Somalia Economic Structure
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Table of Contents
Somalia Economic Structure: Overview
Somalia’s economy suffers from a lack of natural resources and development challenges. The nation has also been struggling with economic reverses, which have made Somalian citizens increasingly dependent on foreign remittances. Besides, Somalia’s economic structure is dominated by the primary sector. This makes the economy susceptible to natural hazards such as floods and droughts, which the nation experiences frequently.[br]
Somalia Economic Structure: Overview
Somalia economic structure is supported by the nation’s agricultural and pastoral sectors. These account for approximately 65% of Somalia’s GDP. Somalian agriculture comprises mainly of banana plantations and livestock, including cattle, sheep, camels and goats. Due to irregular and scanty rainfall, farming in Somalia is restricted to some coastal regions.
The status of the industrial sector in Somalia is dismal, which accounts for a meager 10% of the nation’s GDP. Somalia’s manufacturing sector is dominated by several small-scale informal operations. Large-scale enterprises are principally dedicated to processing of milk, sugar, hides and skins. Manufacturing has ceased to be a significant contributor to Somalia’s economic structure due to inefficiencies in the sector. The growth of the sector has also been curtailed because of the civil wars.
Somalia’s service sector has grown steadily over the last few years, accounting for a quarter of its GDP. The telecommunication industry is a key player in the sector, and Somalian telecommunication firms hold the credit of offering the lowest international call rates in Africa. The hotel industry is also growing slowly and steadily, supported by private-security militia.
Sudan Economic Structure: Status of Financial Sector[br]
The Somali shilling has been the official currency of Somalia since 1991. This currency has become highly devalued, wherein one US dollar is worth 4000 to 5000 Somali shillings on an average. Consequently, the Somali shilling is avoided for large financial transactions by traders and individuals, who generally prefer to trade in US dollars. The conversion of money is generally done through private remittance companies, called hawala. In fact, the remittance service has become an important industry in itself due to the absence of a formal banking sector. The industry handles about $500 million to $1 billion in remittances annually, according to the report “SOMALIA: Remittances – a lifeline to survival.”
