After Somalia gained its independence from Italy in 1960 and had merged with the former British Somaliland, the country only enjoyed 9 years of parliamentary democracy until 1969, when the military led by Mohamed Siyad Barre overthrew the incipient civilian government in a bloodless coup. Photo: PublicDomainPictures/Pixabay
CAPE TOWN – Somalia, popularly known as the “Land of Punt” or the land of the gods by ancient Egyptians, is a country situated on the Horn of Africa, which lies along the Gulf of Aden and the Indian Ocean.

Just across the Gulf of Aden is Saba, the land of legendary, eloquent politician and expert theologian the Queen of Sheba, who paid a visit to the wise king Solomon to quench her thirst for knowledge.

After Somalia gained its independence from Italy in 1960 and had merged with the former British Somaliland, the country only enjoyed 9 years of parliamentary democracy until 1969, when the military led by Mohamed Siyad Barre overthrew the incipient civilian government in a bloodless coup.

After more than two decades, Barre's government was ousted from power by a conglomeration of various clan-based rebel groups in 1991. Late in 2000 after 12 failed attempts to organise a central government, the government of Somalia was formed, though it is still facing challenges from al-Qaeda and al-Shabaab insurgents.

With a population of 15 million, of which 70 percent is under 30, an unemployment rate of 14 percent and a gross domestic product of $7.48 billion (R110.61bn), Somalia is ranked as the most corrupt country in the world by Transparency International and is ranked 190 among 190 economies for ease of doing business. It is classified as a debt distress country with an external debt estimate of 77 percent of 2017 gross domestic product (GDP).

Its economy is mainly dependent on international aid, remittances, foreign direct investment and grants which represent more than a quarter of the country's GDP as sources of revenue.The country's main economic activity is livestock, which contributes three-fifths to the economy. As a result, its major exports are led by sheep and goats representing 44.4 percent of the total exports, followed by bovine at 22.1 percent.

Somalia’s main imports are raw sugar, which represent 11.8 percent of the total imports, followed by rice, 7.41 percent. Its major export destinations are Oman, China, Japan, France and Bulgaria, and its top import origins are China, India, Oman, Kenya and Turkey.

On the Neil Economic scale, the price of a can of Coke in Somalia is 342.20 Somali shillings or SOS (R8.67) and the price of a litre of petrol is 493 SOS. The annual rate of inflation in the country is estimated at 4.5percent as at October.

Despite its economy being driven by agriculture, livestock raising and the services sector, the country is reported to hold large, untapped reserves of numerous natural resources, such as iron ore, uranium, copper, tin, bauxite, gypsum, salt and natural gas.

According to Sophy Owuor, Somalia holds a huge potential of oil reserve, because of its proximity to the Gulf of Arab states such as Yemen and Saudi Arabia. The country is also believed to have one of the largest gypsum reserves in the world.

In the 1960s Somali uranium reserves were one of the largest in the world and were estimated to be 25 percent of the world's known reserves.

It also had the biggest salt factory in the world, which was later destroyed by fire during the British conquest of Italian East Africa in World War II. This sector has failed to develop mainly due to the country's high political instability and poor infrastructure.

Somalia has the potential to be a regional economic hub due to its strategic geographic location and having the longest coastline in Africa.

De Beer is IFA president and advises African states on economic development. www.ifa.africa or [email protected]

BUSINESS REPORT