Individual Assignment
GENERAL ECONOMY OF SOMALIA AND IMPACT OF
COVID19
ABDULLAHI HASSAN ABUKAR ALI
(PBS20101067)
Business Economics (ECO 7101)
DR IDA BINTI MD YASIN
PUTRA BUSINESS SCHOOL
10 DECEMBER 2020
Table of Contents
1.0 Introduction………………………………………………………………………………………………………………….. 3
Q1: ANALYZE THE MACROECONOMICS STATISTICS OF THE SOMALIA …………………… 5
2.0 The Macroeconomics ………………………………………………………………………………………………….. 5
2.1 Economic Context ……………………………………………………………………………………………………. 6
2.1.1 Economic growth: ………………………………………………………………………………………………… 6
2.1.2 Fiscal policy: ………………………………………………………………………………………………………… 6
2.1.3 Monetary policy: ………………………………………………………………………………………………….. 6
2.1.4 PFM: ……………………………………………………………………………………………………………………. 7
2.1.5 Debt: ……………………………………………………………………………………………………………………. 7
2.1.6 Arrears clearance: ……………………………………………………………………………………………….. 8
2.1.7 Trade: ………………………………………………………………………………………………………………….. 8
2.1.8 Financial sector: ………………………………………………………………………………………………….. 8
2.1.9 Private sector: ……………………………………………………………………………………………………… 9
2.1.10 Infrastructure: …………………………………………………………………………………………………….. 9
2.1.11 Agricultural sector: …………………………………………………………………………………………….. 9
2.1.12 Regional integration: ………………………………………………………………………………………… 10
Q2: The Economic Impact Of COVID-19 To the Somalia ………………………………………………. 11
Q3: what can be done to revive the economy of the country? …………………………………….. 14
Reference …………………………………………………………………………………………………………………………. 15
1.0 Introduction
Somalia is now recovering from a two-and-a-half-decade civil war with a slowly rising
economy. The most active industries are agriculture, livestock and service sectors,
which have developed massively in recent years, such as telecommunications, money
transfer, manufacturing, hospitality and transport. Trade transfers often have a role to
play in the economy. Imports are much larger than exports, generating a trade
imbalance. This deficit is funded in part by remittances and Official Development
Assistance (ODA). Development dropped 1.8% in 2019 from 2.4% in 2018 due to
drought in Somalia at the end of 2018, slowing Somalia’s agricultural production, rising
food prices, increasing inflation from 4 per cent on average to 5.2 per cent, reflecting
higher imports and lower exports (IMF, 2020).
Somalia has a historic chance to turn the page on decades of violence, fragility and
state dissolution and head out on a journey towards poverty reduction and sustainable
development. For more than two decades, Somalia has undergone prolonged violence
and fragility, the breakdown of the rule of law, governments, basic public services and
the social contract, resulting in millions of impoverishments. The Provisional
Constitution of 2012 created a federal constitutional system, comprising the Senate,
the Federal Government of Somalia (FGS) and the Federal Member States (FMS).
The sustained political, economic and structural reforms implemented since 2016 have
resulted in restoring the key state capacities.
Given these changes, poverty remains widespread. Almost 70 per cent of Somalis
survive on parity terms of purchasing power at less than US$1.90 per day and
economic growth is barely compatible with population growth, measured at 2.8 per
cent per year. Poverty is profound, especially among rural populations and internally
displaced persons (IDPs). According to the Central Bank of Somalia, 80% of the
population are nomadic or semi-nomadic pastoralists who hold goats, horses, camels
and cattle. Nomads are also harvesting resins and gums to augment their revenue.
According to the World Bank, Somalia’s economy has deteriorated as a result of the
collapse of the state that followed the country’s civil war. Some economists, including
libertarian Peter T. Leeson, suggested instead that the fall of the state simply could
increase economic wellbeing, since the previous Somali state was predatory. The
small-scale fisheries business of the country revolves around the capture and canning
of tuna and mackerel in the north. Sharks are often caught and sold by inshore
artisanal fishers. In southern Somalia, the option of fish and shellfish is processed for
export. In the early 21st century, the Somali fishing industry was influenced by climate
change, overfishing, and growing pirate attacks along the coast.
The main objective of this paper is to analyze the macroeconomics statistics of the
Somalia and impact of COVID-19 for last two years. Somalia’s most precious
resources are its pastures, which cover most of the land. Somalia has little mineral
resources—only some tin, phosphate, gypsum, guano, coal, iron ore, and uranium
deposits—and both quantity and quality are too limited for mining to be worthwhile.
However, the deposits of clay mineral saprolite or sea foam in southern Somalia are
among the largest recognized reserves in the world. Natural gas deposits have been
identified but have not been exploited. Natural gas deposits have been identified but
have not been exploited. Sea salt is obtained at a variety of locations along the coast.
Somalia has a very high trade deficit. Its major export items are livestock and bananas,
which are primarily exported to Arab countries. Other exports include hides and skins,
fish, frankincense and myrrh. About all is processed, and even food for the urban
population is no longer used to the conventional diet. The three major nationalized
banks are the Central Bank of Somalia, the Commercial and Savings Bank of Somalia
and the Somali Development Bank.(Education & Capital, 2019)
