Could Somalia’s vibrant private sector produce goods Somali consumers need locally?

[Deeq A.]

When the central government of Somalia collapsed in 1991, everything collapsed with it. Infrastructure was destroyed. Basic services, such as electricity and clean water, were no longer provided. Government institutions were looted. As a result, the economy disintegrated and the Somali people’s contract with the State became void. In the following years, the civil war and recurrent droughts forced many people to migrate or join extremist groups.

In recent years, however, the situation has gradually changed for the better. Government institutions are slowly recovering and becoming stronger, people are enjoying relative peace, and the economy is being revitalized by capital from the diaspora. Nonetheless, many challenges remain, including the most chronic one: youth unemployment.

How can we create job opportunities for the youth? One possible solution is establishing Small Production Businesses (SPB) in the country.

Production businesses are scarce in Somalia. Almost all the commodities used in the country are imported, including most of the processed food. Goods that could easily be manufactured locally are imported. Many of these commodities could be produced and processed, and create thousands of jobs for young people.

Production Needed

Production businesses would provide the platform for establishing small-scale factories, using local, raw materials. The creation of such businesses would bring two benefits: creating jobs and producing cheaper goods for local consumption.

One example is poultry: In Somalia, most food items, except for meat and milk, are imported. Many Somalis consume chicken and other poultry products, yet those goods are all imported. Poultry farms are cost-effective and relatively easy to establish, and provide skills training and employment opportunities for young people.

Similarly, leather is mostly imported. Somalia’s main export is livestock. Processing livestock hides to produce leather domestically would create more jobs and revenue, and slash prices for Somali consumers. A similar argument can be made for shoes, which are often made of leather and produced elsewhere.

With these possible small-scale solutions in mind, where would investment come from? First, the private sector can play a big role in this regard. The Somali private sector is vibrant and provided many public services when the government could not. In that same spirit, the private sector is able to invest in job-creation in ways the government is currently unable to.

But the government can play a role in protecting the Somali consumer from the dumping of imported goods and other methods of undermining domestic businesses, and also in encouraging Foreign Direct Investments that would create Somali jobs and Somali goods.

By: Mohamed Maqadin