Most productive sectors of the Somali economy remain steady while the entire value chain is reactivated, particularly in the livestock export and sesame outputs.
By Abdirahman Yusuf
Somalia is going through a unique and progressive transformation, with immense trade opportunities to explore. Strategically located in the Horn of Africa and home to the second longest coastline on the continent, Somalia is within reach of international transportation hubs in both the Middle East and Indian Ocean.
Economic activity is estimated to have expanded by 3.7 per cent in 2014, driven by growth in agriculture, livestock, and fisheries, and a resurgent private sector, notably in the services industry, which includes telecommunications, construction and remittances. This combined with Somalia’s naturally rich fishing grounds, fertile agricultural land, and the strong tradition of entrepreneurship, elevated the country in terms of global trade.
Sesame production in Somalia has increased seven-fold since 1991, putting the country at the forefront of global sesame trade. According to Food and Agriculture Organization (FAO), Somalia is the eighth largest exporter of sesame in the world, despite civil strife, minimal investment, and an absence of policy and regulations. Somalia is one of few countries in the world where sesame is grown as a traditional crop. Demand is high for this naturally grown and drought resistant seed. Production of sesame increased by an estimated 40 per cent in the past six years, earning Somalia approximately $300 million in income annually, a relatively small amount compared to its potential, mostly due of lack of processing to improve quality.
Demand for Somali beef and goat is growing, especially for goat meat which is said to be sweeter and less fatty than goats from other parts of the East Africa region. In 2015, Somalia exported a record 5.3 million animals to markets in the Middle East. This was the highest number of live animals exported from Somalia in the last 20 years, earning the country an estimated $360 million in income and leading to a six percent growth in the industry that year.
For some commodities however, the road to recovery is longer. In 1990, before the war began, Somalia was the largest banana exporter in East Africa, employing over 120,000 workers and exporting products worth $96 million annually to markets in Europe, especially Italy, and the Arabian Gulf. Currently, bananas are grown on approximately 4,000 acres, less than 14 percent of the 30,000 acres that were cultivated when the industry was at its peak. This number, however, is growing as more and more farmers reclaim and cultivate banana plantations, aiming to supply the growing local demand, and export to regional and global markets. There has been significant progress, with exports slowly resuming in 2014 to Middle East markets, reconnecting historical trade ties, and paving the way for a new era of trade.
The fisheries sector, widely acknowledged to have huge potential for profitable expansion, is evolving to meet increasing world demand for fish. Somali waters, one of the last untapped fisheries resources, are considered to be some of the most diverse and profitable fishing grounds in Africa, teeming with schools of yellow fin tuna, blue marlin, dolphin fish, and sardines. In addition to having long coastline of 3,300 kilometers, the country has over 10,000 km2 of inland water area with two permanent rivers, the Juba and the Shabelle, which render a great aquaculture potential. Estimates suggest that the country has the potential to produce 400,000 tons of fish per year, and players in the industry are gearing up to take their share of the $136 billion global seafood market.
“Somalia is the eighth largest exporter of sesame in the world, despite civil strife, minimal investment, and an absence of policy and regulations. Somalia is one of few countries in the world where sesame is grown as a traditional crop and demand is high for the naturally grown and drought resistant seed. Production increased by an estimated 40 per cent in the past six years, earning Somalia approximately $300 million in income annually, a relatively small amount compared to its potential, mostly due of lack of processing to improve quality.
The transformation of Somalia’s agricultural industries is highly dependent on meeting demand for quality products, which in turn depends on the capacity of Somali producers to meet global standards. Increasing productivity will require the collaborative efforts to test and take up new and improved technologies, and serious investments in infrastructure and markets. While ongoing efforts to transform the country´s productive sectors are bearing fruit, especially in the livestock, sesame, and fruit sectors, it is critical for producers to gain access to global markets to compete and grow to meet standards.
Somalia’s participation in global trade fairs and events, where investors and producers from around the world promote their products at a global stage, is transforming the business landscape in the country. Somalia was particularly successful at the Gulfood Fair held in Dubai this year, earning the traders in attendance $2.71 million in direct sales of dried lemon and frankincense, and about $10 million in future negotiated sales in other commodities from the country, including sesame, livestock and banana. At the Seafood Expo in Brussels, the Somalia delegation, led by the Minister of Fisheries and Marine Resources, announced that the country was “Open for Business”, referring to Somalia’s Exclusive Economic Zone.
Improvements in the agricultural sector will require smart investments and coordination amongst all stakeholders. Somalia’s Growth, Enterprise, Employment and Livelihoods (GEEL) project is continuously working with Somalis in the private sector and government to attract capital investment to create new businesses and expand existing ones, while introducing advanced skills and technologies to improve efficiency. Further, GEEL is working with Société Générale de Surveillance (SGS), the world’s leading inspection, verification, testing, and certification company, to determine the standards required for Somali exports to trade globally, and support companies to become compliant.
Somalia is uniquely situated to meet rapidly rising demand for quality produce, and as the country continues to engage more with the international market, greater financial and technical support is needed to match private sector efforts, and take advantage of trade opportunities. Therein lays the opportunity to invest and realize the Somalia’s potential.