24 Sept 2018
Somalia: Market Profile
- Somalia, located in the easternmost of Africa, has descended into a two-decade-long civil unrest when armed opposition groups overthrew the country’s military dictator Siad Barre in 1991. In 2012, a new Federal Government of Somalia was established, which is the first permanent central government in the country since the start of the civil war.
- Following the collapse of the Somali government in 1991 and the resulting civil war, hundreds of thousands of refugees fled to neighbouring countries. Somalia is now the world’s third largest source of refugees, after Syria and Afghanistan. As of end of 2017, there are about 900,000 Somali refugees hosted in the region, mainly in Kenya, Yemen and Ethiopia.
- Livestock and crops are the main sources of Somalia’s economic activity, accounted for 75% of the country’s GDP and 93% of total exports in 2017. However, the agricultural sector has been buffeted by an increasingly fragile natural environment and more frequent cycles of drought and floods. A severe drought in November 2016 has led to widespread famine and weakened the country’s economic growth. Somalia’s real GDP growth dropped from 2.4% in 2016 to 1.8% in 2017.
- According to the World Bank, Somalia has one of the most active mobile money markets in the world with around 155 million transactions recorded every month. Despite its fragility and underdeveloped financial institutions, development of mobile money has outpaced most other African countries, with over 70% of Somalis adopting mobile money services regularly.
- Somalia is a member state of the United Nations, African Union and the Arab League. It was also a founding member of the Organization of Islamic Cooperation in 1969.
- Sino-Somalia relationship was established in 1960 and two countries signed their first trade agreement in 1963. Since then, Somali people have been beneficiaries of Chinese benevolence in the various areas of economic and social development. More than 80 infrastructure projects such as roads and hospitals in Somalia were built with Chinese assistance. A medical team of more than 400 staff were sent to Somalia since 1991 to support the country’s medical sector.
- Ahead of Forum on China-Africa Cooperation (FOCAC) in September this year, Somalia and China held bilateral talks and Somalia signed a memorandum of understanding with China to join the Belt and Road Initiative (BRI), aiming to encourage investment and trade links between the two countries.
- According to UNCTAD, cumulative FDI to Somalia has surged almost ten-fold in the past decade, from US$0.3 billion in 2007 to US$2.3 billion in 2017.