Real Economics Somalia/Somaliland

[Abu-Salman]

Having come accross statistics from different sources and questioned many of the figures officially published, it comes out that the real economic activity and overall production is particularly understated in the Somali context.

 

GDP estimates and calculations are one of the more concrete, uncontroversial side of macroeconomics;

it is actually more of an accounting tool that tally the overall annual production within a country through different methods (regardless of actual levels of inequalities).

 

In the case of Somaliland, its estimated 4 millions inhabitants are said to have a ppp GDP per capita of between $ 500 (overall PPP GDP at around $1 billion, said to be around half that of Somalia as a whole).

Yet, other figures show that overall Somali remittances levels hover between 1 and 2 billions and that remittances represents around a third of households spending in Mogadishu, which may means an overall Somali GDP of anything between 3 and 6 billions, plus the non-consumer spending part of the economy.

Also, animal exports in Somaliland alone are due to jump to an estimated 450 millions this year (from around 300 millions, mostly through Berbera's port).

 

At the same time, all those figures reflect only formal transactions, focusing on urban activities;

observant authors pointed out that with the figures long published for Somalia (since Syad's days), Somalis would have long starved (actual food shortage are solely caused by exceptional levels of insecurity and very time/regions specific as the recent famine and that witnessed in 92 touching the most fertile areas).

Thus, milk production as the other main economic activity is thought to represent roughly an equivalent amount of the more official GDP, doubling it.

Of course, this still leaves out other rural activities such as processing of milk surplus or even rural-based services since nomads or farmers are self-reliant societies within the wider one.

But since a figure must be put on everything, let's value milk production at the local market price and say that rural activity equal the lower estimate of urban activity (3 billions).

 

Let's add now cattle export to the mix (now concentrated in the North) and we find an overall PPP Somali production of anything between 2and 14 billions, slightly undervalued while leaving out other sectors at the same time.

This results as an average PPP GDP per capita of anything beween 160 to 1000, either a totally starving population or almost a lower middle-income nation within the context of international organsims and politics aside (we do not get involved in the Somaliland separation issue here, it's just pure economics calculation from international viewpoints that list Somalia as one nation)!

[Carafaat]

Abu Salman, the GDP(Gross Domestic Product) measures a countries economic output or 'production'. Remittances are not counted in the GDP but they are however counted in the GNP(Gross National Product).

 

So we eat more then we produce or earn.

 

this is economicly unsustainable!

[Abu-Salman]

I realise the nuance between GNP and GDP and the local remittances and household spending figures given by the local NGO were just an interesting proxy;

the point is not so much about those indices but how much of the production and trades is left out and the artificiality of "official" measures or comparisons.

The realistic range of $ 2-4 billions as GDP or $ 3-6 billions GNP (both roughly double those amounts if calculated in terms of PPP)

leaves out not only the important informal sector but, even more crucially, the whole rural economy as if activities such as vital milk production did not matters (the absurdity of which authors such as John Drysdale noted).

Which means in turn that the upper estimate PPP per capita GNP of 1000-1200 is at the very least roughly half underestimated.

 

 

Of course,authorities may only tax in practice the 3-6 billions of formal economy or remittances plus the booming livestock exports (now at least $ 500 millions through Berbera alone) but there is ample room to provide some basic equality and vital services for the unprivileged even through the 10-20% lower range of taxation level, before constant gradual increases.

 

 

A most interesting data is the roughly 60 millions of taxes on Telecom providers that could be readily enforced by the TFG as one of their technocrats revealed and overall telecom revenues accross Somalia/Somaliland may be between 300-600 millions.

Another ideal source of taxation or nationalisation target!

[burahadeer]

the biggest headache is really money comes & leaves fast.We need to produce food in every part of the country since rigs r everywhere nowadays.There is no lack of water for atleast 80%.