More by this Author
Somalia has made significant progress towards becoming a stable and peaceful democracy. This is evidenced by the country's peaceful political transitions in 2012, 2017 and 2022. Despite facing several challenges, the government has deepened democratic practices and governance, as exemplified by the successful completion of the Constitutional review process. As a result, economic fundamentals have been strengthened, and peace has given investors the confidence to invest in the country, knowing their investments are secure and profitable.
Somalia presents great investment opportunities, which is why the Ministry of Planning, Investment and Economic Development (MoPIED) in partnership with Nation Media Group, will be holding a two-day Invest Somalia Conference and Expo on April 24 and 25, 2024. The event is aimed at showcasing these opportunities to potential investors.
The country's appeal to both local and foreign investors is based on several factors. In December 2023, the country's foreign debt was reduced by $4.5 billion by the International Monetary Fund and the World Bank after meeting the Heavily Indebted Poor Countries (HIPC) Initiative completion point.
This means that Somalia's external debt has gone down from 64 percent of GDP in 2018 to less than six percent of GDP by the end of 2023. This will allow the country to access more financial resources which will help strengthen its economy, build infrastructure, reduce poverty and create job opportunities. As a result, the domestic market is expected to grow.
Economic growth rate increased from 2.2 percent in 2022 to 2.8 percent in 2023, and is projected to reach 4.3 percent by 2028. Mogadishu has also registered an annual growth rate of 6.9 percent, thanks to the growing number of diaspora Somalis returning.
On the other hand, the inflation rate has been stable and reduced to 4.2 percent in 2023, which is one of the lowest in Sub-Saharan Africa. It's crucial to maintain a stable macroeconomic environment to promote private sector activities.
The country boasts $1.6 billion in diaspora remittances. This, coupled with a population of over 18 million, ensures effective demand in the country.
Somalia has a unique potential as an investment destination due to its strategic geographical location and extensive coastline of over 3,300km, which is the longest on the African continent, and has 15 seaports.
The country's strategic maritime gateway places it at the crossroads of vital trade routes that connect the Indian Ocean to the Arabian Peninsula. There are also significant opportunities in marine fishing and the blue economy.
The livestock sector, which contributes more than 80 percent of agricultural GDP and more than 45 percent of the national GDP, has unexploited potential in the 7.1 million camels, 5.3 million cattle, 30.9 million goats and 13.6 million sheep, which can be harnessed to serve both the domestic and export markets.
The country boasts extensive, rich agricultural land, which investors can exploit to reduce dependence on imported food and raw materials.
There are significant untapped opportunities in Somalia's natural resources, including 200 billion cubic feet of gas reserves, and potential oil fields in the northern zone and the Nuggal and Dharoor basins. If these resources are utilised, Somalia can be among the top seven petroleum exporting countries globally.
Another promising area is onshore wind power, where Somalia has the highest resource potential in Africa. They could generate 30,000- 45,000MW. Investing in these renewable energy resources is a wise decision, aligned with the current global movement towards a green transition.
Somalia became the eighth member of the East African Community (EAC) on November 24, 2023, expanding its market to 300 million people. This is a significant step towards transformative economic growth in the country.
The enlarged market is expected to stimulate trade, investment, and innovation, fostering a dynamic economic ecosystem that transcends national borders. The sheer size of the expanded market signifies a significant financial growth catalyst.
The potential influx of diverse goods, services and investments across member states can increase productivity, job creation, and overall economic prosperity. A larger market creates an environment conducive to investment.
The country recognises the importance of having a favourable domestic business environment. To this end, a Foreign Investment Law has been put in place alongside a dedicated Investment Promotion Office under the Ministry of Planning, committed to protecting and retaining investors.
In conclusion, the government has identified several sectors that are ready for investment, including real estate, healthcare facilities, energy and telecommunication, food production and supply, hotel and hospitality, transport and logistics, trade financing and entrepreneurship, education and skill development centres, marine equipment and supplies, security and ICT, investments in marine product packaging, and investments in fishing and aquaculture.
I encourage investors to take advantage of these investment opportunities and position themselves accordingly in the country.
Mohamed Shire is director-general, Ministry of Planning, Investment and Economic Development
