Somalia: the country's economy

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:55

In 1960, two former colonies of Italy and Britain, as a result of a long struggle, united into a single state of Somalia.

The economy of this country is often cited by various economists as the only one in the world. At the moment, the country is in a serious crisis that has been going on for more than 20 years. The study of the market system of this East African country is hampered by constant fighting and the lack of a centralized authority.

Before 2000

The economy of Somalia was almost completely destroyed by a long civil war. It started in 1988 and continues to this day. Before the start of the war, the main income of the state was the import of agricultural products. With the help of the USSR and the Federal Republic of Germany, many plants and factories were built. These were mainly light industry enterprises. They focused on the advantages of local materials. There have also been a number of attempts to create fishing cooperatives. By the 70s of the 20th century, the Somali economy was on the rise and developed. Every year the pace of industrialization increased more and more. However, in 1977, the war with Ethiopia began. The year-long conflict drained the treasurycountries. Complete defeat led to an even greater crisis. Corruption and the share of the so-called "shadow economy" grew. In 1991, a civil war broke out.

Chaos and war

President Mohamed Barre was overthrown.

The country plunged into chaos and despair. Several major armed groups have effectively seized power in Somalia. The economy in such circumstances has become only a necessary means for the continuation of the war. Until 1991, the country operated on the principle of a planned economy. The enterprises were interconnected and could not function autonomously. As a result of the crisis, the country broke up into several unrecognized states. This situation completely crossed out any possibility of continuing industrialization. Significant sectors of the economy have come under the control of various armed formations. The resulting profit was almost completely taken by them.

The current state of the economy

By the end of 2015, the crisis subsided. There were first investments in the country, mainly from refugees from Somalia. The economy, however, is still in a terrible state. At the moment, in fact, the country does not exist. On its territory there are several unrecognized states. Many territories are not controlled by any administrations at all. The authorities there are represented by small armed gangs or tribal organizations.

Despite all this, the economic situation in the country is not the bestterrible. The main sector of profit is animal husbandry. Most of the inhabitants live in rural areas. Many still lead a nomadic lifestyle. Geographic features contribute to the favorable development of the agricultural industry. Banana plantations bring huge profits every year. There is also huge potential for fishing. However, this niche requires large investments. Another problem for the development of the industry is the various armed formations that control a significant part of the coast. Among them are the well-known "Islamic ships", against which NATO forces carried out the operation, and pirate organizations.

Statistical parameters of Somalia: economy

The main source of information about the state of affairs in the country today is the CIA. Due to the long civil war and the virtual collapse of the state, these data are highly inaccurate, despite the existence of the so-called "federal government" of Somalia. The economy has recently been on the rise thanks to the investments of the Somali community in other countries. At the moment, the country's GDP is about 6 billion dollars. Some state entities have established diplomatic contact with a number of European countries. GDP per capita is about $600. At the same time, it is impossible to calculate this indicator in "tribal territories", that is, in regions where there is no centralized power. But in the stable areas of the country, many different enterprises have been created. Air communication operatesthe marketing industry is growing. Modern means of production are gradually being introduced.

Minor sectors of the economy

Besides livestock and agricultural exports, there are other market niches that make up the Somali economy. The sights of this country once attracted many tourists. However, the protracted military conflict almost completely destroyed tourism. Nevertheless, tourists have begun to arrive in the country recently. They are mostly citizens of neighboring Ethiopia.

Also in Somalia there are a number of rare plants that are highly valued in the world. For example, the country leads in the export of frankincense. Canned fish is sold throughout Africa, and more recently in Asia. The advantage of Somali products lies in their price. This is due to cheap labor and an abundance of marine life that is not commercially caught.