Two and a half decades of conflict, concentrated mainly in southern Somalia, destroyed much of the country’s governance structure, economic infrastructure, and institutions. Following the collapse of the Siad Barre government, in January 1991, Somalia experienced deep cycles of internal conflict that fragmented the country, undermined legitimate institutions, and created widespread vulnerability.
In 2012, a new federal government emerged in Mogadishu within the framework established by the Provisional Constitution. A successful political transition was matched by parallel progress on the security front. With the help of the 22,000-strong African Union Mission to Somalia (AMISOM) force, Somali forces, including aligned clan militia, liberated parts of southern Somalia, including strategic urban centers, from Al Shabaab. Though weakened, Al Shabaab retains significant terrorist capacity and has focused on asymmetric attacks targeting government and international targets. Southern Somalia is still experiencing active conflict. Somaliland and Puntland have remained relatively peaceful, although Al-Shabaab infiltration into Puntland’s mountainous areas has been growing. Following the political transition in 2012 the international community agreed to the Somali Compact with the Federal Government of Somalia (FGS), based on the principles of the New Deal. The Compact, which was agreed to at the Brussels Conference in September 2013, provides an organizing framework (2014-16) for the delivery of assistance to Somalia in line with national priorities and increasingly delivered by Somali institutions.
Somalia’s economy has shown remarkable resilience despite over 24 years of weak and ineffective central government; mainly driven by the private sector. Throughout the years of fragility and conflict, Somalia’s vibrant private sector helped maintain economic activity through provision of money transfer, transport, and telecommunications services. The dearth of statistics continues to make it hard to have a precise estimate of the size of the economy and a number of macroeconomic and social indicators. The World Bank and IMF estimates Somalia’s GDP at about $6 billion in 2015 which is six times the pre-war period (1985-1990) average of US$1 billion. Consumption remains the key driver of GDP with Gross fixed capital formation accounting for only 8% of GDP in 2015. The economy is highly dependent on imports with the share of exports to GDP being only 14%. Imports account for more than two thirds of GDP, creating a large trade deficit, mainly financed by remittances and international aid. Remittances not only provide a buffer to the economy but also are a lifeline to large segments of the population cushioning household economies and creating a buffer against shocks (drought, trade bans, inter-clan clashes).
Income per capita in Somalia is estimated at $435, making it the fifth poorest country in the world. The country will continue to face large-scale food insecurity between now and June 2016 as a result of poor rainfall and drought conditions in several areas, trade disruption, and a combination of protracted and new population displacement, all of which is exacerbated by chronic poverty. Malnutrition remains high in many parts of the country and nutrition surveys conducted from October to December 2015 by the FAO indicate that over 300,000 children under the age of five are acutely malnourished. Presently, no reliable poverty estimates exist for Somalia, but survey data on consumption expenditures has been collected from a representative sample of households in Mogadishu as well as rural and urban areas of Somaliland and Puntland. The first poverty estimates for Somalia are expected to be published by June 2016.
Last Updated: Apr 09, 2016