Analysis of Macro-Economic Situation in Somaliland
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UNDP SOMALIA
UNITED NATIONS DEVELOPMENT PROGRAMME
Somalia Watching Brief
Discussion Paper Prepared by Academy for Peace and Development (APD)
August 2004
This document is being issued as a discussion paper without formal editing. It was prepared by Academy for Peace and Development (APD). The views expressed in this paper are those of the author and do not imply the expression of any opinion on the part of the United Nations Development Programme. Comments and suggestions may be forwarded to KNS Nair, at kns.nair@undp.org
Introduction
This macro-economic study is intended to present a snapshot of the prevailing macroeconomic conditions in Somaliland. It is intended as one part of a series of statistical reports that will appear under the World Bank/UNDP Somalia and Somaliland watching Brief Programme.
The information in this macro-economic study is based on information obtained from government documents, interviews, surveys and materials from local and international agencies.
The reporting and analysis in this study were conducted under the auspices of the Academy for Peace and Development, with funding from the World Bank and UNPD.
Objectives of the Study
The objective of the study was to compile data on key macro-economic sectors in Somaliland to address some of the critical data needs and gaps, and to begin to establish a macro-economic database for policy formulation, planning, and monitoring of rehabilitation, reconstruction and development efforts. The study covered the following sectors: the main production sector, import and export activities, domestic trade and public expenditures, in order to facilitate a better understanding of Somaliland’s macro-economic trends.
Major challenges
Obtaining statistical data was a major obstacle. As a consequence, macroeconomic analysis in Somaliland was also very difficult.
Limitations of the study
One significant weakness of the study is the existence of gaps and fragmentation in the type of data collected and the quality of data collection.
Chapter 1: Background
The land and people
Somaliland comprises the territory, boundaries and people of the former British Somaliland Protectorate. From the shores of the Gulf of Aden, Somaliland extends southwards to the Somali National Regional State of Ethiopia [is this ia formal title?, bounded by Djibouti to the Northwest and Somalia (Puntland) to the east. Within these borders, Somaliland’s territory covers an area of 137, 600 square kilometres, with a northern littoral of 850 kilometres (GOS – Somaliland in Figures, 1999). Three main topographical features locally known as the Guban, Oogo and Hawd distinguish the territory’s geography 1.
The Guban (meaning “burnt”) is the narrow coastal region, which is hot and humid with temperatures exceeding 40 degrees centigrade during the summer season (Xagaa) between June and August. The terrain is relatively barren, allowing only sparse, desert-type vegetation. Eastwards from the main port of Berbera stony mountains hug the coastline, while to the west, the plain widens to provide rich grazing for pastoralists during the cooler months between October and March. With the exception of Berbera, the population of the Guban’s sparse settlements tends to migrate southwards to the highlands during the torrid summer months, returning home when the climate becomes more bearable.
Inland from the coast, land elevation increases rapidly as the Guban gives way to the Oogo: the cooler highland zone dominated by the Gollis mountain range, which traverses Somaliland from west to east. The Oogo zone possesses an abundance of underground water, which together with its agreeable climate, is conducive to settlement and development. All of Somaliland’s major towns are situated in the Oogo, and it supports a degree of cultivation, notably between Hargeysa and Boorame in the west, and around Ceerigaabo in the east.
The third topographical zone is the Hawd, which stretches across the border from Somaliland into Ethiopia. Although rich in pasture, the Hawd has virtually no permanent sources of water. Historically, nomadic pastoralists grazed their herds in the Hawd during the rains, but were forced to migrate to more hospitable areas during the harsh dry season (Jiilaal) when water sources dried up. In the past half century, however, since the introduction of berkado (cemented underground water reservoirs), the Hawd has come to support permanent settlements. This has led to a steady process of desertification, and destruction of the rich pastures that once made the zone ideal for rearing livestock.
The inhabitants of these zones are ethnic Somalis, united by race, language, religion (Sunni Islam) and culture, which they share with the Somali inhabitants of neighbouring states. Population estimates range between 2-3 million inhabitants.2 Somaliland’s inhabitants also identify themselves as members of various clans and sub-clans, which include the Isaaq, Gadabuursi, Ciise, Dhulbahante, and Warsangeli clans 3. The Ciise and Gadabuursi clans predominate in the west. The Isaaq are chiefly settled the central regions, while the Warsangeli and Dhulbahante clans people the eastern areas, although not exclusively. Numerous smaller kin-groups share the Somaliland territory with these major groupings, and the major clans also contain numerous subdivisions.
Chapter 2: The productive Sectors
Livestock Production:
Livestock production has been and remains the mainstay of the Somaliland economy. Livestock husbandry is the dominant system of production in Somaliland, either via nomadism (or transhumant) or agro-pastoralism. Much of Somaliland’s post-war economic growth has been linked, directly or indirectly, to livestock production. However, a number of chronic problems beset Somaliland’s most important productive sector: various environmental pressures and vulnerability to external forces 4.
Livestock Census
There is no exact data on the size of Somalilands herds. In 2002, the government estimated the total population of livestock in Somaliland at 16,238,3045 head with an overall annual growth of 1.9%. This total comprises 6,836,695 goats, 7,516,708 sheep, 1,524,791 camels and 260,110 cattle.
International agencies put the figure lower: In 19995, the government put the livestock population at 15,337,252, whereas UNDP estimated that it was 12,244,740 head, a figure that is 25 percent lower.
However, as a result of cumulative pressures on the environment, there is growing evidence that the ability of Somaliland’s ecosystem to support these herds may soon be reached, if it has not already been surpassed. 15.4 million head of livestock equals 6.5 million Tropical Livestock Units (TLU)6; one TLU requires about 2.25 tons of fodder annually7. Therefore, 6.5 million TLU needs roughly 14.6 million tons of fodder. The estimated production of fodder in Somalia and Somaliland combined in 1986 was 13.7 million tons8 (Axmed, 1988), which is able to support only 6 million TLU, and which does not include the needs of donkeys, horses, and wildlife. In other words, Somaliland’s rangeland capacity is far below the level required to support either government or UNDP estimates.
Moreover, the population figures above don’t take into consideration the deaths and losses due to drought and other eventualities that have occurred recently. For example, drought in the Sool Plateau, which has rich grazing and is home to large numbers of livestock, has claimed the lives of a substantial number of livestock. A survey conducted by FSAU [Food Security Assessment Unit] in 2004 found that 7.3% of the 457 households polled lost less than half of their sheep and goat herds, roughly 50.5% lost more than 50% of their herds and 39.8% lost their entire herds of camels.
Pressures on the Pastoral Environment and its Impact
It is difficult to pinpoint the exact causes and effects of the changes taking place in the pastoral environment, given the complexity and inter-linked nature of the variables involved. The pressures on the pastoral environment are the result of numerous factors including 9:
- Cyclical drought
- Increased water points, human settlement and transport
- Charcoal production
- Private enclosures
Quantitative data on the extent of the impact of these changes on Somaliland’s pastoral environment are lacking. National concern about environmental change in the pastoral rangeland has arisen, not from comprehensive studies or analysis, but rather from anecdotal evidence and disconnected studies of specific problems. Among the most salient issues are rangeland degradation, the disturbance of grazing patterns, and the weakening of traditional social structures and coping mechanisms.
There is no reliable data on the number of people involved directly in livestock production. Certainly the ongoing out-migration from rural areas is reducing the labour available for animal husbandry. Young nomads, including women are migrating to urban centres, leaving older women, children and old men behind to tend the herds.
Another development is the change in the diet of nomadic households. The nomadic diet is largely composed of milk and milk products, complemented by rice, sugar, tea and small amounts of meat. However, there is growing evidence that nomads are consuming less milk and selling more in order to purchase other, non-pastoral foods and non-food items.
Agriculture
Rain-fed farming
Due to its arid ecology, Somaliland is essentially a pastoral economy with little room for agricultural development. Only 10% of its total geographical area of 137, 600 sq. km is thought to be suitable for cultivation and only 3% of that has been put to the plough. Cultivable areas are located principally in the Western districts of the Hargeysa region (e.g. Gabileh, Aallay-baday, etc), parts of Awdal region (e.g. Dilla, Baki,) and parts of Togdheer region such as Odweyne, and Sheekh).
Crops traditionally grown in these agro-pastoral regions of Somaliland are a long-cycle sorghum variety known locally as cilmi Jaamac and short-cycle maize. The normal cropping pattern of Somaliland consists of planting these crops as a monocrop at the beginning of the Gu (spring) season (April-June).
After harvest of the early maturity Gu maize, another early maturing karanmaize is planted on the eve of the Kaaran (short wet period) season (end July- September). The purpose of the Gu maize is to provide relief from hunger before the long cycle sorghum harvest. Thus, In a good year, three harvests are made: two maize harvests and one sorghum harvest as well as good quality fodder. Rainfall is the most essential factor for farmers to make use of the available moisture during cropping season so as to maximize output.
Table 2.1 Estimated area, production, and yield of major crops during pre-war and post-war periods Pre-war/post-war Major Crops
Maize Sorghum Total Annual Average
1982-1988
Area(ha) 30,000 30,000 60,000
Production (tones) 4,293 31,440 35,733
Pre-war/post-war Major Crops
Maize Sorghum Total
Yield (tones/ha) 0.14 1.05 0.60
Gu 1996
Area(ha) 11,398 17,610 29008
Production (tones) 21,000 18,000 39000
Yield (tones/ha) 1.84 1.02 1.34
Gu 1997
Area(ha) 11,398 17,610 29008
Production (tones) 7,979 15,741 23,720
Yield (tones/ha) 0.70 0.89 0.82
Gu 1998
Area(ha) 11,398 17,610 29008
Production (tones) 3591 7084 10675
Yield (tones/ha) 0.32 0.40 0.37
Gu 1999
Area(ha) 8720 19105 27825
Production (tones) 6976 14845 21821
Yield (tones/ha) 0.80 0.78 0.78
Gu 2000-01
Area(ha) 8720 19105 27825
Production (tones) 3985 10957 14942
Yield (tones/ha) 0.07
Gu 2002
Area(ha) 5365 19168 24533
Production (tones) 1073 7800 8873
Yield (tones/ha) 0.20 0.41 0.36
Gu 2003
Area(ha) 11974 34081 28,210
Production (tones) 3290 24,925 4608
Yield (tones/ha) 0.163
The annual total area under cultivation is, on average, only 29,800 hectares., compared to 60,000 hectares prior to the war. Although yields per hectare were higher in 1996 and 1997 and peaking in 1999 than the pre-war level of 0.6 ton per hectare, production has been declining. The reason that farmers are utilising less than half of their available land for cultivation are10: The strength of the livestock sector and earning power of local livestock markets in the 1990s, among other factors, encouraged agro-pastoralists to favour animal husbandry over crop production11. Another factor that has contributed to the decline of crop production has been the provision of relief food to Somali refugee camps in Ethiopia. This has limited the marketability of locally produced sorghum and maize, as many Somalilanders have become accustomed to wheat products due to their experience as refugees. Competition from the rations supplied to refugees in Ethiopia, which is often sold in local markets, has also forced farmers to sell their produce at lower prices. In addition there is a labour shortage in the agricultural sector, since many local youth who see no future in farming are attracted to economic opportunities the cities.
Irrigated Farming
By contrast, irrigated farming in Somaliland has increased substantially during the last two decades12. This type of cultivation, also known as "tog (Valley farming", occurs mostly along the banks of dry riverbeds and perennial springs, and is used in production of fruits and vegetables. Some farmers use reservoirs for harvesting rainwater for irrigation, others sink shallow wells along the riverbanks or in the middle of the dry riverbed, with water pumps to raise the water. In Sanaag region and to a lesser extent in Saaxil, gravity irrigation from natural springs is more widely used.
The spread of irrigated farming activities within the country has been made possible largely by consumer demand for agricultural products in rapidly growing towns and cities, as well as the large pool of displaced people with farming experience from Somalia. In Sool and Sanaag especially, many who fled from Ceerigaabo during the civil-conflict have developed farming.
There are no national statistics on the level of fruit and vegetable production in Somaliland, and whether current production is sufficient to meet local demand. Climatic and technology factors, such as shortages in water during the jilaal (dry) season, lack of simple processing techniques, as well as competition from Ethiopia, inhibit producers from expanding production and being able to supply the market steadily and consistently throughout the year.
The main vegetables and fruits produced in Somaliland are: tomatoes, onions, peppers, cabbages, watermelons, oranges, papayas, and lemons.
Fishing
One of the nation's chief objectives is to achieve the kind of economic growth that will improve the living conditions of the people of Somaliland. A precondition to this is that growth takes place through the sustainable use of the nation's resources, one of which is a coastline that stretches over 850km along the southern shores of the Gulf of Aden, and which has a great potential resource in the form of fish that could generate employment and income for many people, enhance the diet of many Somalilanders and increase the country's foreign exchange earnings through exportation. In 1975 a Norwegian research vessel valued the stocks of grouper, horse mackerel, and other fish at more than 100,000 tons in Somali coastline.
There is little accurate information on fishery resources. What is known is that during the conflict period 1988-1991), much infrastructure was destroyed. Of the 350 boats in use before the war, only 170 are currently operational. Somaliland's yearly fish production is still far below pre-war levels. There is no reliable data for yearly production, but a rough estimate provides a range of between 1000-2000 tons per year. This is less than 2% of resource potential, and for this reason the sector remains untapped.
Some small-scale fishing takes place along the coast of Somaliland, mostly centred in Berbera, Seylac, Maydh and Laasqoray. Small boats, with various sizes of gill nets work out of these locations. Fishing operations in and around Berbera are mainly for local consumption. Around Maydh and Laasqoray sharks are especially targeted, but only the valuable fins are used, for export. In Laasqoray where the first tuna canning factories were built in the mid-1960s, entrepreneurs established a new fish-canning factory, which began production on November 19 2001.
Somaliland’s Ministry of Fisheries derive considerable income from the fishing sector through the issue of licenses, with the collaboration of local people for foreign trawlers to provide security to fish in Somaliland waters. These vessels fish along the coast of Saylac as shrimps is the prime target and they are mainly from Egypt. There are no statistics on the number of vessels or the money involved, nor the quantity of fish yields. Also, coastal communities allow Yemenis to fish in their respective waters in exchange for fees.
At the same time the government and coastal inhabitants are deeply concerned by the illegal activities of foreign fishing vessels in their waters. The government does not have the means to patrol its own coastline to prevent foreign incursions into Somaliland’s Exclusive Economic Zone (EEZ).
Frankincense
Frankincense production was a small but lucrative business before the war. Most of the frankincense production in Somaliland takes place in Sanaag region, in the highland forests of the Gollis mountain range. At present two types of commercial frankincense are collected: maydi (Boswellia frereania) and beeyo/moxor (Boswellia carteri). All the frankincense-growing areas are divided into ardaas (units). On average an ardaa can produce about five camel loads (625 kg)13 of gum; there are about 600 ardaas in Somaliland.
Though the frankincense trade has gradually been resumed, information on the scale of trade is not available although, anecdotally, Large numbers of people in Sanaag are engaged in the production and the business of frankincense.
Mineral Resources
To date, no mineral resources of economic importance have been found in Somaliland. But Somaliland is not short of mineral prospects; hundreds, if not thousands of Somalilanders are engaged in mineral exploration on an individual basis throughout the country. Large quantities of potentially precious stones are sent to Dubai markets for examination and sale.
Industry
On the whole, this sector is new, and contributes relatively little to GDP. But it is now expanding and it is gathering momentum. By the end of August 2004, there will be 30 industrial projects registered with the Ministry of Industry and Commerce and [not clear] are members of the recently formed National Industries Association as can be gleaned from the attached list. 18 of these 30 projects are currently operating while the remaining 12 are at varying stages of construction and implementation. The overwhelming majority of these projects have been initiated quite recently (since the year 2000) and except for a few, are located in and around Hargeysa. These facts indicate inter alia a growing sense of security and growing confidence in the future as well as the availability of the required financial resources and the willingness to invest.
The concentration of enterprises in and around Hargeysa is due to the fact that the capital provides the best investment environment (security, infrastructure, access to markets) in the country for these costly ventures to date.
Most of the enterprises are of small to medium size, reflecting the limited financial resources of Somaliland’s business sector, as well as the small size of the domestic market. Business owners are overwhelmingly corporate entities [as opposed to], again indicative of limited individual financial resources and the need to pool together funds. In many cases, enterprises are joint ventures between Diaspora Somalis and local Somalilanders. Virtually all enterprises are intended to service the domestic markets are [not sure I understand this sentence] import substitution. Though few are local-resource based (e.g. water plants; tiles; meat chilling; tanneries; vegetable oil processing, etc.), the majority of businesses process imported raw materials. As a result of various constraining factors (e.g. insufficient raw materials and market demand) capacity utilization rarely exceeds the 50% mark.
The Ministry of Industry has been actively involved in organizing, guiding, advising, incentivising the private sector and is thus the godfather of the National Industries Association, which encompasses all major investors. Some of the incentives provided by the government to members of the NIA include, free land, and a five-year tax exemption. The NIA was created to play an advocacy role for the industries. It has 22 Articles of Association, which set out its functions, duties and its organizational chart.
Table 2.2 Some profiles of the manufacturing sector in Hargysa city
Legal Status Sole trader Company Corporation Family Business Total
33 66.8 0.1 0.1 100
Starting Capital $5000 $10,000 $50,000 $100,000 Total
0.0 8.35 8.35 83.3 100
Source of raw Local Imported Both -Material 1.6 96.4 1.6 - 100
Permanent Skilled Unskilled Male Female Employees 46.4 53.6 97.1 2.9 100
Permanent Yes No Yes No
staff Hired last year 83.3 16.7
Intend to hire next year 95 5
Business 2% 10% 40% Don’t know -
Growth 20.2 33.3 15.4 31.1 100
The premises Owned Rented 49.3 50.7 - - 100
Private Public Owned Private and owned
Source of 100
Power 19.2 18.8 16.9 45.3 100
Location Billboard Radio TV Others
Yes No Yes No Yes No Yes No Yes No
Attracting customers 33.3 66.7 33.3 66.7 83.3 16.6 83.3 16.6 66.7 33.3
Lack of Banking Lack of foreign investment
Lack of insurance
Lack of capital Lack of regulation/policy
Yes No Yes No Yes No Yes No Yes No
Constraints 66.7 33.3 33.3 66.7 51.1 48.9 15.5 84.5 67.7 32.3
Locally Outside Yes No 100% 50% Less 50%
Who consumes Total
your product 82.3 17.7
Introducing new product 66.6 33.4
Level of capacity 33.5 16.7 49.8 100
Chapter 3: Trade and Commerce
The bulk of Somaliland’s commerce and trade is based on export and import activities. Exports are mainly livestock and Imports are foodstuffs and consumer goods, most of which are destined for Somalia and Ethiopia. The resumption of livestock exports and border controls relaxed with Ethiopia has contributed to the growth of this activity. But nowadays, the livestock export ban and the border closure by the Ethiopian authority is having an adverse effect on trading.
External Trade
Somaliland’s external trade has been dominated by import and export activities, by simply exporting livestock in exchange of importing food stuff, constructions materials and all kind of consumer goods. Most of these goods are destined for neighbouring countries-notably Ethiopia.
Export
Livestock Export
Livestock export accounts for all exports from Somaliland. Other exports through Berbera port are statistically insignificant.
In Somaliland, livestock traders resumed shipments, mainly to Saudi Arabia in 1991 after the war, and livestock exports through Berbera steadily increased between 1991 and 1998. In 1993 livestock exports reached pre-war levels, and record levels of almost three million heads were reached in 199714.
Table:2.1 Livestock Exports Through Berbera
Year Sheep/goats Cattle camels Total
1991 482,508 11,756 102 494,366
1992 631,192 36,662 389 668,243
1993 1,014,921 80,861 14,824 1,110,606
1994* 1,685,265 55,729 38,025 1,779,019
1995 2,713,597 75,128 21,993 2,810,718
1996 2,417,656 64,596 42,828 2,525,080
1997 2,814,495 66,939 50,587 2,932,021
1998 957,623 92,213 11,663 1,061,499
1999 2,000,335 88,939 34,840 2,124,114
2000 1,233,851 46,289 10,100 1,290,240
2001 44,045 12,812 1,635 58,492
2002 366,613 36,678 20,782 424,073
Source: Ministry of Finance, 2000
From 1997 to 1998, livestock exports plunged dramatically from almost 3 million to about a million as a result of an imposed livestock ban by Saudi Arabia in response to an outbreak of Rift Valley Fever in southern Somalia. However, cattle exports to Yemen increased from close to 67,000 to 92,000 heads in that year. It is widely believed that Somali livestock continued to reach Saudi Arabia through other countries. When the ban was lifted in mid-1999, exports resumed and a total of 1,480,141 sheep and goats were exported in the second half of that year. The following year 1,062,618 heads were exported during the Haj season alone. However, a new outbreak of Rift Valley Fever in Saudi Arabia and Yemen in September 2000 led to a total ban on livestock imports from the Horn of Africa by Gulf States. For the second time since 1991, this brought livestock exports in Somaliland to a standstill. Two bans in four years illustrates the vulnerability of Somaliland’s livestock export economy to external market forces.
Table 3.2 Market value of livestock per head in US dollars and Somaliland Shillings
Livestock type Values 1998 1999 2000 2001 2002 2003
Camel/head Value SH SL VALUE 492,708 $130.7 385,535 $115.4 502,333 $167.5 336,250 $55.6 650,000 $96.6 1,327,000 $174.9
Sheep & goats/head Value/SH SL VALUE 68,125 $18.1 52,711 $15.8 68,130 22.71 56,000 $9.257 52,000 $7.7 102,600 $13.5
Cattle/head Value SH SL VALUE 334,167 $88.6 241,726 $72.4 177,639 $59.20 340,000 $56.2 435,000 $64.6 657,733 $86.7
Exchange rates of SH SLversus $US 3,771 3,340 3,00 6,050 6,730 7,585
* Source: Somaliland in figures
Table 3.3 the total market value15 of animals exported per year
Type of animal 1998 1999 2000 2001 2002
Camel $12,052,239 $10,263,560 $7,418,407.5 $195,322.8 $1,997,977.8
sheep/goats $17,332,976 $31,605,293 $28,020,756 $477,161 $2,452,904.3
Cattle $8,170,071.8 $6,439,183.6 $2,740,308.8 $4.478915.2 $2,425,471.6
Total $37,555,286.8 $48,308,036.6 $38,179,472.3 $5,151,399.00 $6,876,352.90
Apart from the decline in total income, market prices for camels and sheep/goats declined sharply in 2001 because of the ban. In 2003 there was a significant increase in the price of livestock in Somaliland, perhaps due to the prolonged drought. Both Hargeysa and Birco markets experienced an increase in meat prices as a result of animal shortages.
Other Exports
As previously mentioned, other exports from Somaliland are statistically negligible, even when livestock bans are in effect.
Table 3.4 Other Exports
Item Total export (kg) Price per unit Total cost
Animal skins 4,187,767pcs $4.0 $16,751068
Gums (export quality) 57,370 kg 6.50 $ $372,905
Fish 1000kg 2.0 $ $2000
Grain (mainly sorghum) 4795 bags 5.0 $ $23,975*
Oranges 1220 bags 12 $/bag $14640
TOTAL $17,164,588
Source: the Ministry of Finance * re-export
Revenue generated from livestock sales do not accrue to the producers alone. Between the karaal and the local market (seylad) many intermediaries play a role in the process, each taking a cut of the sales. Many people in urban centres go to the local livestock market to earn their livelihood. The importance of the seylad in terms of employment cannot be underestimated. The local market in Hargeysa, which is the second largest livestock market after Burco, employs about 2,255 persons.
Quantifying the actual national income from the pastoral sector is very difficult. This is due to what the International Labour Organization has described as the “highly unconventional” nature of the Somali economy, which does not lend itself readily to standard measurements of economic activity17. A study in 1998, gave a national income of US$176.6 million18 from livestock only. The Human Development Report of 1998, however, estimated the value of livestock exports in 1997 at US$ 120.8 million.
Import activities
Most of Somaliland’s trade consists of imports from other countries. The volume of trade in Somaliland surpassed pre-war levels in 199719. This increase was based on growth in livestock exports and the opening of the Ethiopia- Somaliland border, which created a vast new market for Somaliland. In the absence of formal economic institutions and regulations, traders respond flexibly to local demand, importing a range of basic goods, including food (sugar, rice, flour, pasta), building materials, bagaash (bundles of consumer goods such as sandals, cigarettes, clothes), spare parts, fuel, tyres, and electronic items and vehicles. The proportion of these destined for Ethiopia and other part of Somalia is undocumented, as the port of Berbera does not make distinctions for transit goods 20. Government officials estimate that about 85% of imports go to Somalia and Ethiopia, with the exception of construction materials almost utilize in the country. However, a leading local merchant put the figures lower, and says it is about 60-65 percent. The value of imported goods and materials in 2003 is put at about 200 million dollars. Imports are also a major revenue source for the government; with the exception of 1999 (41%) and 2000 (38%), when livestock was banned, they account for more than fifty percent of government revenues.
Table 3.5 Import through Berbera port in M/T.
Commodities 1999 2000 2001 2002
Sugar 125,187 (36.5%) 155,485(30.2%) 152,855(38.3%) 116,680(24.2%)
Rice 34,600 (10%) 66,351 (12.9%) 25,770 (6.5%) 53,383 (11.1%)
Flour 15,422 (4.5%) 48,850(9.9%) 25,894 (6.5%) 35,067 (7.3%)
Wheat 1,690 92,165 19,503 23,415
Cooking oil 4,432 20,652 12,813 21,333
Dates 2,970 11,744 897 1,417
Pasta 5,290 1,835 11,535 15,682
Biscuits 7,594 1,508 1,443 1,604
Cloth 2,059 3,436 5,376 9,045
Spare parts 3,539 6,512 6,537 5,142
Cigarettes 1,948 4,027 2,653 2,931
Soap 7,841 5,211 8,061 7,413
Building materials 102,450 (29.8) 82,744 (16%) 62,599 (16%) 122,564(25.4%)
Fuel 20,818 38,063 45,782 45,720
Others 7,559 12,633 17,172 21,595
Total 343,399 515,216 398,890 482,991
With resumption of livestock in mid 1999, import through Berbera in the third quarter has increased from 53,790 metric tons to 94,972 metric tons, which is almost half of the second quarter’s imports. The fourth quarter in that year also has experienced the same expansion in import about 54%. As much of 2000 (about ten months) livestock export ban was not in effect, import through Berbera has grown in 2000 by 50%. In 2001, when the ban was in effect it drop 22.6% and surprisingly it has bounced back in 2002 by 21.2%, with the exception of sugar, spare parts and soap all other goods has gained ground led by the import of the construction materials and which was doubled.
Domestic trade
In the post-conflict period the number of Somalilanders involved in domestic trading activities has increased. Women tend to be dominant.
Table 3.6 Import values in dollar
ITEMS NO. OF ENTRIES SH.SLD $ US
Household Goods & Other Utilities 68 369,103,634,268 105,458,181.2
Vehicles & Accessories 12 7,391,090,281 2,111,740.1
Cigarettes & Tobacco 2 11,904,392,863 3,401,255.1
Food Stuffs 31 246,972,957,807 70,563,702.2
Qaad 1 26,339,728,226 7,525,636.6
Fuel 4 19,069,749,778 5,448,499.94
Construction Materials 34 17,710,429,157 5,060,122.6
Total 199,569,137.74
Slaughter markets
Women are involved in all aspects of the slaughter market (daabax), from selling to butchering. The trade provides income and occupational opportunities for many lower-income women. Women jeeble (small traders) purchase female livestock across the border in Ethiopia for local consumption and for shipment to Djibouti.
There is no national data on the number of animals slaughtered annually in Somaliland. In Hargeysa, the most populous city in the country, an estimated21 439,200 head of sheep and goats; 14,640 camels, and 18,300 head of cattle are slaughtered annually, with an annual value of $11.6 million. The Hargeysa market employs about 1,886 people.
Milk Marketing
The demand for milk is growing in tandem with that of the rapidly expanding populations of many towns. Milk sales have increased in Somaliland, developing into an important source of income for the pastoralists. According to one report some 80% of the daily income of pastoralists comes from the sale of milk22. Women dominate this sector, either bringing the milk directly into the urban centres or selling it to associations of women in permanent settlements, which send it on to the urban centres.
Again, there are no national figures on the annual quantity of milked traded in Somaliland. The quantity of milk traded annually in Hargyesa, is estimated to be about 12.823 million litres, with annual value of $12.8 million and this business activity employs about 2,000 people.
Qaad trade
The Qaad trade has become one of the country’s major revenue earners in the last two decades. Among people who earn their daily income from the Qaad business are truck drivers, sales agents, retailers and porters. Qaad imports from Ethiopia have been increasing annually by 11% according to government statistics. In 2003, Somaliland imported about 8,812,514 kg of Qaad, with a value of roughly $8.424 million. These numbers do not fully represent the actual amount or value of the leaf that enters the country as some shipments go unrecorded and some enter the country illegally. Those come through the customs about 20%25 or more of its weight is not value by the government and it is tax-free. There are no figures on the monetary value of Qaad retailing prices. The official number of Kgs imported to the country Qaad at retailing prices probably accounts for more than $53 million. Moreover, there is no national data on the number people involved in Qaad business, however, in Hargeysa, about 3,293 persons are involved in Qaad trading26, most are street vendors and they predominately women. The leading importer of this business employs about 700 persons that deal with Jigjiga-Hargeysa operation and about three hundred people in Hargeysa operation.
Table 3.7 Distribution of employment in Qaad trading by type of activities
Type of activities Percentage
Import and distribution facilitation 6.3
General retail 2.2
Table retailers 5.7
Street vendors 85.8
Total 100
Source: FSAU Hargeisa Household Economy Assessment 2003
The impact of qaad on Somaliland society and economy is unmeasured, but few would disagree that it has become a social nightmare and economic predicament. It is widely blamed for many Somaliland’s social and economic ills. Some Somalilanders argue that qaad is a primary cause of unproductivity professional negligence and represents a tremendous hard currency drain on the economy. But it is also a major source of government revenue. Less controversy surrounds its deleterious impact on family life and income, or on personal health. Despite of that, qaad has become major income generators for many households and qaad chewing is tolerated and even encouraged within Somaliland’s society and no stigma is attached to its use.
Fruit and Vegetable Trade
Like milk trading, fruit and vegetable business expanding with the growth of urban sprawling. Large quantity of fruits and vegetables consumed in Somaliland are imported from Ethiopia and Somalia. Ethiopia mainly supplies potatoes, onions, garlic and spices, while southern Somalia supplies fruits. The local production of fruit and vegetables is growing. There are no reliable data on of the local producers in major trading activities. About1445 tons of fresh vegetables and about 1695 tons of fresh fruits are imported to Somaliland; the amount of money involved in this transaction is about $50027 thousands. In Hargeysa, nearly 2,000 persons are engaged in this sector28, ranging from largescale importers and distributors, to retailers of various sizes (shops, stalls, petty traders).
Table 3.8 Share of fresh vegetable by Household income Baki District in Awdel Region
Consumption/person in (g) Poor Households(Average) Middle households (Average) Rich Households (Average)
All Household (Average)
Consumption of tomato/person 16.7 54.6 40.6 37.3
Consumption of onion/person 11.7 21.4 34.7 22.6
Consumption of pepper/person 2.6 6.8 12.9 7.4
Consumption of potato/person 7.1 17.3 35.7 20.0
Consumption of lettuce/person 9.6 40.9 66.5 39
Consumption of cabbage/person 0.0 10.7 12.5 7.7
Consumption of garlic/person 3.7 5.7 12.0 7.1
Consumption of carrot/person 0.0 7.0 31.1 12.7
Consumption of beet root/person 0.0 21.6 22.3 14.6
Consumption of coriander/person 0.0 6.1 23.7 9.9
Total daily Consumption/person 51.3 192.0 292 178.4
Source: Agro-Action
Middle income households consumed more than three times of what the poor households consumed from fresh vegetables, similarly, the rich ones’ intake is more than five times of the poor ones and about one and half times of the middle ones.
Food and Non-Food Trade 29
Another major activity in the country is trading in food and non-food trading as wholesalers and retailers as well. There is no statistics on the number of such business and level of employment in the country. The amount of money involved in this sector is about 70 million dollars excluding the local productions. In Hargeysa over 15,00030 people are active in this sector, engaged in both large and small-scale trading.
In one of the populous districts of Hargeysa, the distribution in percentage of non-food outlets is illustrated in the following table. About 46 percent of these outlets as wholesalers or retailers are engaged foodstuff selling, followed by clothes and utensils.
Table 3.9 Distribution of food and non-food out-lets by type of activities (%) in one district of Hargeysa
Type of activities Percentage
Food stuff 46.3
Clothes/utensils 29.1
Pharmacies 9.8
Restraunts 6.5
Consumer goods 4.9
Spare parts 2.1
Fuel stations 1.3
Total 100
Charcoal and fuel-wood trade
Fuel-wood and charcoal are the main sources of energy for Somaliland and as the population and settlements have grown, the demand for forest products has increased. Charcoal production has greatly increased since the collapse of the last government in 1991 as a result of increased urban consumption, due to returning refugees and out-migration from the rural areas. Charcoal production and trade has increased during the livestock ban, as rural households seek a means to make ends meet. In 2000, charcoal consumption in the whole of Somaliland was estimated to be 480,000 ton per year, on average each household in Somaliland uses about 1.6 ton per year31. The market value of one ton is 258$. The number of people involved in this business in Hargeysa city is about 1,900 persons excluding the producers 32.
The production of charcoal and firewood is a major environmental concern. Its impact on the environment is immeasurable and could lead to catastrophic consequences. In Somaliland today, an estimated 8 million trees are cut annually for charcoal production33. Acacia Bussei, a slow growing species locally known as galool, is the preferred tree for charcoal. A large galool tree can produce three sacks of charcoal. In one hectare, there are an estimated 65 galool trees. The overexploitation of this tree will eventually deplete reserves, because re-growth is slow. There is also growing evidence of using wet trees for charcoal production. This will eventually result in an energy shortages and higher energy prices. And much of deforestations and range degradation is attributed to charcoal productions.
Chapter 4: The Service Sector
Somaliland’s service sector has experienced rapid growth in the post-war period. Telecommunication, airlines business and financial transfer companies have emerged to fill the vacuum left by the collapse of the former government. The expansion of these services has created a new labour market34 requiring skilled professionals, as well as semi-skilled and unskilled workers.
Remittance
The economic importance of remittances has been increasing since the oil boom in the Gulf States in 1970s and became more significant in the post war period, as the main source of income and foreign exchange earnings, when thousands of refugees migrated to Europe and North America. Remittances largely have averted an economic disaster during the livestock export ban of 1998-9 and again since 2000. Remittances have financed ongoing economic activities such as the housing construction boom and import activities. The only source of income comparable with livestock earnings, and which may even exceed them, is remittances. However, the estimation of remittances in Somaliland is problematic for a number reasons 35.
- They are transferred in number of forms and through different channels
- They can be in cash and kind
- No data is available on the global numbers of migrants
Remittances received from abroad by six companies in Hargeysa excluding Dabashiil, were estimate to be more than $50 million in 2003. The seven major companies have about 147 branches through the country; employ about 355 persons and all of them claimed that the livestock export ban has been positive36. With the exception of Dahabshiil, all of them are partnership companies.
Table 4.1 profiles in the construction sector in Hargysa city
Legal Status Sole trader Partnership Corporation Family Business Total 14 15 71 0.0 100
Monthly value $115,000 $300,000 $480,000 $1.3 million No disclosed
transferred in terms of no. of companies 1 1 1 2 1
Permanent Skilled Unskilled Male Female
Employees 91.8 8.2 90.3 9.7 100
Intended to hire Yes No Yes No
next year 42.9 57.1
Establishing new branches 57.1 42.9
Business Growth 0.0% 10% 30% N/A Total 14.2 14.2 28.4 43.2 100
The premises Owned Rented 14.3 85.7
Source of Power Private Public Both Owned Total 71.4 0.0 14.2 14.4 100
Location Billboard Radio TV Others
Yes No Yes No Yes No Yes No Yes No
71.5 28.5 73.1 26.9 58.2 41.8 57.1 42.9 57.1 42.9
Yes No Yes No Yes No Yes No Yes No
Attracting customers 56 44 66 34 32.3 67.5 16.6 83.4 17.3 82.7
Telecommunication
There are seven major Telecommunication companies in Somaliland as listed below. These companies are linked to international ones and provide fixed telephone lines, mobile telephone lines, Internets, fax and other telecommunication services to the major urban centres and towns. The initiation and subsequent expansion of this new and vibrant service facility has been inspired by and is driven by the demands of the economy, facilitating the flow of remittances and information for trade. The quality of the services these companies provide are far superior both in quantitative and in qualitative terms to what existed before the pre-war period. They have enabled the local customers to make instant contact with the outside world speedily and relatively cheaply: the charges per minute not exceeding one US dollar and in fact falling. Like the remittance companies these attest to the ingenuity and enterprenial élan of the Somali business community. Besides the much-needed technological transfer they introduced, these companies have also provided much needed employment to hundreds of skilled, semi-skilled and unskilled local labour. Some of the skilled labour forces are returnees from the Diaspora. Nearly 1,000 persons are employed in this activity, consisting of professionals and semi-skilled ones.
The lack of regulation, however, is creating problems of efficiency, one of the main problems being the inability to communicate between the different systems.
Table 4.2 Some profiles of the telecom companies
UNDP SOMALIA
UNITED NATIONS DEVELOPMENT PROGRAMME
Somalia Watching Brief
Discussion Paper Prepared by Academy for Peace and Development (APD)
August 2004
This document is being issued as a discussion paper without formal editing. It was prepared by Academy for Peace and Development (APD). The views expressed in this paper are those of the author and do not imply the expression of any opinion on the part of the United Nations Development Programme. Comments and suggestions may be forwarded to KNS Nair, at kns.nair@undp.org
Introduction
This macro-economic study is intended to present a snapshot of the prevailing macroeconomic conditions in Somaliland. It is intended as one part of a series of statistical reports that will appear under the World Bank/UNDP Somalia and Somaliland watching Brief Programme.
The information in this macro-economic study is based on information obtained from government documents, interviews, surveys and materials from local and international agencies.
The reporting and analysis in this study were conducted under the auspices of the Academy for Peace and Development, with funding from the World Bank and UNPD.
Objectives of the Study
The objective of the study was to compile data on key macro-economic sectors in Somaliland to address some of the critical data needs and gaps, and to begin to establish a macro-economic database for policy formulation, planning, and monitoring of rehabilitation, reconstruction and development efforts. The study covered the following sectors: the main production sector, import and export activities, domestic trade and public expenditures, in order to facilitate a better understanding of Somaliland’s macro-economic trends.
Major challenges
Obtaining statistical data was a major obstacle. As a consequence, macroeconomic analysis in Somaliland was also very difficult.
Limitations of the study
One significant weakness of the study is the existence of gaps and fragmentation in the type of data collected and the quality of data collection.
Chapter 1: Background
The land and people
Somaliland comprises the territory, boundaries and people of the former British Somaliland Protectorate. From the shores of the Gulf of Aden, Somaliland extends southwards to the Somali National Regional State of Ethiopia [is this ia formal title?, bounded by Djibouti to the Northwest and Somalia (Puntland) to the east. Within these borders, Somaliland’s territory covers an area of 137, 600 square kilometres, with a northern littoral of 850 kilometres (GOS – Somaliland in Figures, 1999). Three main topographical features locally known as the Guban, Oogo and Hawd distinguish the territory’s geography 1.
The Guban (meaning “burnt”) is the narrow coastal region, which is hot and humid with temperatures exceeding 40 degrees centigrade during the summer season (Xagaa) between June and August. The terrain is relatively barren, allowing only sparse, desert-type vegetation. Eastwards from the main port of Berbera stony mountains hug the coastline, while to the west, the plain widens to provide rich grazing for pastoralists during the cooler months between October and March. With the exception of Berbera, the population of the Guban’s sparse settlements tends to migrate southwards to the highlands during the torrid summer months, returning home when the climate becomes more bearable.
Inland from the coast, land elevation increases rapidly as the Guban gives way to the Oogo: the cooler highland zone dominated by the Gollis mountain range, which traverses Somaliland from west to east. The Oogo zone possesses an abundance of underground water, which together with its agreeable climate, is conducive to settlement and development. All of Somaliland’s major towns are situated in the Oogo, and it supports a degree of cultivation, notably between Hargeysa and Boorame in the west, and around Ceerigaabo in the east.
The third topographical zone is the Hawd, which stretches across the border from Somaliland into Ethiopia. Although rich in pasture, the Hawd has virtually no permanent sources of water. Historically, nomadic pastoralists grazed their herds in the Hawd during the rains, but were forced to migrate to more hospitable areas during the harsh dry season (Jiilaal) when water sources dried up. In the past half century, however, since the introduction of berkado (cemented underground water reservoirs), the Hawd has come to support permanent settlements. This has led to a steady process of desertification, and destruction of the rich pastures that once made the zone ideal for rearing livestock.
The inhabitants of these zones are ethnic Somalis, united by race, language, religion (Sunni Islam) and culture, which they share with the Somali inhabitants of neighbouring states. Population estimates range between 2-3 million inhabitants.2 Somaliland’s inhabitants also identify themselves as members of various clans and sub-clans, which include the Isaaq, Gadabuursi, Ciise, Dhulbahante, and Warsangeli clans 3. The Ciise and Gadabuursi clans predominate in the west. The Isaaq are chiefly settled the central regions, while the Warsangeli and Dhulbahante clans people the eastern areas, although not exclusively. Numerous smaller kin-groups share the Somaliland territory with these major groupings, and the major clans also contain numerous subdivisions.
Chapter 2: The productive Sectors
Livestock Production:
Livestock production has been and remains the mainstay of the Somaliland economy. Livestock husbandry is the dominant system of production in Somaliland, either via nomadism (or transhumant) or agro-pastoralism. Much of Somaliland’s post-war economic growth has been linked, directly or indirectly, to livestock production. However, a number of chronic problems beset Somaliland’s most important productive sector: various environmental pressures and vulnerability to external forces 4.
Livestock Census
There is no exact data on the size of Somalilands herds. In 2002, the government estimated the total population of livestock in Somaliland at 16,238,3045 head with an overall annual growth of 1.9%. This total comprises 6,836,695 goats, 7,516,708 sheep, 1,524,791 camels and 260,110 cattle.
International agencies put the figure lower: In 19995, the government put the livestock population at 15,337,252, whereas UNDP estimated that it was 12,244,740 head, a figure that is 25 percent lower.
However, as a result of cumulative pressures on the environment, there is growing evidence that the ability of Somaliland’s ecosystem to support these herds may soon be reached, if it has not already been surpassed. 15.4 million head of livestock equals 6.5 million Tropical Livestock Units (TLU)6; one TLU requires about 2.25 tons of fodder annually7. Therefore, 6.5 million TLU needs roughly 14.6 million tons of fodder. The estimated production of fodder in Somalia and Somaliland combined in 1986 was 13.7 million tons8 (Axmed, 1988), which is able to support only 6 million TLU, and which does not include the needs of donkeys, horses, and wildlife. In other words, Somaliland’s rangeland capacity is far below the level required to support either government or UNDP estimates.
Moreover, the population figures above don’t take into consideration the deaths and losses due to drought and other eventualities that have occurred recently. For example, drought in the Sool Plateau, which has rich grazing and is home to large numbers of livestock, has claimed the lives of a substantial number of livestock. A survey conducted by FSAU [Food Security Assessment Unit] in 2004 found that 7.3% of the 457 households polled lost less than half of their sheep and goat herds, roughly 50.5% lost more than 50% of their herds and 39.8% lost their entire herds of camels.
Pressures on the Pastoral Environment and its Impact
It is difficult to pinpoint the exact causes and effects of the changes taking place in the pastoral environment, given the complexity and inter-linked nature of the variables involved. The pressures on the pastoral environment are the result of numerous factors including 9:
- Cyclical drought
- Increased water points, human settlement and transport
- Charcoal production
- Private enclosures
Quantitative data on the extent of the impact of these changes on Somaliland’s pastoral environment are lacking. National concern about environmental change in the pastoral rangeland has arisen, not from comprehensive studies or analysis, but rather from anecdotal evidence and disconnected studies of specific problems. Among the most salient issues are rangeland degradation, the disturbance of grazing patterns, and the weakening of traditional social structures and coping mechanisms.
There is no reliable data on the number of people involved directly in livestock production. Certainly the ongoing out-migration from rural areas is reducing the labour available for animal husbandry. Young nomads, including women are migrating to urban centres, leaving older women, children and old men behind to tend the herds.
Another development is the change in the diet of nomadic households. The nomadic diet is largely composed of milk and milk products, complemented by rice, sugar, tea and small amounts of meat. However, there is growing evidence that nomads are consuming less milk and selling more in order to purchase other, non-pastoral foods and non-food items.
Agriculture
Rain-fed farming
Due to its arid ecology, Somaliland is essentially a pastoral economy with little room for agricultural development. Only 10% of its total geographical area of 137, 600 sq. km is thought to be suitable for cultivation and only 3% of that has been put to the plough. Cultivable areas are located principally in the Western districts of the Hargeysa region (e.g. Gabileh, Aallay-baday, etc), parts of Awdal region (e.g. Dilla, Baki,) and parts of Togdheer region such as Odweyne, and Sheekh).
Crops traditionally grown in these agro-pastoral regions of Somaliland are a long-cycle sorghum variety known locally as cilmi Jaamac and short-cycle maize. The normal cropping pattern of Somaliland consists of planting these crops as a monocrop at the beginning of the Gu (spring) season (April-June).
After harvest of the early maturity Gu maize, another early maturing karanmaize is planted on the eve of the Kaaran (short wet period) season (end July- September). The purpose of the Gu maize is to provide relief from hunger before the long cycle sorghum harvest. Thus, In a good year, three harvests are made: two maize harvests and one sorghum harvest as well as good quality fodder. Rainfall is the most essential factor for farmers to make use of the available moisture during cropping season so as to maximize output.
Table 2.1 Estimated area, production, and yield of major crops during pre-war and post-war periods Pre-war/post-war Major Crops
Maize Sorghum Total Annual Average
1982-1988
Area(ha) 30,000 30,000 60,000
Production (tones) 4,293 31,440 35,733
Pre-war/post-war Major Crops
Maize Sorghum Total
Yield (tones/ha) 0.14 1.05 0.60
Gu 1996
Area(ha) 11,398 17,610 29008
Production (tones) 21,000 18,000 39000
Yield (tones/ha) 1.84 1.02 1.34
Gu 1997
Area(ha) 11,398 17,610 29008
Production (tones) 7,979 15,741 23,720
Yield (tones/ha) 0.70 0.89 0.82
Gu 1998
Area(ha) 11,398 17,610 29008
Production (tones) 3591 7084 10675
Yield (tones/ha) 0.32 0.40 0.37
Gu 1999
Area(ha) 8720 19105 27825
Production (tones) 6976 14845 21821
Yield (tones/ha) 0.80 0.78 0.78
Gu 2000-01
Area(ha) 8720 19105 27825
Production (tones) 3985 10957 14942
Yield (tones/ha) 0.07
Gu 2002
Area(ha) 5365 19168 24533
Production (tones) 1073 7800 8873
Yield (tones/ha) 0.20 0.41 0.36
Gu 2003
Area(ha) 11974 34081 28,210
Production (tones) 3290 24,925 4608
Yield (tones/ha) 0.163
The annual total area under cultivation is, on average, only 29,800 hectares., compared to 60,000 hectares prior to the war. Although yields per hectare were higher in 1996 and 1997 and peaking in 1999 than the pre-war level of 0.6 ton per hectare, production has been declining. The reason that farmers are utilising less than half of their available land for cultivation are10: The strength of the livestock sector and earning power of local livestock markets in the 1990s, among other factors, encouraged agro-pastoralists to favour animal husbandry over crop production11. Another factor that has contributed to the decline of crop production has been the provision of relief food to Somali refugee camps in Ethiopia. This has limited the marketability of locally produced sorghum and maize, as many Somalilanders have become accustomed to wheat products due to their experience as refugees. Competition from the rations supplied to refugees in Ethiopia, which is often sold in local markets, has also forced farmers to sell their produce at lower prices. In addition there is a labour shortage in the agricultural sector, since many local youth who see no future in farming are attracted to economic opportunities the cities.
Irrigated Farming
By contrast, irrigated farming in Somaliland has increased substantially during the last two decades12. This type of cultivation, also known as "tog (Valley farming", occurs mostly along the banks of dry riverbeds and perennial springs, and is used in production of fruits and vegetables. Some farmers use reservoirs for harvesting rainwater for irrigation, others sink shallow wells along the riverbanks or in the middle of the dry riverbed, with water pumps to raise the water. In Sanaag region and to a lesser extent in Saaxil, gravity irrigation from natural springs is more widely used.
The spread of irrigated farming activities within the country has been made possible largely by consumer demand for agricultural products in rapidly growing towns and cities, as well as the large pool of displaced people with farming experience from Somalia. In Sool and Sanaag especially, many who fled from Ceerigaabo during the civil-conflict have developed farming.
There are no national statistics on the level of fruit and vegetable production in Somaliland, and whether current production is sufficient to meet local demand. Climatic and technology factors, such as shortages in water during the jilaal (dry) season, lack of simple processing techniques, as well as competition from Ethiopia, inhibit producers from expanding production and being able to supply the market steadily and consistently throughout the year.
The main vegetables and fruits produced in Somaliland are: tomatoes, onions, peppers, cabbages, watermelons, oranges, papayas, and lemons.
Fishing
One of the nation's chief objectives is to achieve the kind of economic growth that will improve the living conditions of the people of Somaliland. A precondition to this is that growth takes place through the sustainable use of the nation's resources, one of which is a coastline that stretches over 850km along the southern shores of the Gulf of Aden, and which has a great potential resource in the form of fish that could generate employment and income for many people, enhance the diet of many Somalilanders and increase the country's foreign exchange earnings through exportation. In 1975 a Norwegian research vessel valued the stocks of grouper, horse mackerel, and other fish at more than 100,000 tons in Somali coastline.
There is little accurate information on fishery resources. What is known is that during the conflict period 1988-1991), much infrastructure was destroyed. Of the 350 boats in use before the war, only 170 are currently operational. Somaliland's yearly fish production is still far below pre-war levels. There is no reliable data for yearly production, but a rough estimate provides a range of between 1000-2000 tons per year. This is less than 2% of resource potential, and for this reason the sector remains untapped.
Some small-scale fishing takes place along the coast of Somaliland, mostly centred in Berbera, Seylac, Maydh and Laasqoray. Small boats, with various sizes of gill nets work out of these locations. Fishing operations in and around Berbera are mainly for local consumption. Around Maydh and Laasqoray sharks are especially targeted, but only the valuable fins are used, for export. In Laasqoray where the first tuna canning factories were built in the mid-1960s, entrepreneurs established a new fish-canning factory, which began production on November 19 2001.
Somaliland’s Ministry of Fisheries derive considerable income from the fishing sector through the issue of licenses, with the collaboration of local people for foreign trawlers to provide security to fish in Somaliland waters. These vessels fish along the coast of Saylac as shrimps is the prime target and they are mainly from Egypt. There are no statistics on the number of vessels or the money involved, nor the quantity of fish yields. Also, coastal communities allow Yemenis to fish in their respective waters in exchange for fees.
At the same time the government and coastal inhabitants are deeply concerned by the illegal activities of foreign fishing vessels in their waters. The government does not have the means to patrol its own coastline to prevent foreign incursions into Somaliland’s Exclusive Economic Zone (EEZ).
Frankincense
Frankincense production was a small but lucrative business before the war. Most of the frankincense production in Somaliland takes place in Sanaag region, in the highland forests of the Gollis mountain range. At present two types of commercial frankincense are collected: maydi (Boswellia frereania) and beeyo/moxor (Boswellia carteri). All the frankincense-growing areas are divided into ardaas (units). On average an ardaa can produce about five camel loads (625 kg)13 of gum; there are about 600 ardaas in Somaliland.
Though the frankincense trade has gradually been resumed, information on the scale of trade is not available although, anecdotally, Large numbers of people in Sanaag are engaged in the production and the business of frankincense.
Mineral Resources
To date, no mineral resources of economic importance have been found in Somaliland. But Somaliland is not short of mineral prospects; hundreds, if not thousands of Somalilanders are engaged in mineral exploration on an individual basis throughout the country. Large quantities of potentially precious stones are sent to Dubai markets for examination and sale.
Industry
On the whole, this sector is new, and contributes relatively little to GDP. But it is now expanding and it is gathering momentum. By the end of August 2004, there will be 30 industrial projects registered with the Ministry of Industry and Commerce and [not clear] are members of the recently formed National Industries Association as can be gleaned from the attached list. 18 of these 30 projects are currently operating while the remaining 12 are at varying stages of construction and implementation. The overwhelming majority of these projects have been initiated quite recently (since the year 2000) and except for a few, are located in and around Hargeysa. These facts indicate inter alia a growing sense of security and growing confidence in the future as well as the availability of the required financial resources and the willingness to invest.
The concentration of enterprises in and around Hargeysa is due to the fact that the capital provides the best investment environment (security, infrastructure, access to markets) in the country for these costly ventures to date.
Most of the enterprises are of small to medium size, reflecting the limited financial resources of Somaliland’s business sector, as well as the small size of the domestic market. Business owners are overwhelmingly corporate entities [as opposed to], again indicative of limited individual financial resources and the need to pool together funds. In many cases, enterprises are joint ventures between Diaspora Somalis and local Somalilanders. Virtually all enterprises are intended to service the domestic markets are [not sure I understand this sentence] import substitution. Though few are local-resource based (e.g. water plants; tiles; meat chilling; tanneries; vegetable oil processing, etc.), the majority of businesses process imported raw materials. As a result of various constraining factors (e.g. insufficient raw materials and market demand) capacity utilization rarely exceeds the 50% mark.
The Ministry of Industry has been actively involved in organizing, guiding, advising, incentivising the private sector and is thus the godfather of the National Industries Association, which encompasses all major investors. Some of the incentives provided by the government to members of the NIA include, free land, and a five-year tax exemption. The NIA was created to play an advocacy role for the industries. It has 22 Articles of Association, which set out its functions, duties and its organizational chart.
Table 2.2 Some profiles of the manufacturing sector in Hargysa city
Legal Status Sole trader Company Corporation Family Business Total
33 66.8 0.1 0.1 100
Starting Capital $5000 $10,000 $50,000 $100,000 Total
0.0 8.35 8.35 83.3 100
Source of raw Local Imported Both -Material 1.6 96.4 1.6 - 100
Permanent Skilled Unskilled Male Female Employees 46.4 53.6 97.1 2.9 100
Permanent Yes No Yes No
staff Hired last year 83.3 16.7
Intend to hire next year 95 5
Business 2% 10% 40% Don’t know -
Growth 20.2 33.3 15.4 31.1 100
The premises Owned Rented 49.3 50.7 - - 100
Private Public Owned Private and owned
Source of 100
Power 19.2 18.8 16.9 45.3 100
Location Billboard Radio TV Others
Yes No Yes No Yes No Yes No Yes No
Attracting customers 33.3 66.7 33.3 66.7 83.3 16.6 83.3 16.6 66.7 33.3
Lack of Banking Lack of foreign investment
Lack of insurance
Lack of capital Lack of regulation/policy
Yes No Yes No Yes No Yes No Yes No
Constraints 66.7 33.3 33.3 66.7 51.1 48.9 15.5 84.5 67.7 32.3
Locally Outside Yes No 100% 50% Less 50%
Who consumes Total
your product 82.3 17.7
Introducing new product 66.6 33.4
Level of capacity 33.5 16.7 49.8 100
Chapter 3: Trade and Commerce
The bulk of Somaliland’s commerce and trade is based on export and import activities. Exports are mainly livestock and Imports are foodstuffs and consumer goods, most of which are destined for Somalia and Ethiopia. The resumption of livestock exports and border controls relaxed with Ethiopia has contributed to the growth of this activity. But nowadays, the livestock export ban and the border closure by the Ethiopian authority is having an adverse effect on trading.
External Trade
Somaliland’s external trade has been dominated by import and export activities, by simply exporting livestock in exchange of importing food stuff, constructions materials and all kind of consumer goods. Most of these goods are destined for neighbouring countries-notably Ethiopia.
Export
Livestock Export
Livestock export accounts for all exports from Somaliland. Other exports through Berbera port are statistically insignificant.
In Somaliland, livestock traders resumed shipments, mainly to Saudi Arabia in 1991 after the war, and livestock exports through Berbera steadily increased between 1991 and 1998. In 1993 livestock exports reached pre-war levels, and record levels of almost three million heads were reached in 199714.
Table:2.1 Livestock Exports Through Berbera
Year Sheep/goats Cattle camels Total
1991 482,508 11,756 102 494,366
1992 631,192 36,662 389 668,243
1993 1,014,921 80,861 14,824 1,110,606
1994* 1,685,265 55,729 38,025 1,779,019
1995 2,713,597 75,128 21,993 2,810,718
1996 2,417,656 64,596 42,828 2,525,080
1997 2,814,495 66,939 50,587 2,932,021
1998 957,623 92,213 11,663 1,061,499
1999 2,000,335 88,939 34,840 2,124,114
2000 1,233,851 46,289 10,100 1,290,240
2001 44,045 12,812 1,635 58,492
2002 366,613 36,678 20,782 424,073
Source: Ministry of Finance, 2000
From 1997 to 1998, livestock exports plunged dramatically from almost 3 million to about a million as a result of an imposed livestock ban by Saudi Arabia in response to an outbreak of Rift Valley Fever in southern Somalia. However, cattle exports to Yemen increased from close to 67,000 to 92,000 heads in that year. It is widely believed that Somali livestock continued to reach Saudi Arabia through other countries. When the ban was lifted in mid-1999, exports resumed and a total of 1,480,141 sheep and goats were exported in the second half of that year. The following year 1,062,618 heads were exported during the Haj season alone. However, a new outbreak of Rift Valley Fever in Saudi Arabia and Yemen in September 2000 led to a total ban on livestock imports from the Horn of Africa by Gulf States. For the second time since 1991, this brought livestock exports in Somaliland to a standstill. Two bans in four years illustrates the vulnerability of Somaliland’s livestock export economy to external market forces.
Table 3.2 Market value of livestock per head in US dollars and Somaliland Shillings
Livestock type Values 1998 1999 2000 2001 2002 2003
Camel/head Value SH SL VALUE 492,708 $130.7 385,535 $115.4 502,333 $167.5 336,250 $55.6 650,000 $96.6 1,327,000 $174.9
Sheep & goats/head Value/SH SL VALUE 68,125 $18.1 52,711 $15.8 68,130 22.71 56,000 $9.257 52,000 $7.7 102,600 $13.5
Cattle/head Value SH SL VALUE 334,167 $88.6 241,726 $72.4 177,639 $59.20 340,000 $56.2 435,000 $64.6 657,733 $86.7
Exchange rates of SH SLversus $US 3,771 3,340 3,00 6,050 6,730 7,585
* Source: Somaliland in figures
Table 3.3 the total market value15 of animals exported per year
Type of animal 1998 1999 2000 2001 2002
Camel $12,052,239 $10,263,560 $7,418,407.5 $195,322.8 $1,997,977.8
sheep/goats $17,332,976 $31,605,293 $28,020,756 $477,161 $2,452,904.3
Cattle $8,170,071.8 $6,439,183.6 $2,740,308.8 $4.478915.2 $2,425,471.6
Total $37,555,286.8 $48,308,036.6 $38,179,472.3 $5,151,399.00 $6,876,352.90
Apart from the decline in total income, market prices for camels and sheep/goats declined sharply in 2001 because of the ban. In 2003 there was a significant increase in the price of livestock in Somaliland, perhaps due to the prolonged drought. Both Hargeysa and Birco markets experienced an increase in meat prices as a result of animal shortages.
Other Exports
As previously mentioned, other exports from Somaliland are statistically negligible, even when livestock bans are in effect.
Table 3.4 Other Exports
Item Total export (kg) Price per unit Total cost
Animal skins 4,187,767pcs $4.0 $16,751068
Gums (export quality) 57,370 kg 6.50 $ $372,905
Fish 1000kg 2.0 $ $2000
Grain (mainly sorghum) 4795 bags 5.0 $ $23,975*
Oranges 1220 bags 12 $/bag $14640
TOTAL $17,164,588
Source: the Ministry of Finance * re-export
Revenue generated from livestock sales do not accrue to the producers alone. Between the karaal and the local market (seylad) many intermediaries play a role in the process, each taking a cut of the sales. Many people in urban centres go to the local livestock market to earn their livelihood. The importance of the seylad in terms of employment cannot be underestimated. The local market in Hargeysa, which is the second largest livestock market after Burco, employs about 2,255 persons.
Quantifying the actual national income from the pastoral sector is very difficult. This is due to what the International Labour Organization has described as the “highly unconventional” nature of the Somali economy, which does not lend itself readily to standard measurements of economic activity17. A study in 1998, gave a national income of US$176.6 million18 from livestock only. The Human Development Report of 1998, however, estimated the value of livestock exports in 1997 at US$ 120.8 million.
Import activities
Most of Somaliland’s trade consists of imports from other countries. The volume of trade in Somaliland surpassed pre-war levels in 199719. This increase was based on growth in livestock exports and the opening of the Ethiopia- Somaliland border, which created a vast new market for Somaliland. In the absence of formal economic institutions and regulations, traders respond flexibly to local demand, importing a range of basic goods, including food (sugar, rice, flour, pasta), building materials, bagaash (bundles of consumer goods such as sandals, cigarettes, clothes), spare parts, fuel, tyres, and electronic items and vehicles. The proportion of these destined for Ethiopia and other part of Somalia is undocumented, as the port of Berbera does not make distinctions for transit goods 20. Government officials estimate that about 85% of imports go to Somalia and Ethiopia, with the exception of construction materials almost utilize in the country. However, a leading local merchant put the figures lower, and says it is about 60-65 percent. The value of imported goods and materials in 2003 is put at about 200 million dollars. Imports are also a major revenue source for the government; with the exception of 1999 (41%) and 2000 (38%), when livestock was banned, they account for more than fifty percent of government revenues.
Table 3.5 Import through Berbera port in M/T.
Commodities 1999 2000 2001 2002
Sugar 125,187 (36.5%) 155,485(30.2%) 152,855(38.3%) 116,680(24.2%)
Rice 34,600 (10%) 66,351 (12.9%) 25,770 (6.5%) 53,383 (11.1%)
Flour 15,422 (4.5%) 48,850(9.9%) 25,894 (6.5%) 35,067 (7.3%)
Wheat 1,690 92,165 19,503 23,415
Cooking oil 4,432 20,652 12,813 21,333
Dates 2,970 11,744 897 1,417
Pasta 5,290 1,835 11,535 15,682
Biscuits 7,594 1,508 1,443 1,604
Cloth 2,059 3,436 5,376 9,045
Spare parts 3,539 6,512 6,537 5,142
Cigarettes 1,948 4,027 2,653 2,931
Soap 7,841 5,211 8,061 7,413
Building materials 102,450 (29.8) 82,744 (16%) 62,599 (16%) 122,564(25.4%)
Fuel 20,818 38,063 45,782 45,720
Others 7,559 12,633 17,172 21,595
Total 343,399 515,216 398,890 482,991
With resumption of livestock in mid 1999, import through Berbera in the third quarter has increased from 53,790 metric tons to 94,972 metric tons, which is almost half of the second quarter’s imports. The fourth quarter in that year also has experienced the same expansion in import about 54%. As much of 2000 (about ten months) livestock export ban was not in effect, import through Berbera has grown in 2000 by 50%. In 2001, when the ban was in effect it drop 22.6% and surprisingly it has bounced back in 2002 by 21.2%, with the exception of sugar, spare parts and soap all other goods has gained ground led by the import of the construction materials and which was doubled.
Domestic trade
In the post-conflict period the number of Somalilanders involved in domestic trading activities has increased. Women tend to be dominant.
Table 3.6 Import values in dollar
ITEMS NO. OF ENTRIES SH.SLD $ US
Household Goods & Other Utilities 68 369,103,634,268 105,458,181.2
Vehicles & Accessories 12 7,391,090,281 2,111,740.1
Cigarettes & Tobacco 2 11,904,392,863 3,401,255.1
Food Stuffs 31 246,972,957,807 70,563,702.2
Qaad 1 26,339,728,226 7,525,636.6
Fuel 4 19,069,749,778 5,448,499.94
Construction Materials 34 17,710,429,157 5,060,122.6
Total 199,569,137.74
Slaughter markets
Women are involved in all aspects of the slaughter market (daabax), from selling to butchering. The trade provides income and occupational opportunities for many lower-income women. Women jeeble (small traders) purchase female livestock across the border in Ethiopia for local consumption and for shipment to Djibouti.
There is no national data on the number of animals slaughtered annually in Somaliland. In Hargeysa, the most populous city in the country, an estimated21 439,200 head of sheep and goats; 14,640 camels, and 18,300 head of cattle are slaughtered annually, with an annual value of $11.6 million. The Hargeysa market employs about 1,886 people.
Milk Marketing
The demand for milk is growing in tandem with that of the rapidly expanding populations of many towns. Milk sales have increased in Somaliland, developing into an important source of income for the pastoralists. According to one report some 80% of the daily income of pastoralists comes from the sale of milk22. Women dominate this sector, either bringing the milk directly into the urban centres or selling it to associations of women in permanent settlements, which send it on to the urban centres.
Again, there are no national figures on the annual quantity of milked traded in Somaliland. The quantity of milk traded annually in Hargyesa, is estimated to be about 12.823 million litres, with annual value of $12.8 million and this business activity employs about 2,000 people.
Qaad trade
The Qaad trade has become one of the country’s major revenue earners in the last two decades. Among people who earn their daily income from the Qaad business are truck drivers, sales agents, retailers and porters. Qaad imports from Ethiopia have been increasing annually by 11% according to government statistics. In 2003, Somaliland imported about 8,812,514 kg of Qaad, with a value of roughly $8.424 million. These numbers do not fully represent the actual amount or value of the leaf that enters the country as some shipments go unrecorded and some enter the country illegally. Those come through the customs about 20%25 or more of its weight is not value by the government and it is tax-free. There are no figures on the monetary value of Qaad retailing prices. The official number of Kgs imported to the country Qaad at retailing prices probably accounts for more than $53 million. Moreover, there is no national data on the number people involved in Qaad business, however, in Hargeysa, about 3,293 persons are involved in Qaad trading26, most are street vendors and they predominately women. The leading importer of this business employs about 700 persons that deal with Jigjiga-Hargeysa operation and about three hundred people in Hargeysa operation.
Table 3.7 Distribution of employment in Qaad trading by type of activities
Type of activities Percentage
Import and distribution facilitation 6.3
General retail 2.2
Table retailers 5.7
Street vendors 85.8
Total 100
Source: FSAU Hargeisa Household Economy Assessment 2003
The impact of qaad on Somaliland society and economy is unmeasured, but few would disagree that it has become a social nightmare and economic predicament. It is widely blamed for many Somaliland’s social and economic ills. Some Somalilanders argue that qaad is a primary cause of unproductivity professional negligence and represents a tremendous hard currency drain on the economy. But it is also a major source of government revenue. Less controversy surrounds its deleterious impact on family life and income, or on personal health. Despite of that, qaad has become major income generators for many households and qaad chewing is tolerated and even encouraged within Somaliland’s society and no stigma is attached to its use.
Fruit and Vegetable Trade
Like milk trading, fruit and vegetable business expanding with the growth of urban sprawling. Large quantity of fruits and vegetables consumed in Somaliland are imported from Ethiopia and Somalia. Ethiopia mainly supplies potatoes, onions, garlic and spices, while southern Somalia supplies fruits. The local production of fruit and vegetables is growing. There are no reliable data on of the local producers in major trading activities. About1445 tons of fresh vegetables and about 1695 tons of fresh fruits are imported to Somaliland; the amount of money involved in this transaction is about $50027 thousands. In Hargeysa, nearly 2,000 persons are engaged in this sector28, ranging from largescale importers and distributors, to retailers of various sizes (shops, stalls, petty traders).
Table 3.8 Share of fresh vegetable by Household income Baki District in Awdel Region
Consumption/person in (g) Poor Households(Average) Middle households (Average) Rich Households (Average)
All Household (Average)
Consumption of tomato/person 16.7 54.6 40.6 37.3
Consumption of onion/person 11.7 21.4 34.7 22.6
Consumption of pepper/person 2.6 6.8 12.9 7.4
Consumption of potato/person 7.1 17.3 35.7 20.0
Consumption of lettuce/person 9.6 40.9 66.5 39
Consumption of cabbage/person 0.0 10.7 12.5 7.7
Consumption of garlic/person 3.7 5.7 12.0 7.1
Consumption of carrot/person 0.0 7.0 31.1 12.7
Consumption of beet root/person 0.0 21.6 22.3 14.6
Consumption of coriander/person 0.0 6.1 23.7 9.9
Total daily Consumption/person 51.3 192.0 292 178.4
Source: Agro-Action
Middle income households consumed more than three times of what the poor households consumed from fresh vegetables, similarly, the rich ones’ intake is more than five times of the poor ones and about one and half times of the middle ones.
Food and Non-Food Trade 29
Another major activity in the country is trading in food and non-food trading as wholesalers and retailers as well. There is no statistics on the number of such business and level of employment in the country. The amount of money involved in this sector is about 70 million dollars excluding the local productions. In Hargeysa over 15,00030 people are active in this sector, engaged in both large and small-scale trading.
In one of the populous districts of Hargeysa, the distribution in percentage of non-food outlets is illustrated in the following table. About 46 percent of these outlets as wholesalers or retailers are engaged foodstuff selling, followed by clothes and utensils.
Table 3.9 Distribution of food and non-food out-lets by type of activities (%) in one district of Hargeysa
Type of activities Percentage
Food stuff 46.3
Clothes/utensils 29.1
Pharmacies 9.8
Restraunts 6.5
Consumer goods 4.9
Spare parts 2.1
Fuel stations 1.3
Total 100
Charcoal and fuel-wood trade
Fuel-wood and charcoal are the main sources of energy for Somaliland and as the population and settlements have grown, the demand for forest products has increased. Charcoal production has greatly increased since the collapse of the last government in 1991 as a result of increased urban consumption, due to returning refugees and out-migration from the rural areas. Charcoal production and trade has increased during the livestock ban, as rural households seek a means to make ends meet. In 2000, charcoal consumption in the whole of Somaliland was estimated to be 480,000 ton per year, on average each household in Somaliland uses about 1.6 ton per year31. The market value of one ton is 258$. The number of people involved in this business in Hargeysa city is about 1,900 persons excluding the producers 32.
The production of charcoal and firewood is a major environmental concern. Its impact on the environment is immeasurable and could lead to catastrophic consequences. In Somaliland today, an estimated 8 million trees are cut annually for charcoal production33. Acacia Bussei, a slow growing species locally known as galool, is the preferred tree for charcoal. A large galool tree can produce three sacks of charcoal. In one hectare, there are an estimated 65 galool trees. The overexploitation of this tree will eventually deplete reserves, because re-growth is slow. There is also growing evidence of using wet trees for charcoal production. This will eventually result in an energy shortages and higher energy prices. And much of deforestations and range degradation is attributed to charcoal productions.
Chapter 4: The Service Sector
Somaliland’s service sector has experienced rapid growth in the post-war period. Telecommunication, airlines business and financial transfer companies have emerged to fill the vacuum left by the collapse of the former government. The expansion of these services has created a new labour market34 requiring skilled professionals, as well as semi-skilled and unskilled workers.
Remittance
The economic importance of remittances has been increasing since the oil boom in the Gulf States in 1970s and became more significant in the post war period, as the main source of income and foreign exchange earnings, when thousands of refugees migrated to Europe and North America. Remittances largely have averted an economic disaster during the livestock export ban of 1998-9 and again since 2000. Remittances have financed ongoing economic activities such as the housing construction boom and import activities. The only source of income comparable with livestock earnings, and which may even exceed them, is remittances. However, the estimation of remittances in Somaliland is problematic for a number reasons 35.
- They are transferred in number of forms and through different channels
- They can be in cash and kind
- No data is available on the global numbers of migrants
Remittances received from abroad by six companies in Hargeysa excluding Dabashiil, were estimate to be more than $50 million in 2003. The seven major companies have about 147 branches through the country; employ about 355 persons and all of them claimed that the livestock export ban has been positive36. With the exception of Dahabshiil, all of them are partnership companies.
Table 4.1 profiles in the construction sector in Hargysa city
Legal Status Sole trader Partnership Corporation Family Business Total 14 15 71 0.0 100
Monthly value $115,000 $300,000 $480,000 $1.3 million No disclosed
transferred in terms of no. of companies 1 1 1 2 1
Permanent Skilled Unskilled Male Female
Employees 91.8 8.2 90.3 9.7 100
Intended to hire Yes No Yes No
next year 42.9 57.1
Establishing new branches 57.1 42.9
Business Growth 0.0% 10% 30% N/A Total 14.2 14.2 28.4 43.2 100
The premises Owned Rented 14.3 85.7
Source of Power Private Public Both Owned Total 71.4 0.0 14.2 14.4 100
Location Billboard Radio TV Others
Yes No Yes No Yes No Yes No Yes No
71.5 28.5 73.1 26.9 58.2 41.8 57.1 42.9 57.1 42.9
Yes No Yes No Yes No Yes No Yes No
Attracting customers 56 44 66 34 32.3 67.5 16.6 83.4 17.3 82.7
Telecommunication
There are seven major Telecommunication companies in Somaliland as listed below. These companies are linked to international ones and provide fixed telephone lines, mobile telephone lines, Internets, fax and other telecommunication services to the major urban centres and towns. The initiation and subsequent expansion of this new and vibrant service facility has been inspired by and is driven by the demands of the economy, facilitating the flow of remittances and information for trade. The quality of the services these companies provide are far superior both in quantitative and in qualitative terms to what existed before the pre-war period. They have enabled the local customers to make instant contact with the outside world speedily and relatively cheaply: the charges per minute not exceeding one US dollar and in fact falling. Like the remittance companies these attest to the ingenuity and enterprenial élan of the Somali business community. Besides the much-needed technological transfer they introduced, these companies have also provided much needed employment to hundreds of skilled, semi-skilled and unskilled local labour. Some of the skilled labour forces are returnees from the Diaspora. Nearly 1,000 persons are employed in this activity, consisting of professionals and semi-skilled ones.
The lack of regulation, however, is creating problems of efficiency, one of the main problems being the inability to communicate between the different systems.
Table 4.2 Some profiles of the telecom companies