Publication: Trade as an Engine of Grow in Somalia: Constraints and Opportunities
Date
2021-05
ISSN
Published
2021-05
Author(s)
World Bank
Abstract
International trade can promote
efficiency, knowledge diffusion, technological progress,
and—what ultimately matters most—inclusive growth and
poverty reduction. Boosting export competitiveness is
inextricably linked with rebuilding the productive sectors
of Somalia’s economy, generating jobs and incomes, and
reducing the country’s large structural trade deficits,
which have averaged over 80 percent of GDP since 2015.
Somalia supplies a limited number of exports to a relatively
small set of markets. Its top five export products in 2018
accounted for more than 83 percent of total goods exports.
Dominated by live animals, these exports are primarily
unprocessed primary commodities that do not generate
spillovers to other sectors of the economy and are
vulnerable to weather and other shocks. Somalia also exports
to a small set of countries: 82 percent of its exports were
sold to just five destinations in 2018, mainly the United
Arab Emirates, Oman, and Saudi Arabia. Somalia’s annual
goods export revenues could be increased significantly by
expanding sales of current exports to new markets and
markets where potential remains untapped. Export growth
opportunities are greatest for sesame seed and fish. There
is also some potential to increase livestock exports by
seeking new markets, although econometric analysis suggest
that some markets in the Gulf may be saturated. Gums and
resins (frankincense and myrrh), fruit, and meat also show
potential for increased sales. Countries in East and South
Asia present the greatest opportunities for growth. These
export opportunities could be prioritized in Somalia’s
national trade strategy. Limited or unreliable domestic
supply constrains many of Somalia’s exporters. The World
Bank’s 2018 Country Economic Memorandum (CEM) presents
recommendations for sustainably increasing output of fish,
sesame seed, animals, and other commodities that Somalia
already exports. To break into new markets, Somali exporters
must also invest in gathering information about consumer
preferences and policies in unfamiliar markets and establish
business relationships with new buyers, shippers, and other
partners. The 2018 CEM identifies important roles for public
and private sectors in strengthening systems to ensure
animal and plant health and developing logistical
arrangements to support increased trade flows, which could
be reflected in the national trade strategy.
Citation
“World Bank. 2021. Trade as an Engine of Grow in Somalia: Constraints and Opportunities. © World Bank, Washington, DC. http://hdl.handle.net/10986/36662 License: CC BY 3.0 IGO.”