Somalia

Economy

Main article: Economy of Somalia

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Somalia has a market economy. As one of the world's poorest and least developed countries, Somalia has relatively few natural resources. Much of the economy has been devastated by the civil war. Agriculture is the most important sector, with livestock accounting for about 40% of GDP and about 65% of export earnings. Nomads and semi-nomads, who are dependent upon livestock for their livelihood, make up a large portion of the population. After livestock, bananas are the principal export; sugar, sorghum, maize, and fish are products for the domestic market. The small industrial sector, based on the processing of agricultural products, accounts for 10% of GDP; most facilities have been shut down because of the civil strife. Moreover, in 1999, continuing civil disturbances in Mogadishu and outlying areas interfered with any substantial economic advance and with international aid arrangements. Somalia has one of the highest child mortality rates in the world, with 10% of children dying at birth and 25% of those surviving birth dying before age five. Medecins Sans Frontieres has further stated that the level of daily violence in the lack of legitimate security structures is "catastrophic".

Related Topics:
Market economy - Banana - Sugar - Sorghum - Maize - Fish - Mogadishu - Child mortality - Medecins Sans Frontieres

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Infrastructure, such as roads are as numerous as those in neighboring countries but of much lower quality. A World Bank report states that the private sector has found it too hard to build roads due to high transaction costs and the fact that those who pay road fees are not the only ones using the road (see free rider problem), presenting a problem with recuperation of investment. The telecommunications structure is highly sophisticated, replete with internet cafés, and is one area where Somalia has performed significantly better than its neighbours. The telephone system is administered by the United Nations funded Somali Telecom Association based in neighbouring Dubai. Small scale production of electricity by private generators has largely replaced government supplies. The private sector also supplies water, but only 21% of the population has access to safe drinking water.

Related Topics:
Free rider problem - Internet café - United Nations - Somali Telecom Association - Dubai

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The education system is private, but enrollment is only 17%. According to a November, 2004 report from the World bank, Somalia has one of the lowest literacy rates in the world with an 81% illiteracy rate, compared with 49% in wealthier West Africa and 35% among its neighbours. Higher education ended completely in the civil war of 1991, but Mogadishu University reopened in 1998 and its first class graduated in 2001. Other universities have opened in other cities. Much of the funding for the education system comes from international Islamic charities such as Al-Islah.http://www.state.gov/g/drl/rls/irf/2004/35382.htm

Related Topics:
November - 2004 - Mogadishu University - Al-Islah

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The main problem affecting economic growth is the lack of stability. An example of this is that in Mogadishu, some businessmen would prefer to pay taxes to a government to maintain security rather than to pay warlords for protection from bandits.

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Remittance services has become a large industry in Somalia. Successful people from the world-wide diaspora who fled because of the war contribute to the economy around $2 billion annually. Wireless communications has also become a giant economic force in Somalia. Because of the war, nobody really knows the size of the economy or how much it is growing.

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References: Anarchy and Invention: How Does Somalia's Private Sector Cope without Government?

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