Economy of Somalia
Encyclopedia
According to the CIA
and the Central Bank of Somalia
, despite experiencing civil unrest, Somalia has maintained a healthy informal economy
, based mainly on livestock
, remittance/money transfer
companies and telecommunication
s. Due to a dearth of formal government statistics and the recent civil war
, it is difficult to gauge the size or growth of the economy. For 1994, the CIA estimated the GDP
at $3.3 billion. In 2001, it was estimated to be $4.1 billion. By 2009, the CIA estimated that the GDP had grown to $5.731 billion, with a projected real growth rate of 2.6%. According to a 2007 British Chambers of Commerce
report, the private sector also grew, 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; this 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. Libertarian
economist Peter T. Leeson
attributes this increased economic activity to the Somali customary law (referred to as Xeer
), which he suggests provides a stable environment to conduct business in.
at $350, but better than that of Tanzania
at $280 as well as Eritrea
at $190 and Ethiopia
at $100. 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.
As with neighboring countries, Somalia's economy consists of both traditional and modern production, with a gradual shift in favor of modern industrial techniques taking root. According to the Central Bank of Somalia, about 80% of the population are nomad
ic or semi-nomadic pastoralists, who keep goat
s, sheep, camel
s and cattle
. The nomads also gather resin
s and gums
to supplement their income.
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 banana
s; 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 country, with Saudi Arabia
building livestock export infrastructure and the United Arab Emirates
purchasing large farmlands. Somalia is also a major world supplier of frankincense
and myrrh
. Additionally, fishing fleet
s from Europe
and Asia
have reached commercial fishing
agreements in the northern Puntland
region.
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 bag
s, fabric
, hides and skins, detergent
and soap
, aluminum, foam mattress
es and pillow
s, fishing boat
s, carry out packaging, and stone processing
.
According to the UNDP, 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. The robust private sector has also attracted foreign investment
from the likes of General Motors
and Dole Fruit
.
, Somali Airlines
, that serviced the entire country. Due to the entrepreneurial spirit of the Somali people
and a lack of strict regulatory frameworks, by 1997, up to 14 private airline firms operating 62 aircraft were offering commercial flights to international locations. With competitively priced flight tickets, these companies have helped buttress Somalia's bustling trade networks.
Prominent Somali-owned private airlines include Air Somalia
, Jubba Airways
and Daallo Airlines
, which serve several domestic locations including Bosaso and Hargeisa
, as well as international destinations such as Dubai
and Jeddah
.
sector has seen an unprecedented level of growth in the past few years. Much construction is taking place in Mogadishu
and other major urban centers, encouraging the formation of new restaurant
s and hotel
s. Private-security militias are hired to ensure safety and the normal conduct of business.
s and internet
services in the world. After the start of the civil war, various new telecommunications companies began to spring up and compete to provide missing infrastructure. Funded by Somali entrepreneurs and backed by expertise from China
, Korea
and Europe
, these nascent telecommunications firms offer affordable mobile phone
and internet services that are not available in many other parts of the continent. Customers can conduct money transfers
and other bank
ing activities via mobile phone
s, as well as easily gain wireless internet access.
After forming partnerships with multinational corporations such as Sprint
, ITT
and Telenor
, these firms now offer the cheapest and clearest phone calls in Africa. Installation time for a landline
is just three days, while in Kenya
to the south, waiting lists are many years long. These Somali telecommunication companies also provide services to every city, town and hamlet in Somalia. There are presently around 25 mainlines per 1,000 persons, and the local availability of telephone lines (tele-density) is higher than in neighboring countries; three times greater than in adjacent Ethiopia
. Prominent Somali telecommunications companies include Golis Telecom Group
, Hormuud Telecom
, Somafone
, Nationlink
, Netco, Telcom
and Somali Telecom Group
. Hormuud Telecom alone grosses about $40 million a year. To dampen competitive pressures, three of these companies signed an interconnectivity deal in 2005 that allows them to set prices and expand their networks.
Investment in the telecom industry is one of the clearest signs that Somalia's economy has continued to grow despite the ongoing civil strife in parts of the southern half of the country.
As of 2005, there were also 20 privately-owned Somali newspaper
s, 12 radio
and television
stations, and numerous internet sites offering information to the public. Several local satellite
-based television services transmit international news stations, such as CNN
. In addition, one of Somalia's upstart media firms recently established a partnership with the BBC
.
is the official monetary authority
of Somalia. In terms of financial management, it is in the process of assuming the task of both formulating and implementing monetary policy
.
Owing to a lack of confidence in the local currency, the US dollar
is widely accepted as a medium of exchange alongside the Somali shilling
. Dollarization
notwithstanding, the large issuance of the Somali shilling has increasingly fueled price hikes, especially for low value transactions. This inflationary environment, however, is expected to come to an end as soon as the Central Bank assumes full control of monetary policy and replaces the presently circulating currency introduced by the private sector.
Although Somalia has had no central monetary authority for upwards of 15 years between the outbreak of the civil war in 1991 and the subsequent re-establishment of the Central Bank of Somalia in 2009, the nation's payment system is actually fairly advanced due primarily to the widespread existence of private money transfer operators (MTO) that have acted as informal banking networks.
These remittance firms (hawala
s) have become a large industry in Somalia, with an estimated $1.6 billion USD annually remitted to the region by Somalis
in the diaspora via money transfer companies. The latter include Dahabshiil, Qaran Express, Mustaqbal, Amal Express, Kaah Express, Hodan Global, Olympic, Amana Express, Iftin Express and Tawakal Express. Most are credentialed members of the Somali Money Transfer Association (SOMTA), an umbrella organization that regulates the community's money transfer sector, or its predecessor, the Somali Financial Services Association (SFSA). A unique feature of the Somali funds transfer companies is that they all charge the same low commission of 5% for sending amounts of up to approximately $1000, a fee range that encompasses the vast majority of household Somali remittances. For amounts greater than $1000, these companies charge commission fees of between 3%-4%, significantly lower than Western Union
's 7.1% fee and MoneyGram
's 7.2% fee for sending the same amount to Ethiopia
. The bulk of remittances are sent by Somalis based abroad to relatives in Somalia, a practice which has had a stimulating effect on the country's economy.
Dahabshiil
is the largest of the Somali money transfer operators (MTO), having captured most of the market vacated by Al-Barakaat. The firm has its headquarters in London
and employs more than 2000 people across 144 countries, with 130 branches in the United Kingdom alone, a further 130 branches in Somalia, and 400 branches globally, including one in Dubai
. The company provides a broad range of financial services to international organisations, as well as to both large and small businesses and private individuals. After Dahabshiil, Qaran Express is the largest Somali-owned funds transfer company. The firm has its headquarters in both London and Dubai, with 175 agents worldwide, 66 agents in Somalia and 64 in London, and charges nothing for remitting charity
funds. Mustaqbal is the third most prominent Somali MTO, with 8 agents in Somalia and 49 in the UK. As with Dahabshiil and Qaran Express, it also has a notable presence internationally.
As the reconstituted Central Bank of Somalia fully assumes its monetary policy responsibilities, some of the existing money transfer companies are expected in the near future to seek licenses so as to develop into full-fledged commercial banks. This will serve to expand the national payments system to include formal cheques, which in turn is expected to reinforce the efficacy of the use of monetary policy in domestic macroeconomic
management.
is now in large part supplied by local businesses, using generators purchased abroad. By dividing Somalia's cities into specific quarters, the private sector has found a manageable method of providing cities with electricity. A customer is given a menu of choices for electricity tailored to his or her needs, such as evenings only, daytime only, 24 hour-supply or charge per lightbulb.
Somalia has untapped reserves of numerous natural resources, including uranium
, iron ore, tin
, gypsum
, bauxite
, copper
, salt
and natural gas
. Due to its proximity to the oil-rich Gulf Arab
states such as Saudi Arabia
and Yemen
, the nation is also believed to contain substantial unexploited reserves of oil. A survey of Northeast Africa by the World Bank
and U.N.
ranked Somalia second only to Sudan
as the top prospective producer. America
n, Australia
n and Chinese
oil companies
, in particular, are excited about the prospect of finding petroleum
and other natural resources in the country. An oil group listed in Sydney
, Range Resources
, anticipates that the Puntland
province in the north has the potential to produce 5 Goilbbl to 10 Goilbbl of oil. As a result of these developments, the Somali Petroleum Company
was created by the federal government.
According to surveys, uranium is also found in large quantities in the Buurhakaba
region. A Brazil
ian company in the 1980s had invested $300 million for a uranium mine in central Somalia, but no long-term mining
took place.
Additionally, the Puntland region under the Farole
administration has since sought to refine the province's existing oil deal with Range Resources. The Australian oil firm, for its part, indicated that it looked forward to establishing a mutually beneficial and profitable working relationship with the region's new government.
In mid-2010, Somalia's business community also pledged to invest $1 billion in the national gas
and electricity
industries over the following five years. Abdullahi Hussein, the director of the just-formed Trans-National Industrial Electricity and Gas Company
, predicted that the investment strategy would create 100,000 jobs, with the net effect of stimulating the local economy and discouraging unemployed youngsters from turning to vice. The new firm was established through the merger of five Somali companies from the trade
, finance
, security
and telecommunication
s sectors. The first phase of the project is scheduled to start within six months of the establishment of the company, and will train youth to supply electricity to economic areas and communities. The second phase, which is slated to begin in mid-to-late 2011, will see the construction of factories in specially designated economic zones for the fishing, agriculture, livestock and mining industries.
According to the Central Bank of Somalia, as the nation embarks on the path of reconstruction, the economy is expected to not only match its pre-civil war levels, but also to accelerate in growth and development due to the Somalia's untapped natural resources.
Central Intelligence Agency
The Central Intelligence Agency is a civilian intelligence agency of the United States government. It is an executive agency and reports directly to the Director of National Intelligence, responsible for providing national security intelligence assessment to senior United States policymakers...
and the Central Bank of Somalia
Central Bank of Somalia
The Central Bank of Somalia is the monetary authority of Somalia. Among other duties, it is in charge of ensuring financial stability, maintaining the internal and external value of the local currency, and promoting credit and exchange conditions that facilitate the balanced growth of the...
, despite experiencing civil unrest, Somalia has maintained a healthy informal economy
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
, based mainly on livestock
Livestock
Livestock refers to one or more domesticated animals raised in an agricultural setting to produce commodities such as food, fiber and labor. The term "livestock" as used in this article does not include poultry or farmed fish; however the inclusion of these, especially poultry, within the meaning...
, remittance/money transfer
Wire transfer
Wire transfer or credit transfer is a method of electronic funds transfer from one person or institution to another. A wire transfer can be made from one bank account to another bank account or through a transfer of cash at a cash office...
companies and telecommunication
Telecommunication
Telecommunication is the transmission of information over significant distances to communicate. In earlier times, telecommunications involved the use of visual signals, such as beacons, smoke signals, semaphore telegraphs, signal flags, and optical heliographs, or audio messages via coded...
s. Due to a dearth of formal government statistics and the recent civil war
Somali Civil War
The Somali Civil War is an ongoing civil war taking place in Somalia. The conflict, which began in 1991, has caused destabilisation throughout the country, with the current phase of the conflict seeing the Somali government losing substantial control of the state to rebel forces...
, it is difficult to gauge the size or growth of the economy. For 1994, the CIA estimated the GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
at $3.3 billion. In 2001, it was estimated to be $4.1 billion. By 2009, the CIA estimated that the GDP had grown to $5.731 billion, with a projected real growth rate of 2.6%. According to a 2007 British Chambers of Commerce
British Chambers of Commerce
The British Chambers of Commerce is the national body for a powerful and influential network of 52 accredited Chambers of Commerce across the UK, representing 92,000 businesses that together employ 4,800,000 employees...
report, the private sector also grew, 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; this has been largely financed by the Somali diaspora
Somali diaspora
The Somali diaspora refers to expatriate Somalis who reside in areas of the world that have traditionally not been inhabited by their ethnic group...
, and includes trade and marketing, money transfer services, transportation, communications, fishery equipment, airlines, telecommunications, education, health, construction and hotels. Libertarian
Libertarianism
Libertarianism, in the strictest sense, is the political philosophy that holds individual liberty as the basic moral principle of society. In the broadest sense, it is any political philosophy which approximates this view...
economist Peter T. Leeson
Peter Leeson
Peter T. Leeson is BB&T Professor for the Study of Capitalism at the Mercatus Center, George Mason University He authored The Invisible Hook: The Hidden Economics of Pirates, a book in which he uses rational choice theory to examine the economic conditions and incentives that influenced pirate...
attributes this increased economic activity to the Somali customary law (referred to as Xeer
Xeer
Xeer, pronounced , is the polycentric legal system of Somalia. Under this system, elders serve as judges and help mediate cases using precedents. It is a good example of how customary law works within a stateless society and is a fair approximation of what is thought of as natural law...
), which he suggests provides a stable environment to conduct business in.
Agriculture and natural resources
The Central Bank of Somalia indicates that the country's GDP per capita is $333, which is lower than that of KenyaKenya
Kenya , officially known as the Republic of Kenya, is a country in East Africa that lies on the equator, with the Indian Ocean to its south-east...
at $350, but better than that of Tanzania
Tanzania
The United Republic of Tanzania is a country in East Africa bordered by Kenya and Uganda to the north, Rwanda, Burundi, and the Democratic Republic of the Congo to the west, and Zambia, Malawi, and Mozambique to the south. The country's eastern borders lie on the Indian Ocean.Tanzania is a state...
at $280 as well as Eritrea
Eritrea
Eritrea , officially the State of Eritrea, is a country in the Horn of Africa. Eritrea derives it's name from the Greek word Erethria, meaning 'red land'. The capital is Asmara. It is bordered by Sudan in the west, Ethiopia in the south, and Djibouti in the southeast...
at $190 and Ethiopia
Ethiopia
Ethiopia , officially known as the Federal Democratic Republic of Ethiopia, is a country located in the Horn of Africa. It is the second-most populous nation in Africa, with over 82 million inhabitants, and the tenth-largest by area, occupying 1,100,000 km2...
at $100. 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.
Nomad
Nomadic people , commonly known as itinerants in modern-day contexts, are communities of people who move from one place to another, rather than settling permanently in one location. There are an estimated 30-40 million nomads in the world. Many cultures have traditionally been nomadic, but...
ic or semi-nomadic pastoralists, who keep goat
Goat
The domestic goat is a subspecies of goat domesticated from the wild goat of southwest Asia and Eastern Europe. The goat is a member of the Bovidae family and is closely related to the sheep as both are in the goat-antelope subfamily Caprinae. There are over three hundred distinct breeds of...
s, sheep, camel
Camel
A camel is an even-toed ungulate within the genus Camelus, bearing distinctive fatty deposits known as humps on its back. There are two species of camels: the dromedary or Arabian camel has a single hump, and the bactrian has two humps. Dromedaries are native to the dry desert areas of West Asia,...
s and cattle
Cattle
Cattle are the most common type of large domesticated ungulates. They are a prominent modern member of the subfamily Bovinae, are the most widespread species of the genus Bos, and are most commonly classified collectively as Bos primigenius...
. The nomads also gather resin
Resin
Resin in the most specific use of the term is a hydrocarbon secretion of many plants, particularly coniferous trees. Resins are valued for their chemical properties and associated uses, such as the production of varnishes, adhesives, and food glazing agents; as an important source of raw materials...
s and gums
Natural gum
Natural gums are polysaccharides of natural origin, capable of causing a large viscosity increase in solution, even at small concentrations. In the food industry they are used as thickening agents, gelling agents, emulsifying agents, and stabilizers...
to supplement their income.
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
Fish
Fish are a paraphyletic group of organisms that consist of all gill-bearing aquatic vertebrate animals that lack limbs with digits. Included in this definition are the living hagfish, lampreys, and cartilaginous and bony fish, as well as various extinct related groups...
, charcoal
Charcoal
Charcoal is the dark grey residue consisting of carbon, and any remaining ash, obtained by removing water and other volatile constituents from animal and vegetation substances. Charcoal is usually produced by slow pyrolysis, the heating of wood or other substances in the absence of oxygen...
and banana
Banana
Banana is the common name for herbaceous plants of the genus Musa and for the fruit they produce. Bananas come in a variety of sizes and colors when ripe, including yellow, purple, and red....
s; sugar
Sugar
Sugar is a class of edible crystalline carbohydrates, mainly sucrose, lactose, and fructose, characterized by a sweet flavor.Sucrose in its refined form primarily comes from sugar cane and sugar beet...
, sorghum
Sorghum
Sorghum is a genus of numerous species of grasses, one of which is raised for grain and many of which are used as fodder plants either cultivated or as part of pasture. The plants are cultivated in warmer climates worldwide. Species are native to tropical and subtropical regions of all continents...
and corn
Maize
Maize known in many English-speaking countries as corn or mielie/mealie, is a grain domesticated by indigenous peoples in Mesoamerica in prehistoric times. The leafy stalk produces ears which contain seeds called kernels. Though technically a grain, maize kernels are used in cooking as a vegetable...
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
Arabian Peninsula
The Arabian Peninsula is a land mass situated north-east of Africa. Also known as Arabia or the Arabian subcontinent, it is the world's largest peninsula and covers 3,237,500 km2...
, Somali traders have increasingly begun to challenge Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
's traditional dominance over the Persian Gulf Arab livestock and meat market, offering quality animals at very low prices. In response, Persian Gulf
Persian Gulf
The Persian Gulf, in Southwest Asia, is an extension of the Indian Ocean located between Iran and the Arabian Peninsula.The Persian Gulf was the focus of the 1980–1988 Iran-Iraq War, in which each side attacked the other's oil tankers...
Arab states have started to make strategic investments in the country, with Saudi Arabia
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...
building livestock export infrastructure and the United Arab Emirates
United Arab Emirates
The United Arab Emirates, abbreviated as the UAE, or shortened to "the Emirates", is a state situated in the southeast of the Arabian Peninsula in Western Asia on the Persian Gulf, bordering Oman, and Saudi Arabia, and sharing sea borders with Iraq, Kuwait, Bahrain, Qatar, and Iran.The UAE is a...
purchasing large farmlands. Somalia is also a major world supplier of frankincense
Frankincense
Frankincense, also called olibanum , is an aromatic resin obtained from trees of the genus Boswellia, particularly Boswellia sacra, B. carteri, B. thurifera, B. frereana, and B. bhaw-dajiana...
and myrrh
Myrrh
Myrrh is the aromatic oleoresin of a number of small, thorny tree species of the genus Commiphora, which grow in dry, stony soil. An oleoresin is a natural blend of an essential oil and a resin. Myrrh resin is a natural gum....
. Additionally, fishing fleet
Fishing fleet
A fishing fleet is an aggregate of commercial fishing vessels. The term may be used of all vessels operating out of a particular port, all vessels engaged in a particular type of fishing , or all fishing vessels of a country or region.Although fishing vessels are not formally organized as if they...
s from Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
and Asia
Asia
Asia is the world's largest and most populous continent, located primarily in the eastern and northern hemispheres. It covers 8.7% of the Earth's total surface area and with approximately 3.879 billion people, it hosts 60% of the world's current human population...
have reached commercial fishing
Commercial fishing
Commercial fishing is the activity of catching fish and other seafood for commercial profit, mostly from wild fisheries. It provides a large quantity of food to many countries around the world, but those who practice it as an industry must often pursue fish far into the ocean under adverse conditions...
agreements in the northern Puntland
Puntland
Puntland , officially the Puntland State of Somalia , is a region in northeastern Somalia, centered on Garowe in the Nugaal province. Its leaders declared the territory an autonomous state in 1998....
region.
Manufacturing
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
Somali diaspora
The Somali diaspora refers to expatriate Somalis who reside in areas of the world that have traditionally not been inhabited by their ethnic group...
, 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
Pasta
Pasta is a staple food of traditional Italian cuisine, now of worldwide renown. It takes the form of unleavened dough, made in Italy, mostly of durum wheat , water and sometimes eggs. Pasta comes in a variety of different shapes that serve for both decoration and to act as a carrier for the...
, mineral water
Mineral water
Mineral water is water containing minerals or other dissolved substances that alter its taste or give it therapeutic value, generally obtained from a naturally occurring mineral spring or source. Dissolved substances in the water may include various salts and sulfur compounds...
, confections
Confectionery
Confectionery is the set of food items that are rich in sugar, any one or type of which is called a confection. Modern usage may include substances rich in artificial sweeteners as well...
, plastic bag
Plastic bag
A plastic bag, polybag, or pouch is a type of packaging made of thin, flexible, plastic film, nonwoven fabric, or plastic textile. Plastic bags are used for containing and transporting goods such as foods, produce, powders, ice, magazines, comic books, chemicals and waste.Most plastic bags are...
s, fabric
Textile
A textile or cloth is a flexible woven material consisting of a network of natural or artificial fibres often referred to as thread or yarn. Yarn is produced by spinning raw fibres of wool, flax, cotton, or other material to produce long strands...
, hides and skins, detergent
Detergent
A detergent is a surfactant or a mixture of surfactants with "cleaning properties in dilute solutions." In common usage, "detergent" refers to alkylbenzenesulfonates, a family of compounds that are similar to soap but are less affected by hard water...
and soap
Soap
In chemistry, soap is a salt of a fatty acid.IUPAC. "" Compendium of Chemical Terminology, 2nd ed. . Compiled by A. D. McNaught and A. Wilkinson. Blackwell Scientific Publications, Oxford . XML on-line corrected version: created by M. Nic, J. Jirat, B. Kosata; updates compiled by A. Jenkins. ISBN...
, aluminum, foam mattress
Mattress
A mattress is a manufactured product to sleep or lie on, consisting of resilient materials and covered with an outer fabric or ticking. In the developed world it is typically part of a bed set and is placed upon a foundation....
es and pillow
Pillow
A pillow is a large cushion support for the head, usually used while sleeping in a bed, or for the body as used on a couch or chair. There are also throw pillows , which are pillows that are purely decorative and not designed for support or comfort...
s, fishing boat
Boat
A boat is a watercraft of any size designed to float or plane, to provide passage across water. Usually this water will be inland or in protected coastal areas. However, boats such as the whaleboat were designed to be operated from a ship in an offshore environment. In naval terms, a boat is a...
s, carry out packaging, and stone processing
Stonemasonry
The craft of stonemasonry has existed since the dawn of civilization - creating buildings, structures, and sculpture using stone from the earth. These materials have been used to construct many of the long-lasting, ancient monuments, artifacts, cathedrals, and cities in a wide variety of cultures...
.
According to the UNDP, investments in light manufacturing have expanded in Bosaso, Hargeisa
Hargeisa
Hargeisa is a city in the northwestern Woqooyi Galbeed region of Somalia. With a population of approximately 2 million residents, it is the second largest city in the country. Hargeisa is the capital of Somaliland, a self-declared republic that is internationally recognized as an autonomous region...
and Mogadishu
Mogadishu
Mogadishu , popularly known as Xamar, is the largest city in Somalia and the nation's capital. Located in the coastal Benadir region on the Indian Ocean, the city has served as an important port for centuries....
, in particular, indicating growing business confidence in the economy. To this end, in 2004, an $8.3 million Coca-Cola
Coca-Cola
Coca-Cola is a carbonated soft drink sold in stores, restaurants, and vending machines in more than 200 countries. It is produced by The Coca-Cola Company of Atlanta, Georgia, and is often referred to simply as Coke...
bottling plant opened in Mogadishu, with investors hailing from various constituencies in Somalia. The robust private sector has also attracted foreign investment
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
from the likes of General Motors
General Motors
General Motors Company , commonly known as GM, formerly incorporated as General Motors Corporation, is an American multinational automotive corporation headquartered in Detroit, Michigan and the world's second-largest automaker in 2010...
and Dole Fruit
Dole Food Company
Dole Food Company, Inc. is an American-based agricultural multinational corporation headquartered in Westlake Village, California. The company is the largest producer of fruits and vegetables in the world, operating with 74,300 full-time and seasonal employees who are responsible for over 300...
.
Airline industry
Prior to the civil war, Somalia had only one national airlineAirline
An airline provides air transport services for traveling passengers and freight. Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit...
, Somali Airlines
Somali Airlines
Somali Airlines was the flag carrier of Somalia.-History and destinations:The carrier was formed in March 1964 as the national airline of the country with the aid of Alitalia, which initially held a 50% controlling stake in the company, and the Somali government held the balance...
, that serviced the entire country. Due to the entrepreneurial spirit of the Somali people
Somali people
Somalis are an ethnic group located in the Horn of Africa, also known as the Somali Peninsula. The overwhelming majority of Somalis speak the Somali language, which is part of the Cushitic branch of the Afro-Asiatic language family...
and a lack of strict regulatory frameworks, by 1997, up to 14 private airline firms operating 62 aircraft were offering commercial flights to international locations. With competitively priced flight tickets, these companies have helped buttress Somalia's bustling trade networks.
Prominent Somali-owned private airlines include Air Somalia
Air Somalia
Air Somalia is a privately owned airline based in Somalia, which was established in 2001....
, Jubba Airways
Jubba Airways
-History:It was founded in 1998 by two Calgary-based Somali entrepreneurs, Said Nur Qailie and Abdi Hashi Dalel.On May 1998, a month after the company had been established, the airline embarked on its first voyage...
and Daallo Airlines
Daallo Airlines
Daallo Airlines is an airline, headquartered in the Dubai Airport Free Zone in Al Garhoud, Dubai, United Arab Emirates. With its main base at Djibouti-Ambouli International Airport, the airline operates scheduled services in East Africa and the Middle East...
, which serve several domestic locations including Bosaso and Hargeisa
Hargeisa
Hargeisa is a city in the northwestern Woqooyi Galbeed region of Somalia. With a population of approximately 2 million residents, it is the second largest city in the country. Hargeisa is the capital of Somaliland, a self-declared republic that is internationally recognized as an autonomous region...
, as well as international destinations such as Dubai
Dubai
Dubai is a city and emirate in the United Arab Emirates . The emirate is located south of the Persian Gulf on the Arabian Peninsula and has the largest population with the second-largest land territory by area of all the emirates, after Abu Dhabi...
and Jeddah
Jeddah
Jeddah, Jiddah, Jidda, or Jedda is a city located on the coast of the Red Sea and is the major urban center of western Saudi Arabia. It is the largest city in Makkah Province, the largest sea port on the Red Sea, and the second largest city in Saudi Arabia after the capital city, Riyadh. The...
.
Hospitality
Somalia's hospitalityHospitality
Hospitality is the relationship between guest and host, or the act or practice of being hospitable. Specifically, this includes the reception and entertainment of guests, visitors, or strangers, resorts, membership clubs, conventions, attractions, special events, and other services for travelers...
sector has seen an unprecedented level of growth in the past few years. Much construction is taking place in Mogadishu
Mogadishu
Mogadishu , popularly known as Xamar, is the largest city in Somalia and the nation's capital. Located in the coastal Benadir region on the Indian Ocean, the city has served as an important port for centuries....
and other major urban centers, encouraging the formation of new restaurant
Restaurant
A restaurant is an establishment which prepares and serves food and drink to customers in return for money. Meals are generally served and eaten on premises, but many restaurants also offer take-out and food delivery services...
s and hotel
Hotel
A hotel is an establishment that provides paid lodging on a short-term basis. The provision of basic accommodation, in times past, consisting only of a room with a bed, a cupboard, a small table and a washstand has largely been replaced by rooms with modern facilities, including en-suite bathrooms...
s. Private-security militias are hired to ensure safety and the normal conduct of business.
Telecommunications and media
Somalia now offers some of the most technologically advanced and competitively priced telecommunicationTelecommunication
Telecommunication is the transmission of information over significant distances to communicate. In earlier times, telecommunications involved the use of visual signals, such as beacons, smoke signals, semaphore telegraphs, signal flags, and optical heliographs, or audio messages via coded...
s and internet
Internet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
services in the world. After the start of the civil war, various new telecommunications companies began to spring up and compete to provide missing infrastructure. Funded by Somali entrepreneurs and backed by expertise from China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
, Korea
Korea
Korea ) is an East Asian geographic region that is currently divided into two separate sovereign states — North Korea and South Korea. Located on the Korean Peninsula, Korea is bordered by the People's Republic of China to the northwest, Russia to the northeast, and is separated from Japan to the...
and Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
, these nascent telecommunications firms offer affordable mobile phone
Mobile phone
A mobile phone is a device which can make and receive telephone calls over a radio link whilst moving around a wide geographic area. It does so by connecting to a cellular network provided by a mobile network operator...
and internet services that are not available in many other parts of the continent. Customers can conduct money transfers
Electronic funds transfer
Electronic funds transfer is the electronic exchange or transfer of money from one account to another, either within a single financial institution or across multiple institutions, through computer-based systems....
and other bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
ing activities via mobile phone
Mobile phone
A mobile phone is a device which can make and receive telephone calls over a radio link whilst moving around a wide geographic area. It does so by connecting to a cellular network provided by a mobile network operator...
s, as well as easily gain wireless internet access.
After forming partnerships with multinational corporations such as Sprint
Sprint Nextel
Sprint Nextel Corporation is an American telecommunications company based in Overland Park, Kansas. The company owns and operates Sprint, the third largest wireless telecommunications network in the United States, with 53.4 million customers, behind Verizon Wireless and AT&T Mobility...
, ITT
ITT Corporation
ITT Corporation is a global diversified manufacturing company based in the United States. ITT participates in global markets including water and fluids management, defense and security, and motion and flow control...
and Telenor
Telenor
Telenor Group is the incumbent telecommunications company in Norway, with headquarters located at Fornebu, close to Oslo. Today, Telenor Group is mostly an international wireless carrier with operations in Scandinavia, Eastern Europe and Asia, working predominantly under the Telenor brand...
, these firms now offer the cheapest and clearest phone calls in Africa. Installation time for a landline
Landline
A landline was originally an overland telegraph wire, as opposed to an undersea cable. Currently, landline refers to a telephone line which travels through a solid medium, either metal wire or optical fibre, as distinguished from a mobile cellular line, where transmission is via radio waves...
is just three days, while in Kenya
Kenya
Kenya , officially known as the Republic of Kenya, is a country in East Africa that lies on the equator, with the Indian Ocean to its south-east...
to the south, waiting lists are many years long. These Somali telecommunication companies also provide services to every city, town and hamlet in Somalia. There are presently around 25 mainlines per 1,000 persons, and the local availability of telephone lines (tele-density) is higher than in neighboring countries; three times greater than in adjacent Ethiopia
Ethiopia
Ethiopia , officially known as the Federal Democratic Republic of Ethiopia, is a country located in the Horn of Africa. It is the second-most populous nation in Africa, with over 82 million inhabitants, and the tenth-largest by area, occupying 1,100,000 km2...
. Prominent Somali telecommunications companies include Golis Telecom Group
Golis Telecom Somalia
Golis Telecom Somalia is the largest telecommunications operator in northeastern Somalia. Founded in 2002 with the objective of supplying the country with GSM mobile services, fixed line and internet services, it has an extensive network that covers all the major cities and more than 40 districts...
, Hormuud Telecom
Hormuud Telecom
Hormuud Telecom Somalia Inc. is a privately held telecommunications company established in April 2002 in Somalia. It has its headquarters in Mogadishu.-Overview:More than 600 Somali investors have shares in Hormuud Telecom...
, Somafone
Somafone
Somafone Telecommunications Service Company is Somalia's leading telecommunications company. It was formed in 2003 as a fully owned subsidiary of Somafone FZ LLC of the Dubai Internet City. The firm's head offices are located in Mogadishu.-See also:*Golis Telecom Somalia*Hormuud...
, Nationlink
NationLink Telecom
-Overview:NationLink Telecom was founded in September 1997 by Abdirizak Ido, a Somali Businessman who is currently President of the company based in East Africa. The company is one of the leading telecommunications service providers in Somalia and offers its services throughout the...
, Netco, Telcom
Telcom
Telcom is a telecommunications network operator in Somalia. It is the first major privately-owned company providing telecommunications services to Somali cities.-Overview:...
and Somali Telecom Group
Somali Telecom Group
Somali Telecom Group is a telecommunications company based in Somalia. It was founded in 1993 in Rockville, Maryland, in the USA, by Abdirazak I. Osman, Edmund L. Resor, Abdiaziz Ismail Dualeh and Luis F. George. According to the company's website's front page, it is Somalia's "first telecom...
. Hormuud Telecom alone grosses about $40 million a year. To dampen competitive pressures, three of these companies signed an interconnectivity deal in 2005 that allows them to set prices and expand their networks.
Investment in the telecom industry is one of the clearest signs that Somalia's economy has continued to grow despite the ongoing civil strife in parts of the southern half of the country.
As of 2005, there were also 20 privately-owned Somali newspaper
Newspaper
A newspaper is a scheduled publication containing news of current events, informative articles, diverse features and advertising. It usually is printed on relatively inexpensive, low-grade paper such as newsprint. By 2007, there were 6580 daily newspapers in the world selling 395 million copies a...
s, 12 radio
Radio
Radio is the transmission of signals through free space by modulation of electromagnetic waves with frequencies below those of visible light. Electromagnetic radiation travels by means of oscillating electromagnetic fields that pass through the air and the vacuum of space...
and television
Television
Television is a telecommunication medium for transmitting and receiving moving images that can be monochrome or colored, with accompanying sound...
stations, and numerous internet sites offering information to the public. Several local satellite
Satellite television
Satellite television is television programming delivered by the means of communications satellite and received by an outdoor antenna, usually a parabolic mirror generally referred to as a satellite dish, and as far as household usage is concerned, a satellite receiver either in the form of an...
-based television services transmit international news stations, such as CNN
CNN
Cable News Network is a U.S. cable news channel founded in 1980 by Ted Turner. Upon its launch, CNN was the first channel to provide 24-hour television news coverage, and the first all-news television channel in the United States...
. In addition, one of Somalia's upstart media firms recently established a partnership with the BBC
BBC
The British Broadcasting Corporation is a British public service broadcaster. Its headquarters is at Broadcasting House in the City of Westminster, London. It is the largest broadcaster in the world, with about 23,000 staff...
.
Finance
The Central Bank of SomaliaCentral Bank of Somalia
The Central Bank of Somalia is the monetary authority of Somalia. Among other duties, it is in charge of ensuring financial stability, maintaining the internal and external value of the local currency, and promoting credit and exchange conditions that facilitate the balanced growth of the...
is the official monetary authority
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
of Somalia. In terms of financial management, it is in the process of assuming the task of both formulating and implementing monetary policy
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
.
Owing to a lack of confidence in the local currency, the US dollar
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
is widely accepted as a medium of exchange alongside the Somali shilling
Somali shilling
The Somali shilling is the official currency of Somalia...
. Dollarization
Dollarization
Dollarization occurs when the inhabitants of a country use foreign currency in parallel to or instead of the domestic currency. The term is not only applied to usage of the United States dollar, but generally to the use of any foreign currency as the national currency.The biggest economies to have...
notwithstanding, the large issuance of the Somali shilling has increasingly fueled price hikes, especially for low value transactions. This inflationary environment, however, is expected to come to an end as soon as the Central Bank assumes full control of monetary policy and replaces the presently circulating currency introduced by the private sector.
Although Somalia has had no central monetary authority for upwards of 15 years between the outbreak of the civil war in 1991 and the subsequent re-establishment of the Central Bank of Somalia in 2009, the nation's payment system is actually fairly advanced due primarily to the widespread existence of private money transfer operators (MTO) that have acted as informal banking networks.
These remittance firms (hawala
Hawala
Hawala is an informal value transfer system based on the performance and honor of a huge network of money brokers, which are primarily located in the Middle East, North Africa, the Horn of Africa, and South Asia...
s) have become a large industry in Somalia, with an estimated $1.6 billion USD annually remitted to the region by Somalis
Somali people
Somalis are an ethnic group located in the Horn of Africa, also known as the Somali Peninsula. The overwhelming majority of Somalis speak the Somali language, which is part of the Cushitic branch of the Afro-Asiatic language family...
in the diaspora via money transfer companies. The latter include Dahabshiil, Qaran Express, Mustaqbal, Amal Express, Kaah Express, Hodan Global, Olympic, Amana Express, Iftin Express and Tawakal Express. Most are credentialed members of the Somali Money Transfer Association (SOMTA), an umbrella organization that regulates the community's money transfer sector, or its predecessor, the Somali Financial Services Association (SFSA). A unique feature of the Somali funds transfer companies is that they all charge the same low commission of 5% for sending amounts of up to approximately $1000, a fee range that encompasses the vast majority of household Somali remittances. For amounts greater than $1000, these companies charge commission fees of between 3%-4%, significantly lower than Western Union
Western Union
The Western Union Company is a financial services and communications company based in the United States. Its North American headquarters is in Englewood, Colorado. Up until 2006, Western Union was the best-known U.S...
's 7.1% fee and MoneyGram
MoneyGram
MoneyGram International, Inc. is a US-based, Global Money transfer company, headquartered in Dallas, Texas. It has Global Operations Centers in Saint Louis Park, Minnesota and Brooklyn Center, Minnesota, Global Call Center Operations in Denver, Colorado and regional and local offices around the...
's 7.2% fee for sending the same amount to Ethiopia
Ethiopia
Ethiopia , officially known as the Federal Democratic Republic of Ethiopia, is a country located in the Horn of Africa. It is the second-most populous nation in Africa, with over 82 million inhabitants, and the tenth-largest by area, occupying 1,100,000 km2...
. The bulk of remittances are sent by Somalis based abroad to relatives in Somalia, a practice which has had a stimulating effect on the country's economy.
Dahabshiil
Dahabshiil
Dahabshiil is an international funds transfer company headquartered in Dubai, United Arab Emirates. Formed in the early 1970s, the firm operates from over 24,000 outlets and employs more than 2,000 people across 144 countries. It provides a broad range of financial services to international...
is the largest of the Somali money transfer operators (MTO), having captured most of the market vacated by Al-Barakaat. The firm has its headquarters in London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
and employs more than 2000 people across 144 countries, with 130 branches in the United Kingdom alone, a further 130 branches in Somalia, and 400 branches globally, including one in Dubai
Dubai
Dubai is a city and emirate in the United Arab Emirates . The emirate is located south of the Persian Gulf on the Arabian Peninsula and has the largest population with the second-largest land territory by area of all the emirates, after Abu Dhabi...
. The company provides a broad range of financial services to international organisations, as well as to both large and small businesses and private individuals. After Dahabshiil, Qaran Express is the largest Somali-owned funds transfer company. The firm has its headquarters in both London and Dubai, with 175 agents worldwide, 66 agents in Somalia and 64 in London, and charges nothing for remitting charity
Charitable organization
A charitable organization is a type of non-profit organization . It differs from other types of NPOs in that it centers on philanthropic goals A charitable organization is a type of non-profit organization (NPO). It differs from other types of NPOs in that it centers on philanthropic goals A...
funds. Mustaqbal is the third most prominent Somali MTO, with 8 agents in Somalia and 49 in the UK. As with Dahabshiil and Qaran Express, it also has a notable presence internationally.
As the reconstituted Central Bank of Somalia fully assumes its monetary policy responsibilities, some of the existing money transfer companies are expected in the near future to seek licenses so as to develop into full-fledged commercial banks. This will serve to expand the national payments system to include formal cheques, which in turn is expected to reinforce the efficacy of the use of monetary policy in domestic macroeconomic
Macroeconomics
Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy...
management.
Energy
The World Bank reports that electricityElectricity
Electricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...
is now in large part supplied by local businesses, using generators purchased abroad. By dividing Somalia's cities into specific quarters, the private sector has found a manageable method of providing cities with electricity. A customer is given a menu of choices for electricity tailored to his or her needs, such as evenings only, daytime only, 24 hour-supply or charge per lightbulb.
Uranium
Uranium is a silvery-white metallic chemical element in the actinide series of the periodic table, with atomic number 92. It is assigned the chemical symbol U. A uranium atom has 92 protons and 92 electrons, of which 6 are valence electrons...
, iron ore, tin
Tin
Tin is a chemical element with the symbol Sn and atomic number 50. It is a main group metal in group 14 of the periodic table. Tin shows chemical similarity to both neighboring group 14 elements, germanium and lead and has two possible oxidation states, +2 and the slightly more stable +4...
, gypsum
Gypsum
Gypsum is a very soft sulfate mineral composed of calcium sulfate dihydrate, with the chemical formula CaSO4·2H2O. It is found in alabaster, a decorative stone used in Ancient Egypt. It is the second softest mineral on the Mohs Hardness Scale...
, bauxite
Bauxite
Bauxite is an aluminium ore and is the main source of aluminium. This form of rock consists mostly of the minerals gibbsite Al3, boehmite γ-AlO, and diaspore α-AlO, in a mixture with the two iron oxides goethite and hematite, the clay mineral kaolinite, and small amounts of anatase TiO2...
, copper
Copper
Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...
, salt
Salt
In chemistry, salts are ionic compounds that result from the neutralization reaction of an acid and a base. They are composed of cations and anions so that the product is electrically neutral...
and natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
. Due to its proximity to the oil-rich Gulf Arab
Arab states of the Persian Gulf
"Arab states of the Persian Gulf" or "Arab Persian Gulf states" or "Persian Gulf Arab states" or "Arabic Persian Gulf states" or "Arab States of The Gulf", are terms that refer to the six Arab states of Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Bahrain and Oman, bordering the Persian Gulf....
states such as Saudi Arabia
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...
and Yemen
Yemen
The Republic of Yemen , commonly known as Yemen , is a country located in the Middle East, occupying the southwestern to southern end of the Arabian Peninsula. It is bordered by Saudi Arabia to the north, the Red Sea to the west, and Oman to the east....
, the nation is also believed to contain substantial unexploited reserves of oil. A survey of Northeast Africa by the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
and U.N.
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
ranked Somalia second only to Sudan
Sudan
Sudan , officially the Republic of the Sudan , is a country in North Africa, sometimes considered part of the Middle East politically. It is bordered by Egypt to the north, the Red Sea to the northeast, Eritrea and Ethiopia to the east, South Sudan to the south, the Central African Republic to the...
as the top prospective producer. America
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
n, Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
n and Chinese
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
oil companies
Petroleum industry
The petroleum industry includes the global processes of exploration, extraction, refining, transporting , and marketing petroleum products. The largest volume products of the industry are fuel oil and gasoline...
, in particular, are excited about the prospect of finding petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
and other natural resources in the country. An oil group listed in Sydney
Sydney
Sydney is the most populous city in Australia and the state capital of New South Wales. Sydney is located on Australia's south-east coast of the Tasman Sea. As of June 2010, the greater metropolitan area had an approximate population of 4.6 million people...
, Range Resources
Range Resources
Range Resources is a Texas-based natural gas company mainly engaged in the fracking and well drilling of shale gas contained in the Marcellus Formation in the Eastern United States. The company was first to devise techniques for extracting gas from the Marcellus Shale, through the use of test...
, anticipates that the Puntland
Puntland
Puntland , officially the Puntland State of Somalia , is a region in northeastern Somalia, centered on Garowe in the Nugaal province. Its leaders declared the territory an autonomous state in 1998....
province in the north has the potential to produce 5 Goilbbl to 10 Goilbbl of oil. As a result of these developments, the Somali Petroleum Company
Somali Petroleum Company
The Somali Petroleum Company is a petroleum exploration and production company in Somalia. It was created by the Transitional Federal Government of Somalia on 19 August 2008 in order to manage and develop Somalia's hydrocarbon resources.- Stakeholders :...
was created by the federal government.
According to surveys, uranium is also found in large quantities in the Buurhakaba
Buurhakaba
-Overview:Burhakaba is the largest town in the region, with a reported population of 28,000 people. The town is named after a large hill that surrounds it.-References:*...
region. A Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
ian company in the 1980s had invested $300 million for a uranium mine in central Somalia, but no long-term mining
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
took place.
Additionally, the Puntland region under the Farole
Abdirahman Mohamud Farole
Abdirahman Mohamud Farole is a Somali politician. He is the fourth and current President of Puntland.-Biography:Farole was born in the qandala region of Somalia in 1945. He first pursued his post-secondary education locally, earning a Diploma of Public Health in 1964 from the Scuola Professionale...
administration has since sought to refine the province's existing oil deal with Range Resources. The Australian oil firm, for its part, indicated that it looked forward to establishing a mutually beneficial and profitable working relationship with the region's new government.
In mid-2010, Somalia's business community also pledged to invest $1 billion in the national gas
Gas
Gas is one of the three classical states of matter . Near absolute zero, a substance exists as a solid. As heat is added to this substance it melts into a liquid at its melting point , boils into a gas at its boiling point, and if heated high enough would enter a plasma state in which the electrons...
and electricity
Electricity
Electricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...
industries over the following five years. Abdullahi Hussein, the director of the just-formed Trans-National Industrial Electricity and Gas Company
Trans-National Industrial Electricity and Gas Company
The Trans-National Industrial Electricity and Gas Company is a newly established Somali Energy conglomerate. It unites five major Somali companies from the trade, finance, security and telecommunications sectors after an agreement was signed in Istanbul, Turkey that will see this new firm provide...
, predicted that the investment strategy would create 100,000 jobs, with the net effect of stimulating the local economy and discouraging unemployed youngsters from turning to vice. The new firm was established through the merger of five Somali companies from the trade
Commerce
While business refers to the value-creating activities of an organization for profit, commerce means the whole system of an economy that constitutes an environment for business. The system includes legal, economic, political, social, cultural, and technological systems that are in operation in any...
, finance
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
, security
Security
Security is the degree of protection against danger, damage, loss, and crime. Security as a form of protection are structures and processes that provide or improve security as a condition. The Institute for Security and Open Methodologies in the OSSTMM 3 defines security as "a form of protection...
and telecommunication
Telecommunication
Telecommunication is the transmission of information over significant distances to communicate. In earlier times, telecommunications involved the use of visual signals, such as beacons, smoke signals, semaphore telegraphs, signal flags, and optical heliographs, or audio messages via coded...
s sectors. The first phase of the project is scheduled to start within six months of the establishment of the company, and will train youth to supply electricity to economic areas and communities. The second phase, which is slated to begin in mid-to-late 2011, will see the construction of factories in specially designated economic zones for the fishing, agriculture, livestock and mining industries.
According to the Central Bank of Somalia, as the nation embarks on the path of reconstruction, the economy is expected to not only match its pre-civil war levels, but also to accelerate in growth and development due to the Somalia's untapped natural resources.