Uncovering Riches in Somalia
Somalia could soon become a modern-day, rags to riches story. Foreign investors who recognise the country’s untapped wealth and potential could one day write their own story.
Some of the country’s vast oil and gas and mineral deposits of gold, copper, thorium, tin and uranium remain undeveloped. There are also investment opportunities in agricultural, fisheries, financial and professional services, transport, tourism and infrastructure development under public private partnerships.
"The time to invest in Somalia is now" said Prime Minister Hassan Khaire
“The time to invest in Somalia is now,” said the Prime Minister of Somalia Hassan Khaire, during the 2018 launch of the Nordic Horn of Africa Opportunities fund. The US $10 million fund was created to support the country’s small and medium sized companies.
It’s also the first commercial investment fund that understands the incredible economic potential of the region.
Despite three decades of recovery from civil unrest, the country’s economy is not only steady and sustained but growing. According to a September 2019 World Bank report, Somalia’s economy is projected to expand by 3.2 - 3.5 percent over the medium-term, assuming the current reform momentum continues.
Somalia economy is driven mostly by an ambitious and eager entrepreneur mind workforce, who are among the youngest in the world. The county’s median age is only 18.
This year, the economy is headed for a 2.9 percent growth, up from 2.8 percent in 2018. Tax collection increased by 29 percent in 2018, as the government changed its tax policies. In 2017, the economy only grew 1.4 percent as the agricultural sector recovered from a drought.
A lot of economic growth is tied to Somalia’s strong trading relationships with other countries and strong government policies that favour investor contributions to the public sector. The government understands the importance of foreign investment to the economy, and has some of the most flexible foreign investment laws in the world.
The Somali government is also encouraging foreign investment by creating a business-friendly economic climate with policies that make investment easy, while making significant progress fighting corruption.
On September 21, 2019 Somali President Mohamed Abdullahi Farmaajo, signed and passed the long awaited Anti-Corruption Bill into law. This major milestone will improve the government’s image and help gain the confidence of the International Monetary Fund and the World Bank to obtain debt relief for Somalia.
”This Anti-Corruption Bill will be good for our country and our economy and the formation of an Independent Ethics and Anti-Corruption Commission is our top priority,” said President Mohamed Abdullahi Farmaajo.
The Anti-Corruption Commission has the power to investigate and review government decisions, protocols, and will be constantly monitoring all activities by public officials. The country’s government has also made great strides in fiscal transparency according to a 2019 report on Fiscal Transparency by the U.S. Department of State.
The reports state that Somalia has made significant progress by publishing its budget and end-of-year report online within a reasonable period of time, including debt obligations from 2013 to 2016.
Some highlights in the report, emphasising the country’s commitment to fiscal transparency, include:
- Even though actual revenues and expenditures deviated from projections, the government issued a revised budget estimate passed by parliament, increasing the credibility of information in budget documents.
- The Somalia government conducted reviews of ministries and submitted those reports to parliament.
- The government attempted to improve its processes for awarding natural resource extraction on petroleum legislation, and reached a political agreement with state governments on the sharing of potential revenues from natural resources.
- Information about the awarding of fishing licenses to Chinese companies was also made public and are included in official government budgeting documents.
“Somalia is laying the foundations for longer term economic development, but human capital development is essential for growth to be inclusive and sustainable,” said Hugh Riddell, World Bank Country Manager for Somalia.
As the pace of recovery continues, the new Somali economy will demand workers with new skills creating further foreign investment opportunities in education.
International players are also helping the country by encouraging growth.
On October 10th, 2019 the government of Norway proposed a short-term bridging loan of NOK 3.135 billion to Somalia in 2020 to clear Somalia’s debt arrears to the World Bank’s International Development Association.
“This loan from Norway will be an important contribution to the work to promote reform and stabilisation in Somalia,” said Norway’s Minister of Foreign Affairs Ine Eriksen Søreide.
The government of Somalia is on the right course to improve its economy and to entice international investment and promote trade.
The country is full of untapped natural resources, just waiting to be discovered and developed. Prudent organisations that understand this rare opportunity and invest in the country today are likely to see an improved bottom line.
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Trade Invest Somalia.