For the last several years, Somalia has enjoyed a stable economic growth rate with strong positive indications of a progressing business environment. Even though Somalia ranks 190 on the World Bank’s annual flagship report of Ease doing business, the country is among the top ten countries for startups in Africa. “Mogadishu is the most innovative city in Somalia. At rank 587, Mogadishu ranked relatively high in 2020. Additionally, Mogadishu took the 14th spot of Africa’s 36 ranked cities. According to Startup Blink 2020.
Somalia positioned itself as a hub of opportunities with intensive ongoing institutional reforms and global partnerships to spur the growth and development of the economy. Somalia has huge opportunities to set ambitious milestones to recover and rebound its economy in the long run. The growing use of frontier digital technologies, rapid urbanisation and government reforms might be a gamechanger for the betterment of the new Somalia.
Since the COVID-19 pandemic broke out in 2019, similarly to the global economy, the Somali economy has been struggling to perform with its potential. The progressive business atmosphere has been hindered by the triple threats, floods, Locust invasion and COVID-19. These threats have become the major bottleneck to the growth of the economy. The GDP has decreased by 0.3% in 2020 which is the lowest since 2017.
Fortunately, the storms cooled off. Somalia is now recovering from the crisis to maintain its position. Since the year 2021 began, the country’s economic performance has registered progressing figures compared to last year. According to the Central Bank of Somalia (CBS), the real GDP growth is projected to grow 2.4% in 2021. Similarly, the changes in figures have also been registered in the consumer price index (CPI). According to the Somalia National Bureau of Statistics (SNBS), the overall inflation rate increased to 2.17 per cent on majorly increasing prices in heath, food & non-alcoholic beverages, electricity, water and gas since they are the most significant expenditure in consumer baskets in household consumption. Fortunately, the exchange rate has been relatively stable in 2021. According to CBS, the Somalia Shilling exchange rate was 26,064 SOS per US Dollar.
In this third quarter for 2021, the private sector made remarkable achievements in introducing new products and services to the markets. In real estate, Dahabshiil launched flagship projects, Dahab Tower, which may disrupt the apartments and the housing sector in Mogadishu. Housing and real estate are some of the most expensive and lucrative industries in the country. It’s also a major concern for almost everyone. The growing middle-class generation spends most of their earnings and savings either renting or buying a house or a land. Similar projects have been increasing in the city, although it’s not sure how they will reduce the current housing price in the future.
Additionally, Somtel launched eSIM card service in Mogadishu. The new service will help subscribers to access all services without using sim cards or linking to routers. These services include calls, internet and edahab. The new eSIM service is hoped to increase internet penetration and connectivity among people. Somalia has been among the leading telecommunications countries in cheap mobile data.
A National payment system (NPS) spearheaded by CBS has been adopted by some of the private banks to ease money transfer among the banks. It has been a long term Challenge to the interconnectivity between the local banks. Through the NPS, the CBS will provide regulation and supervision of payment systems to payment service providers to become inter-operable and connected. Although the NPS has been backlashed with bureaucracies since the CBS will require to clear every transaction being made by a financial service provider.
The Ministry of Commerce and Industry launched the Somali Trade information Portal (STIP). The site, found at www.stip.gov.com, will serve as a one-stop centre for accessing all trade laws, regulations, policies & procedures for all kinds of businesses to do business in Somalia. This is expected to attract investors, increase the FDI and stimulate the economy. “With the launch of the Somalia Trade Information Portal, we hope that our business community will have a useful tool to find the information necessary to facilitate their import-export activities. We are committed to closely coordinating with the public and private sectors as well as international organizations to ensure the sustainability of the portal,” said H.E. Abdulkadir Sharif Shekhuna, State Minister, Ministry of Commerce and Industry.
The Site is an important step to improve trade competitiveness and to facilitate Somalia’s accession to the World Trade Organization (WTO) by complying with the WTO Trade Facilitation Agreement. This development of the portal was supported by IFC as part of Somalia Investment Climate Reform Project II.
Accelerating the public and private engagement and their contributions to improving the business atmosphere is inevitable.The recovery process seems to put the country on the path of rapid growth.
Mohamed Okash, Editor-In-Chief
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