Growth Potential in Somalia

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The following statistics show the growth potential of Somalia, based on its abundant natural resources and position relative to global trade routes . Of course, to optimize its geographic advantages and resources, this divided nation on the Horn of East Africa would have to at least stabilize and possibly re-unite. The following is meant as a encouragement for nationals of Somalia and for the diaspora the world over.

 

Somalia has some prime real estate in terms of accessing global trade. Let’s have a look at this fun little map of global trade: http://bioval.jrc.ec.europa.eu/products/gam/index.htm

 

 

The ochre and brick-to-brown palette indicates travel time to major cities (in hours and days).

 

The light blue is shipping lane density based on the thickness of the lines in the ocean.

 

Now a zoom to Somalia:

 

 

 

As you can see the sea trade that passes Somalia is substantial. Nearly 8% of global trade passé through the Gulf of Aden (the space between Somalia and Yemen). 1. In slightly easier-to-imagine terms that’s 20,000 ships and 30% of Europe’s oil imports. 2. Most of the news around the Gulf of Aden in the past years has been about the piracy. 3. It is important to note that piracy is in decline and is now at a 6 year low.

 

1 http://www.bloomberg.com/news/2011-01-31/egypt-s-suez-canal-carrying-8-of-world-trade-remains-open-amid-violence.html

 

2 http://www.reuters.com/article/2009/04/15/us-somalia-piracy-shipping-factbox-idUSTRE53E2JR20090415

 

3 http://www.businessweek.com/news/2012-10-22/somalia-piracy-attacks-plunge-as-navies-secure-trade-route

 

This means:

 

If Somalia could tap that trade through locally owned businesses then it could have a growth boom like Singapore, as pictured at the center of the spider web below.

 

 

 

Source: Singapore Bureau of Statistics

 

http://www.pacificbridge.com/publications/human-resource-issues-in-singapore/

 

Ultrabasic International Economics!

 

Singapore serves as a trade hub with 25% of global trade passing by. They have developed an oil processing infrastructure, buying unprocessed oil (cheaper than processed stuff), and selling the processed oil to passing vessels. They don’t have their own domestic oil resources; they just import.

 

You may be asking: why stop to refuel? When the boats are fully fueled they are heavier. Heavier=sitting lower in the water=sitting lower in the water=more water has to be displaced for the boat to move=more oil has to be used for the vessel to move=more expensive. Ergo, more frequent refueling stops are less expensive.

 

So if Somalia could have its own oil processing infrastructure then they could sell to vessels going to and from Africa, Asia, Europe and the Middle East.

 

When a country has a large proportion of global trade passing nearby, a wide variety of products pass your shores. The variety available provides opportunities, as many of the products can be combined to create more valuable products. For example, different countries are more efficient at producing different types of fruits and vegetables. So, Somalia could import a variety of those agricultural products and export overpriced fruit smoothies.

 

Warning: classes in international econ are incredibly difficult.

 

Granted Somalia gets a 8% of trade passing by to singapore’s 25%, but with the Economic growth of the sub-Saharan nations on the east coast of Africa the volume of trade passing Somalia could increase. As you can see on the map

 

 

http://www.economist.com/node/21541008

 

A large portion of the trade that these economies engage it will be with Europe and Asia and a lot of that trade will pass by Somalia. The top trading partner for 2007 to 2010 for every sub-Saharan African country on africa’s east coast including was the European Union. With the exception of Tanzania who’s largest trading partner was Switzerland 1. There have been some major shake ups in the oil markets of east Africa, the break up of Sudan has left the South seeking new paths of export. This along with the discovery of oil in Uganda has lead to plans to construct new oil pipelines connecting Uganda and South Sudan to Kenya.2 This means that a major market for oil has been delivered to Somalia’s door step.

 

1 http://stat.wto.org/CountryProfile/WSDBCountryPFHome.aspx?Language=E

 

2 http://allafrica.com/stories/201301290304.html

 

Uranium:

 

Estimated to exceed a quarter of global reserves

 

So more than 200,000 tons

 

http://news.google.com/newspapers?nid=1314&dat=19680316&id=hbVWAAAAIBAJ&sjid=gOkDAAAAIBAJ&pg=7276,235261

 

Even though the price of uranium got as high as $120/pound ever since the fucashima disaster it seems fluxulate between 30-50 $ a poundhttp://online.wsj.com/article/SB10001424127887324034804578344583621600670.html

 

So: 200,000tons converted to pounds

 

200,000 X 2000 = 400,000,000 pounds

 

Then into US$

 

$16 trillion in deposits

 

 

http://maps.nationmaster.com/country/so/1

 

http://images.nationmaster.com/images/motw/africa/somalia_nat_res_2002.jpg

 

Now If you look at that map you will see that Uranium deposits are in the south. It is around Mogadishu just north and to the Northeast.

 

Unfortunately these areas have had severe problems with stability. Hopefully this wont go the same direction as the Kivu regions in the DRC, especially because Uranium is especially dangerous to extract, both for the people mining it and for the environment.