Current Status of Somalia's Ruined Economy
After almost 15 years of a devastating civil war and the total absence of a functioning central government, Somalia's economy lies in shambles and it needs urgent reconstruction if we really desire to end the misery of the Somali people who have been suffering for so long. This economic reconstruction would be a very daunting task and would most probably take decades to accomplish because, unlike other war-torn countries, Somalia is very unique since its state has totally collapsed and all the institutions of central government have completely disappeared. Nonetheless, it is not impossible to achieve such reconstruction provided that we get a dedicated, patriotic and honest political leadership, who are equipped with a vision, and who put the general interest of their people ahead of their narrow, tribal or personal interests. (But before we go any further, I must point out that the absence of a central government has meant that no official socio-economic data have been produced since the outbreak of the civil war in late 1990. As such, there are few reliable data now available on Somalia; all my figures are thus rough estimates from various sources).
The biggest blow that the civil war had dealt to our economy was that no meaningful production or economic activities could take place in the middle of clan fighting: Hundreds of thousands of productive labor force were murdered in cold blood, forced to join armed militias formed by clan faction leaders, or had to flee their farms, villages and towns to become refugees in neighboring countries. The few industrial establishments or factories that the country had (mostly to process agricultural or animal produce) were also looted, their machinery and equipment shipped away and mostly sold in neighboring Arab countries as scrap metal, and their premises taken over by clan soldiers or destitute squatters. In this connection, I was deeply saddened when one of the Deputy Ministers in the new Transitional Federal Government of Somalia, who had accompanied President Abdullahi Yusuf in a recent visit to Saudi Arabia, told us that all the buildings of Somalia's well-known sugar factory at Jowhar (or SNAI) have been totally wiped out and that its headquarters is just a large empty lot at the present time. Again, I was informed that the modern textile factory at Bal’ad, which used to employ hundreds of Somali citizens from that town and its surroundings, was completely vandalized and its buildings converted into a camp for armed militias who survive by erecting checkpoints on the road between Bala’d and Mogadishu to extort money from hapless Somali drivers and by the constant utilization of their lethal Kalashnikovs against unarmed, innocent civilians.
In terms of actual performance, and according to the latest reports of the Economist Intelligence Unit (EIU) of London, Somalia's gross domestic product (GDP), i.e., the total goods and services produced by its economy, both in the public and private sectors, was estimated at around US $1 billion in 2004, as compared with $8 billion and $14 billion for neighboring Ethiopia and Kenya, respectively; GDP per head (or person) was around $100 for Somalia, as compared with $400 for Kenya and $900 for Djibouti; during the last fiscal year, this GDP grew at almost 12% in Ethiopia and 1% only in Somalia. Moreover, EIU figures show that Somalia’s economy had grown in the past 15 years at around 1%, on average. With regard, to the consumer price index (or inflation), Somalia recorded, at 18%, the second highest inflationary rate in a comparison that EIU had made among 13 East, Central Africa and Indian Ocean islands (neighboring Djibouti had an inflationary rate of a mere 2.5%). On top of that, Somalia is saddled with a foreign debt now totaling $2.84 billion of which a penny has not been repaid since 1990. What enables most Somalis to survive today are the remittances of their relatives in the diaspora (or abroad) which are currently estimated at $800 million per year plus a small level of foreign aid. Before the collapse of its state, Somalia used to receive foreign aid at a much lager scale and even the government's annual budget used to be subsidized through financial assistance from friendly countries. All this has evaporated after 1991 as there was no a functioning central government that was internationally recognized.
Again, according to the latest available figures (2002), EIU indicated that Somalia's exports amounted to $85 million while its imports reached $351 million, indicating a net trade deficit of about $266 million (or more than 310% of its exports). As to the breakdown of these exports in fiscal year 1990, for which official figures are available, they consisted of the following: (a) Livestock: $43 million (or 58%); (b) Bananas: $28 million (37%); and (c) Hides and Skins: $3 million (5%). That is all that we could sell in the international market or contribute to the world economy!
As has always been the case, and as indicated above, the latest data show that livestock constitutes the backbone of Somalia's economy and it accounted for 40% of the country's GDP and nearly 65% of its export earnings in the year 2002, for instance, according to the World Food Programme (WFP) estimates. However, the revenues from this sector of our economy has been greatly hampered by the ban which Saudi Arabia – the biggest market for Somalia's livestock exports – had imposed on Somali meat because of an alleged animal disease. But the disease that Somali livestock is supposed to have been afflicted with, namely, Rift Valley fever, is a disease that is mainly found in neighboring Kenya and is not known in Somalia. According to some experts who are familiar with the issue have pointed out that the real reason behind this ban, which has dealt a severe blow to the Somali economy and ultimately to the poor Somali nomad whose entire livelihood depends on animal husbandry, is more complex than that. In short, it is said to stem from the lobbying of some prominent Saudi businessmen and wealthy sheiks who have put heavy pressure on their government to prohibit the importation of Somali meat so as to eliminate any competition with the output of their huge animal farms in Australia, Argentina and other countries. Besides, for the past 14 years, Somalia had no functioning national government that could have engaged the Saudi authorities and could have persuaded them to lift this unfair and unnecessary ban of the export of Somali livestock (which, incidentally, is very popular in this country and the rest of the Arabian Gulf region).
In the absence of any industrial or manufacturing activity in the country, most of the economic activities that are presently going on in Somalia center around petty trade, including the sale and consumption of the mild narcotic (or drug) known as qat on a very large scale. (It may be worth noting here that the ordinary citizens of Somalia's two neighboring countries that produce qat, namely, Ethiopia and Kenya, don't normally chew it; this drug has also been lately causing serious, mysterious health problems to its Somali consumers, like sudden heart-attack, because apparently the farmers of its place of origin, particularly, in Ethiopia, spray unknown, and perhaps very harmful, chemicals on the qat tree so as to make its leaves grow faster and bigger). Other factors that seriously have been constraining the Somali economy is the total destruction of all governmental institutions, the incredible deterioration of the country's basic infrastructure and the large scale "brain-drain" which has been going on in the past 15 years. Virtually all the educated class, the most experienced professionals and state officials, and any decent person (qof xishoonaya), who does not want to take part in Somalia’s irrational tribal war, and any other person capable of doing so, have left the country to escape the scourge of the civil war or to migrate to greener pastures in other parts of the world. As a result, it is now estimated that 4 out of Somalia’s population, now estimated at 11 million, live outside their country.
The absence of a national ministry of finance and a central bank that could together regulate the fiscal and monetary policies of the county has also led to a very serious problem in terms of foreign exchange rates. This is so, because any warlord, faction leader or a group of traders can now print any quantity of new Somali Shillings that they may wish. Consequently, the value of the Somali Shilling has plummeted over the years and the exchange rate now stands, as per the latest report of the BBC Somali Service, at So. Sh. 19,000 per US $1. This amounts to more than 730% of what it was at the start of the ruinous civil war in 1990. (I still remember with great nostalgia a time in the 1970s when this exchange rate was $1 = So. Sh. 7, and you could take care of a whole family with a monthly salary of just Sh. 1,000. Today, this latter amount cannot fetch for you more than a cup of tea in Somalia!).
Another factor that has very negatively impacted the economy, particularly the agricultural sector, is the fact that the farmers of the fertile lands of the south, especially between the Shabelle and Juba riverine areas, have been uprooted, many of them moving all the way to Tanzania and USA as a result of the seemingly never ending civil war. These unarmed, peaceful citizens – particularly the Somali Bantus - who have been the backbone of Somalia’s fragile agricultural sector have been forced to vacate their rightful farms by gun-touting nomads who came mostly from the arid regions of Mudug and Galgudud. These violent and primitive nomads know nothing about agriculture and are too impatient to live by cultivating the land. All they do is to cut the trees that took decades to be cultivated and nurtured to use them as charcoal to be exported overseas and, thus, accelerate the desertification of these newly conquered regions as they have already done to their own regions. (I was told that the latest fashion in Mogadishu or Afgoye now is to sleep on a bed made out of the wood of a mango tree. What a terrible waste of valuable national resources!).
In its latest "Human Development Report" for the year 2005, where the countries of the world are ranked according to the level of their development, the United Nations did not even bother to include Somalia in its list, presumably because the country's socio-economic conditions are so dire. In that yearly report, the countries of the world are classified into three main categories, namely, high, medium and low human developments, and then ranked on such major indicators as: life expectancy at birth, adult literacy, educational attainment and GDP per capita. In this last report for 2005, Norway was at the top among 177 countries while Niger (in West Africa) – whose population is mostly nomadic like us, the Somalis - was at the bottom and ranked 177th. All of Somalia's neighbors, together with almost all the Sub-Sahara African countries, were included in the third category of the classification, i.e., low human development, and were ranked as follows: Djibouti: 150th, Kenya: 154th and Ethiopia: 170th. Incidentally, before the collapse of its state, Somalia was still at the bottom of the list and ranked 149th among 160 countries which were classified in the UNDP's Human Development Report for 1991.
Despite the above gloomy picture, some aspects of the Somali economy have made good progress. Telecommunications, especially mobile telephones, and the access to the internet have made remarkable achievements. Thanks to the initiatives of the private sector, today it is possible to reach some of the smallest and most distant towns in Somalia by phone. The existence of a written Somali language – which was introduced in 1972 and which I consider to be the biggest achievement of Siad Barre’s former regime – has enabled most Somalis, even the semi-illiterate ones, to use the internet to get in touch with their relatives and loved ones who are normally scattered all over the world. Some relatively peaceful and stable regions of the country have also witnessed a significant progress or even economic boom. On the other hand, some people, especially warlords and some of their allied traders, who have set up their own air and sea ports, or simply control checkpoints in the major cities and towns, have been accumulating a great deal of wealth. But the majority of the Somali people live in abject poverty and in some areas suffer from total insecurity. Before the onslaught of the ruinous civil war, the government and its numerous ministries, agencies and other institutions were by far the biggest employers of the Somali citizens but this has, unfortunately, disappeared long time ago.
Another disheartening factor is that, although Somalia has some good natural resources, they have never been properly invested in and exploited. The country has large, unutilized arable land and is also believed to contain a good quantity of oil, gas and minerals (and even big underground lakes, according to Mr. Ismail Ali Ismail, the prominent Somali economist and former staff member of the Economic Commission for Africa (ECA), Addis Ababa). Somalia also boasts the longest seacoast in Africa and, thus, has great fishing resources. However, during the devastating civil war when the state has completely disappeared, foreign ships, coming all the way from Korea, have been plundering the natural resources of the Somali coast. More seriously, some other foreigners – mainly Europeans – were reported to have been dumping nuclear waste and other harmful chemicals on this coast with the connivance of some irresponsible and dishonest Somali warlords and faction leaders – something that could have incalculable negative consequences on Somalia’s environment as well the health of its citizens for generations to come.
Last but not least, I will postpone the discussion of the specific steps that the newly formed government could take in order to fulfill the needed economic reconstruction for another occasion. Otherwise, my essay will be too long. However, I would like to make one last important point: The breakout of the civil war, and the subsequent collapse of the Somali State, was a lose-lose situation; we all lost dearly, despite what some tribal-minded fanatics may think, because we were all benefiting directly or indirectly from that destroyed state, and no particular group, clan or region has really gained from its disappearance. By the same token, I wish to remind the Somali readers that, contrary to what some misguided warlords and faction leaders have been propagating for the past 15 years, tribe “X”, “Y” or “Z”, is not our real enemy. Our real enemy is abject poverty, wide-spread ignorance and disease, total destruction of our state and a seemingly never-ending civil war which our unlucky country, Somalia, has been experiencing for some time now. This is, of course, something that needs urgent action in order to achieve a meaningful, sustainable and lasting economic reconstruction so as to end the long standing misery of our people