July 2013 Page 3
Opportunities for Economic Development in Somalia
Somalia’s coastline, which totals over
,presents the greatest potential for the country’s long
-term economic recovery.Sectors such as shipping, fishing, and energy, all of which deteriorated after the fall of the Siad Barre regime in 1991, couldexperience a resurgence if security conditions continue to normalise. Thefishing industry remains largely underdeveloped,
restricted by storage limitations, refrigeration and opportunities for export. Once crippled by offshore piracy,it saw growth in 2012
and 2013 and could trigger an economic stimulus and provide an alternative income for would-be pirates. According to
Integrated Regional Information Networks
), the EU will invest USD 6.5
million into a project that seeks to increase Somalilan
fishing capacity to 120,000 tonnes per annum. If goals are achieved, it would generate USD 1.2 billion in revenue.
strategic location on the Gulf of Aden and the Arabian Sea could open valuable routes with Gulf countries as well asIndia, China and Southeast Asian partners. Home to four major ports, the country can also benefit from trade with landlockedneighbours in need of access to natural harbours to export goods. Specifically, ports could serve South Sudan, Ethiopia andUganda. Kenya and, more recently, Djibouti have monopolised this commercial opportunity for years due to insecurity in Somalia.
However, a wave of international investors could provide the country with the resources to improve port infrastructure and reclaim
its prospects for becoming a regional shipping partner.According to
, a potential conflict could emerge between autonomous regions and the SFG, or perhaps even between
MNCs coordinating with authorities in autonomous regions and the SFG. In December 2012, Somalia President Hassan Sheik Mohamoud stat
ed his administration’s intention to oversee o
four major ports in Berbera, Bosaso
Kismayo, and Mogadishu. Three of these, Berbera, Kismayo, and Mogadishu, aredeep water ports,and the port in Bosasounderwent a recent expansion. Two of these ports lie within autonomous regions and are operated by local authorities, potentiallyin opposition to SFG. Control of the Kismayo port, located in semi-autonomous Jubaland,led to gunfights between rival warlords
in June 2013. The port once provided an economic lif
eline to al Shabaab and it remains unclear how Mogadishu’s
. Indeed, federal administration of the ports might necessitate economic and political arrangements with local authorities at each port.
Port of Berbera
,located on the Gulf of Aden in Somalia’s autonomous northwest region of
Somaliland, serves as a lifeline for
the Somaliland economy and one of the centres of livestock export for the country. In 2010, 2.5 million cattle were transportedfrom the harbour. The biggest trading partners are Saudi Arabia, Egypt and Yemen and livestock, as of 2012, exports to thosecountries accounted for 60-
65 per cent of the facility’s
. The majority of Somaliland’s residents are pastoralists and
international trade has offset periods of drought in the past. When food stocks decline due to dry conditions, herders - benefittingfrom an economic stimulus of overseas trade - have been able to purchase food staples. For this reason, the Berbera port manager,Ali Omar Mohamed, wanted in 2012 to increase the berth from its current level of 12 meters to 20 meters, which woulda
ccommodate the world’s largest container ships of 300,000 tonnes. Current depth allows for ships
weighing only 35,000 tonnes.Bolloré Africa Logistics, a French conglomerate, hoped to expand capacity in Berbera in 2009 by linking the trade zone with
landlocked Addis Ababa. Known for developing port infrastructure despite insecure conditions (the company worked through wars
in Cote d’Ivoire and Rwanda), it postponed its Berbera investment strategy
for undisclosed reasons. Nevertheless, economists in2013 pointed to the prospects for a lucrative expansion. Since 2009, rumours circulated widely about secret deals from companies
like Bolloré, UAE’s Dubai World Africa(
PetroTrans,that might re-invest in the project or potentially lease the port.
Port of Bosaso
Located on the Gulf of Aden in northeast Somalia, Bosaso is the commercial centre of Puntland
and the region’s largest city. It is a
strategic livestock trading post for much of the Arab world, dealing primarily with the transport of goat, sheep and camels. The
city’s port was built
in the 1980s under the Barre regime. The Italian government initiated a project to convert Bosaso
into adeep water facility, but abandoned it during the civil war. Many residents still hope to see a conversion, noting the populationincreased from 40,000 to over 650,000 in just two decades. Local officials planned construction of a new port in 2012 that willsupport small-scale fishing
operations; however, details of the project’s progress are limited. In March 2013,
the World FoodProgramme (WFP) completed a multi-year
improving capacity by over fifty per cent. Officials noted the two-fold improvements would affect both delivery of humanitarian aid and potential for exportsfrom the region.
The city of Kismayo,the capital of Jubaland, is positioned halfway between Mogadishu and the Kenyan border. It is the most
important political and economic centre in southern Somalia. Due to the recent deployment of Kenyan and Ethiopian troops under the African Mission in Somalia(AMISOM)banner, external stakeholders in Jubaland include Ethiopia, Kenya and al Shabaab.