionally, wireless internet access became increasingly available, facilitating greater connectivity for individuals and businesses alike. This expansion of services played a critical role in integrating Somalia’s economy and society into the broader global digital landscape, fostering new opportunities for commerce, education, and social engagement. However, the ongoing conflict and insecurity in various parts of Somalia continued to impose significant constraints on the operations of telecommunications companies. Persistent fighting and lawlessness disrupted infrastructure development, posed risks to personnel and equipment, and complicated efforts to establish nationwide coverage. Despite these obstacles, firms persevered, often adapting their operations to the volatile environment by focusing on relatively stable regions or employing innovative business models that accounted for security challenges. The resilience of the telecommunications sector in the face of such adversity underscored the critical importance of communication services to Somali society and the determination of entrepreneurs to rebuild the country’s economic foundations. In 2004, the telecommunications landscape in Somalia presented a striking contrast to that of neighboring countries. The installation time for a landline telephone in Somalia was approximately three days, a remarkably short period compared to Kenya, where waiting lists for landline connections extended for many years due to bureaucratic inefficiencies and limited infrastructure. This rapid installation was indicative of the entrepreneurial and flexible nature of Somalia’s telecommunications providers, who operated in a largely unregulated environment that allowed for swift deployment of services. The ability to quickly establish landline connections was a significant advantage for businesses and individuals seeking reliable communication channels in a country otherwise marked by infrastructural deficits. Telecommunications firms interviewed in 2004 expressed a profound sense of urgency and frustration regarding the absence of an effective central government, which they identified as a fundamental barrier to sustained growth and development in the sector. These companies emphasized that “everything starts with security,” highlighting the essential role of stability and governance in creating an environment conducive to investment, expansion, and innovation. Without a secure and predictable political framework, telecommunications providers faced ongoing risks that limited their ability to plan long-term projects, attract foreign investment, and extend services to underserved areas. The call for improved security underscored the interconnectedness of political stability and economic progress in Somalia. At that time, Somalia’s tele-density—the number of telephone lines per 1,000 inhabitants—stood at approximately 25 mainlines per 1,000 persons. This figure was notably higher than that of neighboring countries, reflecting the relative success of Somalia’s telecommunications sector despite the country’s broader challenges. For example, Somalia’s tele-density was three times greater than that of Ethiopia, a neighboring state with a more centralized but less accessible telecommunications infrastructure. This comparative advantage was largely attributable to the competitive and entrepreneurial nature of Somalia’s telecommunications market, which fostered innovation and responsiveness to consumer demand in the absence of a dominant state monopoly. Several prominent telecommunications companies operated within Somalia, playing pivotal roles in the sector’s growth and service provision. Among these were Golis Telecom Group, Hormuud Telecom, Somafone, Nationlink, Netco, Telcom, and Somali Telecom Group. These firms collectively contributed to expanding network coverage, improving service quality, and introducing new technologies to the Somali market. Hormuud Telecom, in particular, emerged as a leading player, generating gross revenues of approximately $40 million annually. The financial success of Hormuud and other companies demonstrated the viability and profitability of the telecommunications industry in Somalia, even amid ongoing political and security challenges. In an effort to reduce competitive pressures and foster a more coordinated approach to network expansion and pricing, three major telecommunications companies signed an interconnectivity agreement in 2005. This agreement allowed the firms to collaborate on setting prices and ensuring interoperability between their networks, thereby improving service quality and customer experience. The interconnectivity arrangement also facilitated the expansion of coverage areas, as customers of one provider could communicate seamlessly with those of another. This cooperative strategy marked a significant step toward market stabilization and the creation of a more integrated telecommunications ecosystem within Somalia. By 2010, the expansion of Somalia’s telecommunications industry had become one of the clearest indicators of the country’s broader economic growth and resilience. The sector’s rapid development reflected not only the entrepreneurial spirit of Somali businesspeople but also the increasing demand for communication services as the economy diversified and modernized. Telecommunications infrastructure supported a range of economic activities, from small-scale commerce to remittances and financial services, thereby contributing to poverty reduction and social inclusion. The growth of the telecom sector also signaled Somalia’s gradual reintegration into regional and global markets, as improved connectivity facilitated trade, investment, and information exchange. By 2015, Somalia had developed a vibrant media landscape that complemented its telecommunications advancements. The country hosted approximately 20 privately owned newspapers, alongside 10 radio and television stations, and numerous internet sites that provided information to the public. This proliferation of media outlets reflected both the demand for diverse sources of news and entertainment and the relative freedom of expression that had emerged in certain regions. The growth of private media contributed to increased public awareness, civic engagement, and cultural expression, playing a vital role in Somalia’s ongoing social and political development. The expansion of telecommunications infrastructure underpinned this media growth, enabling the dissemination of content across the country and connecting Somali audiences with global information networks.

The Central Bank of Somalia serves as the official monetary authority tasked with formulating and implementing the country’s monetary policy, a responsibility it has been progressively assuming in recent years. Following decades of disruption, the bank is currently in the process of fully reinstating its functions to regulate the monetary system, stabilize the currency, and control inflation. Historically, the institution faced significant challenges in re-establishing its operations, but efforts have been underway to rebuild its capacity and infrastructure to effectively manage Somalia’s financial system. This gradual assumption of monetary policy responsibilities marks a critical step toward restoring formal financial governance in the country. In 2013, the African Development Bank conducted an assessment of the Somali Central Bank and concluded that the institution was “handicapped by the lack of adequate human, material and financial resources,” which severely limited its operational effectiveness. Despite these constraints, the bank was expected to play a pivotal role in reducing inflation once it gained full control over monetary policy and introduced a new national currency. The report underscored the necessity of strengthening the bank’s institutional capacity and resource base to enable it to fulfill its mandate effectively. This evaluation reflected both the challenges and the potential for monetary stabilization through enhanced central banking functions. Concurrently, the self-declared autonomous region of Somaliland maintained its own central bank, which operated primarily as a government treasury and currency printer rather than as a comprehensive monetary authority. Unlike the Central Bank of Somalia, Somaliland’s institution did not engage extensively in monetary policy formulation or regulation of the financial sector. Its functions were largely limited to managing government finances and issuing the Somaliland shilling, which circulates exclusively within the region. This distinction highlighted the fragmented nature of monetary governance within Somalia’s territories during this period. A significant feature of Somalia’s monetary landscape has been the widespread acceptance of the US dollar alongside the Somali shilling, a phenomenon known as dollarization. This dual-currency usage emerged due to a pervasive lack of confidence in the Somali shilling, which suffered from chronic inflation and instability. The US dollar’s acceptance as a medium of exchange provided a more stable and trusted alternative for transactions, savings, and pricing. Dollarization has thus played a crucial role in facilitating commerce and financial activities in the absence of a fully functional and stable local currency. Despite the prevalence of dollarization, the Somali shilling has experienced substantial inflation, largely driven by the extensive issuance of the currency by private sector actors rather than a central authority. This uncontrolled expansion of the money supply contributed to price instability and eroded the purchasing power of the local currency. The Central Bank of Somalia aims to address this issue by assuming full control over monetary policy and replacing the currency currently issued by private entities with a standardized national currency. Such measures are intended to curb inflation, restore confidence in the Somali shilling, and establish a more stable monetary environment. Somalia experienced a prolonged absence of a central monetary authority for over 15 years following the outbreak of the civil war in 1991, which led to the collapse of state institutions, including the Central Bank. The resulting vacuum in formal financial governance created significant challenges for the country’s monetary and banking systems. It was not until 2009 that the Central Bank of Somalia was re-established, marking a critical milestone in the restoration of Somalia’s financial infrastructure. The reconstitution of the bank signaled the beginning of efforts to rebuild monetary institutions and reintroduce formal banking regulation after years of institutional void. In the absence of formal bank-to-bank transfer mechanisms during this period, private money transfer operators (MTOs) emerged as vital informal banking networks within Somalia. These entities facilitated the movement of funds domestically and internationally, compensating for the lack of conventional banking services. The MTOs operated through trust-based systems and extensive agent networks, enabling the Somali population and diaspora to conduct financial transactions despite the absence of formal banking infrastructure. Their role became indispensable in maintaining economic activity and financial connectivity. These remittance firms, commonly referred to as hawalas, constitute a significant industry in Somalia, channeling an estimated US$1.6 billion annually from the Somali diaspora to recipients within the country. The hawala system relies on informal trust networks and operates largely outside formal regulatory frameworks, yet it has proven remarkably resilient and efficient in facilitating remittances. The inflow of remittance funds represents a critical source of income for many Somali households and plays a central role in sustaining the domestic economy. The scale of this industry underscores the importance of diaspora financial flows in Somalia’s economic landscape. Among the most prominent Somali MTOs are Dahabshiil, Qaran Express, Mustaqbal, Amal Express, Kaah Express, Hodan Global, Olympic, Amana Express, Iftin Express, and Tawakal Express. These companies have established extensive agent networks both within Somalia and internationally, enabling widespread access to remittance and money transfer services. Their operations encompass a range of financial services tailored to the needs of Somali communities worldwide, reflecting the critical role these firms play in the country’s informal financial sector. The prominence of these MTOs highlights the entrepreneurial response to the absence of formal banking infrastructure. Most Somali MTOs are affiliated with the Somali Money Transfer Association (SOMTA) or its predecessor, the Somali Financial Services Association (SFSA), organizations that provide industry regulation and coordination within the community’s money transfer sector. These associations work to establish best practices, promote transparency, and facilitate dialogue between member companies and regulatory authorities. Their role has been instrumental in maintaining the integrity and reliability of remittance services, thereby supporting the broader financial ecosystem in Somalia. Such self-regulation has helped to foster trust among users and stakeholders. Somalia ranks as the world’s fourth-most remittance-dependent country, with remittances accounting for between 20% and 50% of the national economy. This heavy reliance on external financial inflows underscores the critical importance of diaspora funds in supporting household consumption, business activities, and overall economic stability. The magnitude of remittances relative to GDP reflects the structural challenges facing Somalia’s domestic economy and the pivotal role played by international financial transfers in bridging gaps in income and investment. This dependency shapes economic policy considerations and development strategies. Dahabshiil stands as the largest Somali MTO, having captured much of the market previously dominated by Al-Barakaat before its collapse. Headquartered in London, Dahabshiil employs over 2,000 people across 144 countries and operates 130 branches in the United Kingdom, 130 in Somalia, and an additional 400 branches worldwide, including a significant presence in Dubai. Its extensive global network enables it to provide comprehensive money transfer and financial services to a wide client base. Dahabshiil’s scale and reach make it a central player in the Somali and international remittance markets. Beyond basic money transfer services, Dahabshiil offers a wide range of financial products to international organizations, businesses of varying sizes, and private individuals. These services include payment processing, currency exchange, and financial management solutions tailored to the diverse needs of its clientele. Dahabshiil’s capacity to serve multiple sectors reflects its evolution from a traditional remittance operator into a multifaceted financial services provider. This diversification supports economic activity and financial inclusion across Somalia and the Somali diaspora. Qaran Express ranks as the second-largest Somali-owned funds transfer company, with headquarters in both London and Dubai. It maintains a network of 175 agents worldwide, including 66 in Somalia and 64 in London. Notably, Qaran Express charges no fees for remitting funds intended for charitable purposes, demonstrating a commitment to facilitating humanitarian support. Its operational model emphasizes accessibility and community-oriented service, positioning it as a key competitor in the Somali remittance sector. This approach enhances the flow of funds for both private and charitable uses. Mustaqbal is recognized as the third most prominent Somali MTO, operating 8 agents within Somalia and 49 in the United Kingdom. It maintains a notable international presence comparable to that of Dahabshiil and Qaran Express, serving a broad customer base across multiple countries. Mustaqbal’s operations contribute to the competitive dynamics of the Somali money transfer industry and provide additional options for remittance recipients and senders. Its prominence reflects the sustained demand for reliable and efficient financial services within the Somali community. As the Central Bank of Somalia continues to assume full responsibility for monetary policy, some existing money transfer companies are expected to pursue licenses to become fully-fledged commercial banks. This transition would allow these firms to expand their service offerings, including the introduction of formal cheque usage and integration into the national payments system. The licensing of MTOs as commercial banks represents a significant development in the formalization and modernization of Somalia’s financial sector. It is anticipated to enhance the breadth and efficiency of financial services available to the public. The expansion of the national payments system through the formalization of money transfer companies is expected to improve the effectiveness of monetary policy in managing Somalia’s domestic macroeconomy. A more robust and regulated banking sector will facilitate better control over money supply, interest rates, and credit availability. This structural enhancement is critical for stabilizing the economy, controlling inflation, and fostering sustainable economic growth. Strengthening the payments infrastructure thus serves as a foundation for broader economic development and financial sector reform. Improved local security conditions have encouraged Somali expatriates to return to the country to pursue investment opportunities, contributing to a modest but meaningful increase in foreign investment. This inflow of capital, combined with remittance funds, has significantly bolstered the value of the Somali shilling. The return of diaspora investors and the gradual normalization of economic activities have created a more favorable environment for currency stabilization and economic recovery. These developments reflect the interplay between security improvements and economic revitalization. By March 2014, the Somali shilling had appreciated by nearly 60% against the US dollar over the preceding 12 months, signaling a remarkable strengthening of the local currency. Bloomberg reported that during this period, the Somali shilling was the strongest currency among 175 global currencies traded, rising approximately 50 percentage points higher than the next most robust global currency. This extraordinary appreciation highlighted the unique dynamics of Somalia’s currency market and underscored the impact of improved monetary governance, increased investment, and remittance inflows. The shilling’s performance during this time represented a significant milestone in Somalia’s ongoing economic stabilization efforts.

The Somalia Stock Exchange (SSE) functions as the national stock exchange of Somalia, created with the purpose of facilitating investment and fostering economic growth within the country. Established in 2012, the SSE emerged as a critical institution aimed at revitalizing Somalia’s financial infrastructure, which had long been disrupted by decades of conflict and instability. By providing a formal platform for the trading of securities, the exchange sought to encourage both domestic and foreign investment, thereby contributing to the broader efforts of economic reconstruction and development. The establishment of the SSE represented a significant step toward integrating Somalia into the global financial system and promoting transparency and regulatory oversight in capital markets. The founding of the Somalia Stock Exchange was spearheaded by Idd Mohamed, a prominent Somali diplomat who held the distinguished titles of Ambassador Extraordinary and Deputy Permanent Representative to the United Nations. Mohamed’s involvement lent considerable diplomatic and international credibility to the initiative, reflecting the strategic importance of the stock exchange in Somalia’s post-conflict recovery agenda. His leadership in establishing the SSE underscored the intersection between Somalia’s diplomatic engagement and its economic aspirations, as the country sought to rebuild its institutions and attract investment amid ongoing challenges. Mohamed’s vision for the SSE was rooted in the belief that a functioning capital market could serve as a catalyst for sustainable economic growth and development. Central to the mission of the Somalia Stock Exchange was the objective of attracting investment from both Somali-owned enterprises and international companies. This dual focus aimed to mobilize capital necessary for the country’s reconstruction efforts following years of civil war and economic disruption. By providing a regulated marketplace where shares and securities could be traded, the SSE intended to create opportunities for Somali businesses to raise funds and expand operations. Simultaneously, it sought to appeal to foreign investors interested in participating in Somalia’s emerging markets, thereby fostering economic diversification and integration. The exchange’s emphasis on investment was aligned with broader national priorities of rebuilding infrastructure, enhancing service delivery, and promoting private sector development. In August 2012, shortly after its establishment, the Somalia Stock Exchange entered into a Memorandum of Understanding (MoU) with the Nairobi Securities Exchange (NSE), Kenya’s principal stock exchange. This agreement was designed to support the technical development and capacity building of the nascent Somali exchange by leveraging the expertise and experience of the more established NSE. The partnership was significant because it provided the SSE with access to institutional knowledge, operational frameworks, and best practices essential for the successful functioning of a stock exchange. Through this collaboration, the SSE aimed to build robust systems for trading, settlement, and regulatory compliance, which were critical for gaining investor confidence and ensuring market integrity. The MoU with the Nairobi Securities Exchange contained specific provisions focused on identifying and mobilizing appropriate expertise to enhance the operational capabilities of the Somalia Stock Exchange. This included assistance in areas such as market infrastructure development, regulatory oversight, and human resource training. The NSE’s role extended beyond technical support to encompass advisory services on governance structures and market surveillance mechanisms, which were vital for establishing a credible and transparent exchange. By fostering this cooperative relationship, the SSE positioned itself to benefit from regional experience and to accelerate its institutional maturity, thereby improving its prospects for sustainable growth and investor participation. A distinctive feature of the agreement between the Somalia Stock Exchange and the Nairobi Securities Exchange was the planned introduction of Sharia-compliant financial instruments, reflecting the predominance of Islamic finance principles in Somalia. The MoU envisaged the development and listing of sukuk bonds and halal equities as part of the SSE’s broader strategy to cater to the needs of investors seeking Sharia-compliant investment options. Sukuk, often described as Islamic bonds, represent asset-backed securities that comply with Islamic law, which prohibits interest-based transactions. The inclusion of such instruments was intended to broaden the appeal of the SSE to Muslim investors both within Somalia and in the wider Islamic finance market. This approach aligned with global trends in Islamic finance and underscored the SSE’s commitment to offering diverse financial products tailored to the cultural and religious context of its market. By November 2014, the Somalia Stock Exchange had made significant progress in establishing its operational presence across the country, with administrative offices set up in key urban centers including Mogadishu and Kismayo. These locations were strategically chosen due to their economic significance and potential as hubs for business activity. The establishment of offices in multiple cities reflected the SSE’s ambition to facilitate access to capital markets for companies and investors throughout Somalia, not just in the capital. This geographic expansion was an important step in building the institutional infrastructure necessary for the exchange’s functionality and in promoting awareness and participation among local businesses and stakeholders. The official opening of the Somalia Stock Exchange was scheduled for 2015, marking a pivotal milestone in the development of the country’s financial sector. This launch was anticipated to symbolize the formal inauguration of capital market activities in Somalia, signaling a new era of economic modernization and investor engagement. The planned opening was expected to generate significant interest both domestically and internationally, as it represented a concrete manifestation of Somalia’s efforts to rebuild its economy and integrate with global financial markets. The event was also intended to showcase the readiness of the SSE to operate as a regulated and transparent platform for securities trading. At the time of its launch, the Somalia Stock Exchange planned to list shares from seven Somali-owned companies spanning key sectors such as financial services, telecommunications, and transportation. These sectors were chosen due to their critical roles in the country’s economic recovery and growth prospects. The inclusion of companies from diverse industries was designed to provide investors with a range of investment opportunities and to demonstrate the breadth of Somalia’s emerging private sector. By highlighting these companies, the SSE aimed to attract prospective global investors interested in participating in Somalia’s economic resurgence, thereby facilitating capital inflows and encouraging further business development. The initial listings were intended to set a precedent for future market activity and to build momentum for the expansion of the exchange’s offerings.

Somalia possesses significant untapped reserves of various natural resources, which include uranium, iron ore, tin, gypsum, bauxite, copper, salt, and natural gas. These mineral deposits are distributed across different regions of the country, reflecting Somalia’s diverse geological formations and potential for extensive resource exploitation. Despite the abundance of these resources, much of them remain largely unexplored and undeveloped due to historical political instability and infrastructural challenges. The presence of such a wide array of minerals offers considerable opportunities for economic development and diversification beyond the traditional sectors of agriculture and livestock. In recent years, international interest in Somalia’s natural resources has grown, particularly in the petroleum sector. Australian and Chinese oil companies have been granted licenses to explore petroleum and other natural resources within Somalia’s territorial boundaries. These licenses represent a strategic move by foreign investors to capitalize on the country’s largely unexplored hydrocarbon potential. The involvement of these companies has introduced advanced exploration technologies and increased financial investment, which are critical for unlocking Somalia’s energy resources. This foreign engagement also reflects Somalia’s efforts to integrate into the global energy market and attract foreign direct investment to stimulate economic growth. One of the most promising developments in Somalia’s petroleum sector has been projected by Range Resources, an oil company listed on the Sydney Stock Exchange. The company has identified the Puntland province in northern Somalia as a potential site for significant oil production, with estimates suggesting that the region could yield between 5 billion barrels (approximately 790 million cubic meters) and 10 billion barrels (around 1.6 billion cubic meters) of oil. These projections place Puntland among the potentially major oil-producing regions in Africa, highlighting the strategic importance of Somalia’s northern territories in the global energy landscape. Range Resources’ exploration activities have thus generated considerable optimism regarding the future of Somalia’s oil industry and its capacity to contribute substantially to national revenue. In response to the increasing exploration activities and the potential for substantial petroleum development, the Somali federal government established the Somali Petroleum Company. This state-owned enterprise was created to oversee petroleum exploration and development within the country, serving as the central regulatory and operational body in the sector. The formation of the Somali Petroleum Company marked a significant step toward formalizing the management of the country’s hydrocarbon resources and ensuring that exploration activities align with national interests. Through this company, the government aims to coordinate licensing, monitor environmental compliance, and negotiate contracts with foreign investors, thereby fostering a more structured and transparent petroleum industry. The discovery of Somalia’s mineral wealth dates back to the late 1960s when United Nations geologists conducted extensive surveys and uncovered major uranium deposits alongside other rare mineral reserves. This discovery was notable for being the largest find of its kind at the time, placing Somalia prominently on the global map of uranium-rich countries. The geological surveys revealed that the uranium deposits were not only abundant but also of high quality, which attracted international attention from both governmental and private sector entities interested in nuclear materials. These early findings laid the foundation for subsequent exploration and development efforts in the country’s mining sector. Industry experts during that period estimated that Somalia’s uranium deposits accounted for over 25% of the world’s known uranium reserves, which were approximately 800,000 tons globally. This substantial share underscored Somalia’s potential as a major player in the global uranium market, especially at a time when nuclear energy and weapons development were of strategic importance internationally. The size and quality of these deposits suggested that Somalia could become a significant supplier of uranium, contributing to the global supply chain and influencing uranium prices. Such a large proportion of global reserves concentrated in Somalia highlighted the country’s strategic mineral wealth, which had the potential to drive economic development if properly harnessed. Further detailed assessments were conducted under the 1984 International Uranium Resources Evaluation Project (IUREP) Orientation Phase Mission to Somalia. This mission reported that the country possessed approximately 5,000 tons of uranium classified as reasonably assured resources (RAR), indicating a high degree of geological confidence in the presence and extractability of these deposits. The RAR classification reflects uranium quantities that could be economically mined with existing technology and under current market conditions. This official evaluation provided a more precise quantification of Somalia’s uranium resources, reinforcing the earlier optimistic estimates and guiding future exploration and investment decisions. In addition to the reasonably assured resources, Somalia was estimated to have about 11,000 tons of uranium categorized as estimated additional resources (EAR), primarily located in calcrete deposits. Calcrete deposits are mineral accumulations formed by the precipitation of calcium carbonate in arid or semi-arid environments, often serving as significant uranium hosts. These EAR represent uranium quantities that are less certain than RAR but are considered potentially recoverable with further exploration and technological advancements. The presence of such deposits expanded the scope of uranium resources available in Somalia, indicating that the country’s uranium wealth extended beyond the most accessible reserves and could be further developed with improved geological understanding. Speculative resources (SR) of uranium in Somalia were potentially as high as 150,000 tons, found in sandstone and calcrete deposits. Speculative resources represent uranium quantities that are hypothesized to exist based on geological inference but have not yet been confirmed through direct exploration. The identification of these speculative resources suggested that Somalia’s uranium reserves could be significantly larger than currently documented, pending future exploration efforts. The sandstone and calcrete formations hosting these speculative uranium deposits are typical of sedimentary uranium deposits found in other parts of the world, indicating favorable geological conditions for further discoveries. These speculative estimates have encouraged continued interest and investment in Somalia’s mineral exploration sector. Somalia subsequently developed into a significant global supplier of uranium, attracting mineral extraction interests from a variety of international companies. American, United Arab Emirates, Italian, and Brazilian firms competed for mining rights, reflecting the global demand for uranium and the strategic importance of Somalia’s deposits. This international competition underscored the geopolitical and economic value of Somalia’s mineral resources, as countries sought to secure access to uranium for energy production and other applications. The involvement of diverse multinational corporations also introduced advanced mining technologies and capital investment, which contributed to the development of Somalia’s mining infrastructure and capacity. Among the companies active in Somalia’s mineral sector, Link Natural Resources holds stakes in natural resources located in the central region of the country. This company’s involvement signifies ongoing exploration and potential extraction activities in areas rich in mineral deposits, including uranium. Additionally, Kilimanjaro Capital controls the Amsas-Coriole-Afgoi (ACA) Block, which spans 1,161,400 acres and encompasses uranium exploration activities. The ACA Block represents one of the largest contiguous exploration areas under private control in Somalia, highlighting the scale of investment and interest in the country’s mineral potential. These companies play a crucial role in advancing geological surveys, resource evaluation, and eventual mining operations, contributing to Somalia’s economic prospects. Beyond uranium, Somalia also contains unspecified quantities of yttrium, a rare earth element and valuable mineral resource. Yttrium is used in various high-tech applications, including electronics, lasers, and superconductors, making it a strategically important mineral in modern industry. The presence of yttrium alongside uranium and other minerals enhances Somalia’s profile as a country with diverse and valuable mineral wealth. Although the exact quantities of yttrium remain unspecified, its occurrence suggests additional opportunities for resource development and export diversification. The exploitation of rare earth elements like yttrium could further integrate Somalia into global mineral supply chains, especially as demand for such materials continues to grow worldwide.

In mid-2010, Somalia’s business community made a significant commitment to the development of the nation’s energy sector by pledging an investment of $1 billion over the following five years, specifically targeting the gas and electricity industries. This ambitious financial undertaking was aimed at revitalizing and expanding the country’s energy infrastructure, which had suffered extensive degradation due to decades of conflict and instability. The infusion of capital was expected to not only modernize existing facilities but also to stimulate new projects that would enhance energy accessibility across various regions, thereby supporting broader economic recovery and growth. At the forefront of this initiative was Abdullahi Hussein, who served as the director of the newly established Trans-National Industrial Electricity and Gas Company. Hussein projected that the strategic investment plan would have a substantial impact on employment, estimating the creation of approximately 100,000 jobs. This forecast reflected the anticipated multiplier effect of energy sector development on the wider economy, as improved power supply would enable the expansion of industrial activities, commercial enterprises, and service delivery. The job creation target underscored the dual focus of the project on economic revitalization and social development, particularly in a country grappling with high unemployment and youth disenfranchisement. The Trans-National Industrial Electricity and Gas Company itself emerged from the consolidation of five Somali companies operating across diverse sectors, including trade, finance, security, and telecommunications. This merger represented a strategic alignment of resources and expertise aimed at fostering a more integrated and efficient approach to energy sector development. By pooling capital, technical knowledge, and operational capabilities, the newly formed entity sought to overcome the fragmented nature of Somalia’s business environment and to establish a more robust platform for large-scale infrastructure projects. The involvement of companies from varied industries also highlighted the interconnectivity between energy provision and other critical sectors in the Somali economy. Within six months of its establishment, the Trans-National Industrial Electricity and Gas Company initiated the first phase of its comprehensive project, which concentrated on capacity building through youth training programs. This phase prioritized equipping young Somalis with the skills necessary to generate and distribute electricity to key economic zones and local communities. The emphasis on youth training was a strategic response to the pressing need for a skilled workforce capable of supporting the nascent energy infrastructure. By empowering young people with technical expertise, the project aimed to foster sustainable development and to create a foundation for long-term energy sector growth that would benefit both urban centers and rural areas. Following the initial phase, the second phase of the project commenced in mid-to-late 2011, focusing on the construction of factories within specially designated economic zones. These zones were strategically targeted to support the development of Somalia’s primary industries, including fishing, agriculture, livestock, and mining. The establishment of industrial facilities in these sectors was intended to capitalize on Somalia’s abundant natural resources and to stimulate value-added production, thereby enhancing export potential and domestic economic diversification. By linking energy infrastructure development with industrial expansion, the project sought to create a synergistic effect that would accelerate economic transformation and improve livelihoods across multiple regions. In 2012, the Puntland regional administration, under the leadership of President Abdirahman Mohamed Farole, gave formal approval to the first official oil exploration project in Puntland and, more broadly, in Somalia. This marked a historic milestone in the country’s energy sector, signaling a shift toward the exploitation of hydrocarbon resources that had long been identified but remained untapped due to political instability and lack of regulatory frameworks. The endorsement by the Farole administration provided the necessary governmental support and legitimacy for exploration activities, facilitating partnerships with international oil companies and attracting foreign direct investment. The oil exploration initiative was spearheaded by the Canadian oil company Africa Oil, in partnership with Range Resources, an Australian-based energy firm. These companies brought technical expertise, financial resources, and international experience to the project, which aimed to assess and develop Somalia’s petroleum potential. The collaboration represented a significant step toward integrating Somalia into the global energy market and diversifying its economic base beyond traditional sectors. The involvement of reputable international firms also underscored the growing confidence in Somalia’s security environment and regulatory reforms, which were essential for attracting and sustaining investment in the extractive industries. A key milestone in the exploration efforts occurred in March 2012 with the successful drilling of the Shabeel-1 well, located within Puntland’s Dharoor Block. This initial drilling operation yielded oil, confirming the presence of commercially viable hydrocarbon reserves in the region. The discovery was a pivotal development that not only validated geological assessments but also provided a tangible basis for further exploration and eventual production activities. The success of the Shabeel-1 well generated optimism about the potential for Somalia to become an oil-producing nation, which could significantly boost government revenues, create employment opportunities, and catalyze broader economic development. Amid these developments, the Central Bank of Somalia articulated a positive outlook for the nation’s economic trajectory, emphasizing that as reconstruction efforts progressed, the economy was expected to recover beyond its pre-civil war levels. The bank highlighted Somalia’s vast untapped natural resources, including hydrocarbons, minerals, and renewable energy potentials, as critical drivers of accelerated growth and development. This perspective underscored the transformative potential of the energy sector, not only as a source of direct economic activity but also as an enabler of broader structural improvements in infrastructure, industry, and social welfare. The Central Bank’s stance reflected a growing consensus among policymakers and stakeholders that strategic investment in energy and resource development could serve as a cornerstone for Somalia’s long-term stability and prosperity.

Economic data for Somalia from 1960 through 2022 encompasses multiple key indicators, including nominal gross domestic product (GDP), nominal GDP per capita, GDP measured in purchasing power parity (PPP), GDP per capita in PPP terms, and real GDP growth rates where such data were available. These metrics collectively provide a comprehensive overview of Somalia’s economic performance and living standards over more than six decades, reflecting the country’s evolving economic conditions amid various historical and political contexts. In 1960, the year Somalia gained independence, the nominal GDP was recorded at 0.2 billion US dollars, indicating a modest economic base at the outset of sovereignty. The nominal GDP per capita at that time stood at 63 US dollars, reflecting the average economic output per individual, which was relatively low by global standards. Unfortunately, data regarding GDP in purchasing power parity terms, GDP per capita in PPP, and real GDP growth rates were not available for this initial period, limiting the ability to assess the economy’s relative purchasing power or growth dynamics. This lack of comprehensive data is indicative of the limited statistical infrastructure and economic reporting mechanisms present in Somalia during its early years as an independent nation. By 1970, Somalia’s nominal GDP had increased to 0.3 billion US dollars, demonstrating a gradual expansion of the economy over the decade following independence. Correspondingly, nominal GDP per capita rose to 87 US dollars, suggesting modest improvements in individual economic output and potentially living standards. Despite these increases, data on GDP in PPP terms and real GDP growth rates remained unspecified, continuing the trend of incomplete economic records during this period. The absence of PPP data in particular hindered comparisons of Somalia’s economic size and individual wealth to other countries when adjusted for cost of living differences. The economic trajectory continued upward through the 1970s, with nominal GDP reaching 0.6 billion US dollars by 1980. This doubling of nominal GDP over the decade reflected ongoing, albeit limited, growth in economic activity. Nominal GDP per capita increased to 102 US dollars, indicating incremental gains in average income levels. However, the lack of available data on GDP in PPP and real GDP growth rates persisted into the 1980s, reflecting continued challenges in economic data collection and reporting. This period was marked by political instability and economic difficulties that likely contributed to the limited availability of comprehensive economic statistics. In 1990, Somalia’s nominal GDP had risen to 0.9 billion US dollars, while nominal GDP per capita reached 131 US dollars. These figures represented the highest levels recorded before the onset of the civil war and the subsequent collapse of central government institutions, which severely disrupted economic activity and data collection. Once again, no data were available on GDP in PPP terms or real GDP growth rates for this year, underscoring the challenges faced in maintaining consistent economic records during periods of political turmoil and conflict. A significant gap in reliable economic data followed the early 1990s due to the prolonged civil war and the absence of a functioning central government. It was not until 2013 that comprehensive economic data became available again, reflecting the gradual stabilization and reconstruction efforts underway in Somalia. In that year, nominal GDP was estimated at 5.8 billion US dollars, marking a substantial increase from pre-conflict levels and signaling a recovering economy. Nominal GDP per capita rose to 454 US dollars, indicating improvements in average income despite ongoing challenges. For the first time in decades, data on GDP in PPP terms were reported, with Somalia’s GDP in PPP estimated at 13.5 billion US dollars and GDP per capita in PPP at 1,052 US dollars. These PPP figures allowed for more accurate comparisons of economic output and living standards relative to other countries by accounting for differences in price levels. However, real GDP growth data for 2013 were not reported, leaving the pace of economic expansion unclear for that year. The economic recovery continued into 2014, with nominal GDP increasing to 6.5 billion US dollars. Nominal GDP per capita also rose to 491 US dollars, reflecting ongoing improvements in economic conditions and individual income. GDP in PPP terms expanded to 16.3 billion US dollars, while GDP per capita in PPP reached 1,222 US dollars, further illustrating the country’s growing economic capacity when adjusted for purchasing power. Notably, 2014 was the first year in this recent period for which a real GDP growth rate was available, recorded at a robust 7.5%. This strong growth rate suggested a rapid expansion of economic activity and a positive trajectory for Somalia’s post-conflict economic development. In 2015, Somalia’s nominal GDP continued its upward trend, reaching 7.0 billion US dollars. Nominal GDP per capita increased to 508 US dollars, indicating incremental gains in average income levels. GDP in PPP terms grew to 19.6 billion US dollars, and GDP per capita in PPP rose to 1,422 US dollars, reflecting continued improvements in economic output and living standards when adjusted for cost of living. The real GDP growth rate for 2015 was notably high at 9.9%, underscoring a period of rapid economic expansion and recovery. This growth was likely driven by improvements in security, increased investment, and the gradual rebuilding of economic infrastructure. The year 2016 saw further economic gains, with nominal GDP reaching 7.4 billion US dollars and nominal GDP per capita rising to 517 US dollars. GDP in PPP terms expanded to 21.5 billion US dollars, while GDP per capita in PPP increased to 1,506 US dollars, demonstrating sustained growth in both aggregate economic output and average individual wealth. The real GDP growth rate for 2016 was reported at 6.4%, indicating continued but slightly moderated economic expansion compared to the previous year. This growth reflected ongoing stabilization efforts and the strengthening of key economic sectors such as livestock, telecommunications, and remittances. In 2017, Somalia’s nominal GDP rose to 8.4 billion US dollars, with nominal GDP per capita increasing to 555 US dollars. GDP in PPP terms expanded to 23.2 billion US dollars, and GDP per capita in PPP reached 1,558 US dollars, highlighting continued improvements in economic scale and individual purchasing power. The real GDP growth rate rebounded to a strong 9.5%, signaling vigorous economic activity and recovery momentum. This period was characterized by increased domestic production, investment in infrastructure, and enhanced governance structures that supported economic growth. In 2018, nominal GDP experienced a slight decrease to 8.3 billion US dollars, while nominal GDP per capita declined to 537 US dollars. Despite this nominal contraction, GDP in PPP terms rose to 24.4 billion US dollars, and GDP per capita in PPP increased to 1,585 US dollars, suggesting that when adjusted for purchasing power, the economy continued to expand. The real GDP growth rate for 2018 was 3.0%, indicating a slowdown in economic growth compared to previous years. This deceleration may have been influenced by external shocks, security challenges, or fluctuations in key sectors such as agriculture and livestock. In 2019, Somalia’s nominal GDP increased to 9.2 billion US dollars, with nominal GDP per capita rising to 590 US dollars, marking a recovery from the previous year’s slight decline. GDP in PPP terms grew to 25.8 billion US dollars, while GDP per capita in PPP reached 1,613 US dollars, reflecting ongoing improvements in economic output and living standards. The real GDP growth rate was 3.6%, indicating moderate economic expansion. This growth was supported by continued efforts to improve security, governance, and economic diversification. The year 2020 presented significant challenges, as nominal GDP remained flat at 9.2 billion US dollars, but nominal GDP per capita decreased to 557 US dollars. GDP in PPP terms experienced a slight decline to 25.4 billion US dollars, and GDP per capita in PPP fell to 1,538 US dollars. The real GDP growth rate was negative at −2.6%, reflecting an economic contraction likely attributable to the global impacts of the COVID-19 pandemic, as well as ongoing domestic instability and climatic shocks. This contraction marked a setback in Somalia’s economic recovery and underscored the vulnerability of its economy to external and internal disruptions. In 2021, Somalia’s nominal GDP rebounded to 9.8 billion US dollars, with nominal GDP per capita increasing to 577 US dollars. GDP in PPP terms rose to 27.5 billion US dollars, and GDP per capita in PPP reached 1,609 US dollars, indicating a return to positive economic momentum. The real GDP growth rate was 3.3%, suggesting a moderate recovery from the previous year’s contraction. This improvement was supported by gradual easing of pandemic-related restrictions, ongoing reconstruction efforts, and increased international support. By 2022, Somalia’s nominal GDP had further increased to 10.4 billion US dollars, with nominal GDP per capita rising to 592 US dollars. GDP in PPP terms expanded significantly to 30.1 billion US dollars, while GDP per capita in PPP reached 1,711 US dollars, reflecting continued growth in economic output and living standards when adjusted for purchasing power. The real GDP growth rate for 2022 was 2.4%, indicating sustained, albeit modest, economic expansion. This growth was driven by ongoing improvements in security, governance, and investment, as well as a gradual strengthening of key sectors such as telecommunications, agriculture, and services. Overall, the economic data from 1960 to 2022 illustrate Somalia’s trajectory from a low-income, data-poor economy through periods of conflict and instability to a phase of gradual recovery and growth, with increasing availability and reliability of economic statistics in recent years.