Energy in Somalia

Somalia is classified by the United Nations as a least developed country, with the majority of its population being dependent on agriculture and livestock for their livelihood. The economy of Somalia is $49.918 billion by gross domestic product as of 2020. For 1994, the CIA estimated it at purchasing power parity to be approximately $30.3 billion. In 2001, it was estimated to be $4.1 billion. By 2009, the CIA estimated that it had grown to $75.731 billion, with a projected real growth rate of 2.6%. In 2014, the International Monetary Fund estimated economic activity to have expanded by 3.7% primarily. This expansion was driven by growth in the primary sector and the secondary sector. According to a 2007 British Chambers of Commerce report, the private sector has experienced growth, particularly in the service sector. Unlike the pre-civil war period, when most services and the industrial sector were government-run, there has been substantial, albeit unmeasured, private investment in commercial activities. The investment has been largely financed by the Somali diaspora, and includes trade and marketing, money transfer services, transportation, communications, fishery equipment, airlines, telecommunications, education, health, construction and hotels.

According to the United Nations Development Programme (UNDP) Somalia, the country had some of the lowest development indicators in the world, and a "strikingly low" Human Development Index (HDI) value of 0.285. This would rank amongst the lowest in the world if comparable data were available, and when adjusted for the significant inequality that exists in Somalia, its HDI is even lower. The UNDP notes that "inequalities across different social groups, a major driver of conflict, have been widening".

Somalia's economy consists of both traditional and modern production, with a gradual shift to more modern industrial techniques. According to the Central Bank of Somalia, about 80% of the population are nomadic or semi-nomadic pastoralists, who keep goats, sheep, camels and cattle. The nomads also gather resins and gums to supplement their income.

According to the World Bank, Somalia's economy has suffered as a result of the state failure that accompanied the country's civil war. Some economists, including libertarian Peter T. Leeson, have argued instead that state collapse has actually helped improve economic welfare, because the previous Somali state was predatory.

Economic indicators

According to the African Development Bank, Somalia is "characterized by a severe lack of basic economic and social statistics". This situation has been exacerbated by the civil war and institutional collapse, although even prior to Somalia's state failure, data was often unreliable.

The World Bank reports that Somalia's GDP was $917.0 million in 1990 and its total population was 13.42 million in 2014, and has since risen to 15 million as of 2018, marking roughly a 12% increase in its total population since then. In 2018 the World bank estimated an annual GDP of $6.2 billion, similar in size to Guam and the Kyrgyz Republic, and classifies it as a low-income country. The United Nations Statistics Division reports a GDP figure of $1.306 billion for 2012, compared to $2.316 billion in 2005 and $1.071 billion in 2010.

According to the Central Bank of Somalia, sometime in the 2000s the country's GDP per capita according to the World Bank was $230, a slight reduction in real terms from 1990. The 2012 '' Human Development Report'' estimates per capita GDP to be $284, compared with an average across sub-Saharan Africa of $1,300 per capita. This GDP per capita figure is the fourth lowest in the world. About 43% of the population live on less than 1 US dollar a day, with about 24% of those found in urban areas and 54% living in rural areas.

According to the United Nations Development Programme (UNDP) Somalia, the country had some of the lowest development indicators in the world, and a "strikingly low" Human Development Index (HDI) value of 0.285. This would rank amongst the lowest in the world if comparable data were available, and when adjusted for the significant inequality that exists in Somalia, its HDI is even lower. The UNDP notes that "inequalities across different social groups, a major driver of conflict, have been widening". The UN has classified Somalia as a least developed country since its Committee for Development Policy began categorising states in this way in 1971.

An International Monetary Fund mission to Somalia reports estimated GDP growth of 3.7% in 2014 and CPI inflation of -71.10%. The report notes that provided that Somalia's security situation continues to improve modestly and there is no drought, economic growth in the medium term should average 5%, but that "growth will remain inadequate to redress poverty and gender disparities". An estimated 73% of the people of Somalia live below the poverty line in 2016.

State failure and economic welfare

According to the World Bank, within two years of the outbreak of civil war in 1988, Somali state institutions collapsed and "most of the economic and social infrastructure and assets were destroyed". In 2003 the Bank said that despite the absence of a state and its institutions, the Somali private sector experienced impressive growth, but that "most of these sectors are now becoming either stagnant or their growth is hindered due to the lack of investment, trained manpower and the absence of a relevant legal and regulatory framework to enforce rules and regulations, common standards and quality control". The report notes difficulties encouraging and making use of domestic savings for investment, due to the lack of formal financial services and regulatory agencies. The lack of state institutions, the Bank argues, resulted in the prevention of access to international capital markets.

In an article published in 2007, libertarian economist Peter T. Leeson argues that the Somali state was predatory, and that its collapse has improved the economic welfare of its citizens, with 14 out of 18 key development indicators being more positive in the period 2000-2005 than in 1985–1990. Similarly, economists Benjamin Powell, Ryan Ford and Alex Nowrasteh argue that Somalia's economic performance, relative to other African states, has improved during the period of statelessness. Ersun Kurtulus states that Leeson and Powell, Ford and Nowrasteh's articles provide "the most unequivocal evidence to indicate that Somalia has been faring far better under anarchy than it did under Barre's regime". Kurtulus argues that these authors may provide a valid explanation of the situation in Somalia, but that "the argument appears to be derived from a hypothesis which is rooted in a liberal conceptualisation of statehood rather than in a quantitative analysis which establishes a negative correlation between indicators of state predation and those of economic and social welfare". Kurtulus suggests that the collapse of a repressive state may improve personal and civil liberties, but that such an account "overemphasises endogenous factors that are vested in the domestic arena, while neglecting the exogenous factors that operate at the regional and international level".

Agriculture

Agriculture is the most important economic sector. It accounts for about 65% of the GDP and employs 65% of the workforce. Livestock contributes about 40% to GDP and more than 50% of export earnings. Other principal exports include fish, charcoal and bananas; sugar, sorghum and corn are products for the domestic market. According to the Central Bank of Somalia, imports of goods total about $460 million per year, and have recovered and even surpassed aggregate imports prior to the start of the civil war in 1991. Exports, which total about $270 million annually, have also surpassed pre-war aggregate export levels but still lead to a trade account deficit of about $190 million US dollars per year. However, this trade deficit is far exceeded by remittances sent by Somalis in the diaspora, which have helped sustain the import level.

With the advantage of being located near the Arabian Peninsula, Somali traders have increasingly begun to challenge Australia's traditional dominance over the Persian Gulf Arab livestock and meat market, offering quality animals at very low prices. In response, Persian Gulf Arab states have started to make strategic investments in the region, with Saudi Arabia building livestock export infrastructure and the United Arab Emirates purchasing large farmlands. Additionally, fishing fleets from Europe and Asia have reached commercial fishing agreements in the northern Puntland region.

With Somalia exporting 3 million sheep in 2012, its live exports to the Middle East have overtaken Australian exports which numbered 2 million. According to the Australian Bureau of Agricultural and Resource Economics and Sciences, 99% of the country's livestock exports are headed to the Middle East. However, since 2006, there has been a 10% decline "because of increasing competition in export markets from African and eastern European sheep exports". More than 5 million livestock were exported in 2014, the highest amount in 20 years. Neighbouring Somaliland is also home to some of the largest livestock markets, known in Somali as ''seylad'', in the Horn of Africa, with as many as 10,000 heads of sheep and goats sold daily in the markets of Burao and Yirowe, many of whom shipped to Gulf states via the port of Berbera. The markets handle livestock from all over the Horn of Africa.

Frankincense and myrrh are important export products for Somalia. Along with Ethiopia and Kenya, Somalia is one of the world's three largest suppliers of these products.

Manufacturing

The modest industrial sector, based on the processing of agricultural products, accounts for 10% of Somalia's GDP.

Prior to the outbreak of the civil war in 1991, the roughly 53 state-owned small, medium and large manufacturing firms were foundering, with the ensuing conflict destroying many of the remaining industries. However, primarily as a result of substantial local investment by the Somali diaspora, many of these small-scale plants have re-opened and newer ones have been created. The latter include fish-canning and meat-processing plants in the north, as well as about 25 factories in the Mogadishu area, which manufacture pasta, mineral water, confections, plastic bags, fabric, hides and skins, detergent and soap, aluminum, foam mattresses and pillows, fishing boats, carry out packaging, and stone processing.

In 2001, investments in light manufacturing have expanded in Bosaso, Hargeisa and Mogadishu, in particular, indicating growing business confidence in the economy. To this end, in 2004, an $8.3 million Coca-Cola bottling plant opened in Mogadishu, with investors hailing from various constituencies in Somalia. Various other sectors have also attracted foreign investment from the likes of General Motors and Dole Fruit.

Airline industry

Following the start of the civil war, all of Somali Airlines' operations were officially suspended in 1991.World of Information (Firm), ''Africa Review'', (World of Information: 2003), p.299. By 2014, there were over six Somali-owned private carriers filling the gap. These included Daallo Airlines, Jubba Airways, African Express Airways, East Africa 540, Central Air and Hajara. Daallo and Jubba merged as the African Airways Alliance

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