More than two decades of armed conflict, political instability, famine and long drought in Somalia have destroyed infrastructure and weakened public institutions. International partners provide financial support and humanitarian assistance while the Somali private sector and Diaspora maintain informal economy largely based on export, remittance and telecommunication. To transition such informal economy to formal, the Federal Government has taken steps to improve investment climate and competitiveness. Through the Ministry of Commerce and Industry, the Federal Government will ensure private sector engagement, set clear legal and regulatory framework, and improve investment climate so as to attract foreign and domestic investment for economic recovery.
Somalia is emerging from ashes of civil war to an environment where by an investment and growth can be possible. Somalia has adapted a free market economy to minimize government intervention and maximize the role of the market. Somalia’s entrepreneurial private sector is one of the country’s main assets and an important partner for job creation and building sustainable livelihood for Somali people. Recognizing its influence, the Somali private sector can help deliver peace dividends in the form of job and consequently income creation, access to services, security and stability, equitable resource distribution and good governance, and consequently lower levels of poverty for many people in Somalia.
In London conference, the Federal Government together with private sector, diaspora, Federal Member States and international development partners set priority reform and actions to accelerate Somali’s economic recovery. As a result, Public Private Dialogue (PPD) declaration between the government and private sector was signed. In the declaration, the role of government as an enabler in the PPD is to develop and strengthen legal and regulatory framework through consultation with private sector and Federal Member States; and for the private sector as a driver, to engage government so as to establish modern business environment.
Both government and private sector are committed to work on a raft of reform to improve business environment and create playfield that promotes foreign and domestic investment.
National PPD secretariat led by the Ministry of Commerce and Industry, and consisting of key government institutions and private sector is established to help coordinate public sector, and liaise with private sector and economic committee. The private sector nomination already in place and had several meetings while public institutions constituted their focal points recently. First meeting for the national PPD secretariats is scheduled to take place in January 2018.
New Foreign Direct Investment (FDI) has been approved and TOR for the FDI Committee is in draft as per the FDI Law. Investment policy paper is underway with intention to operationalize FDI by March of 2018
With support from World Bank Group, Federal Government in consultation with Federal Member States and the private sector drafted a company law to modernize business environment and to create an attractive and competitive business climate for national economic growth and job creation. Consultation meeting on Company Law with member states and private sector was done in Mogadishu in October 2017 with recommendations to finalize and submit final draft to cabinet and then to parliament.
In addition, the Federal Government is in the process of establishing One Stop Shop for business registration and licensing process so as to improve enabling environment for trade and investment and the overall way of doing business. To achieve this, Organizational and ICT Assessment is complete with recommendation such as establishment of Department of Business Registration within the Ministry of Commerce and Industry, and implementation process is underway.
Furthermore, Federal Government is committed to strengthen relationships with the region and globally through its application for membership to East African Community (EAC) and to Common Market for East and Southern Africa (COMESA) as well as accession to World Trade Organization (WTO). This will help us to establish internal reforms required for foreign and domestic trade and investment, business opportunities and job creation.
The Federal Government of Somalia is keen to lay the foundation realizing the long-term economic recovery and growth. Through the Ministry of Commerce and Industry, government is working with private sector, Federal Member States and development partners to strengthen legal and regulatory framework and improve investment climate through inclusive and wider consultation so as to attract foreign and domestic investment for economic recovery.
Ahmed Elmi Muhumed is the Somalia Investment Climate Reform Project Coordinator