World Bank Gets First Measure of ‘Unequal’ Somaliland Economy

[Jacaylbaro]

Somaliland, a breakaway territory in northern Somalia, has a gross domestic product of $1.4 billion with a “high” income gap between rich and poor, according to the World Bank’s first economic output estimate.

 

Somaliland’s GDP per capita of $348 in 2012 ranked as the world’s fourth-lowest after Burundi, the Democratic Republic of Congo and Malawi, the Washington-based lender said in an e-mailed presentation released today in the capital, Hargeisa.

 

“A focus on how to address inequality in Somaliland and ensure access to services for all, will be important to secure progress for all,” the bank said, according to the statement.

 

Somaliland, which has a population of 3.5 million, declared independence from Somalia after the fall of dictator Mohamed Siad Barre in 1991. No sovereign state has recognized the region as an independent nation. Companies including London-based Genel Energy Plc (GENL) and RAK Gas LLC of the United Arab Emirates are exploring for oil and gas in the region.

 

Somaliland’s Gini coefficient, a measure of the income gap, is 45.7 in rural areas compared to 27 in Ethiopia and 42.6 in urban centers against 37 in the neighboring country. The index ranges from 0, which represents perfect equality, to 100, which implies complete inequality, according to the bank.

 

The uneven distribution of wealth is a “major challenge,” with 29 percent of households in urban areas and 38 percent in rural Somaliland living in poverty, according to a 2013 household and enterprise survey carried out by the World Bank from January to March.

 

Livestock Contribution

 

The livestock industry accounts for 30 percent of the economy, followed by trade at 20 percent, crop production at 8 percent and real estate at 6 percent, the bank said.

 

The accuracy of the estimates is hindered by a lack of data and difficulty in measuring output by nomadic populations, and remittance and foreign aid flows are not captured, the bank said. While there are no isolated figures for Somaliland, overseas workers send home $1.2 billion to Somalia every year, while official development aid totaled $150 million for Somaliland in 2012.

 

The country’s “low” level of domestic revenue, which at 8.5 percent of GDP is about half of the sub-Saharan African average, consists largely of trade levies, while the country’s few “large businesses” pay insufficient taxes, the bank said.

 

The region should review its tax regime, which charges companies 10 percent of their profit, compared with 26 percent in Ethiopia and 28 percent in Kenya, according to the bank.

 

Half of government spending in the decade through 2012 has been spent on security, while health care and education expenditure has been kept low, it said. The al-Qaeda-linked Islamist militant group al-Shabaab has waged an insurgency against the Western-back government in Somalia since 2007 in a bid to impose Shariah law.

 

Source: Bloomberg

[Alpha Blondy]

i'm at the ''Somaliland Davos'' conference, right now, abti.

 

are you there?

 

 

[N.O.R.F]

Who wrote this?

 

Estimates are given then it states they are likely inaccurate. The $1.2b changes from just Somaliland to the whole of Somalia.

 

Is the WB advising raising coorporate taxes in line with Ethiopia and Kenya? Established countries with structured economic/development strategies with tourism, exports and supported by the IC?

[Alpha Blondy]

just came back from shirkii. fascinating stuff.

 

it was a lot of bs lakinse we now have figures. we can work toward developing indicators and measures of progress. this is crucial.

 

Sacad spoke of the ''4-i's''.

 

1. incentive.

2. institution.

3. investment.

4. impact.

 

[SomaliPhilosopher]

From what I seen in somaliland, SL probably has the most 'human' "unequalness". It is subtle, it is not jarring, it kinda just blends in...

[Mooge]

Niyoow wasnt Somaliland budget only 2 million or something?

[Abu-Salman]

<cite>

@N.O.R.F

said:</cite>

Who wrote this?

 

Estimates are given then it states they are likely inaccurate. The $1.2b changes from just Somaliland to the whole of Somalia.

 

Is the WB advising raising coorporate taxes in line with Ethiopia and Kenya? Established countries with structured economic/development strategies with tourism, exports and supported by the IC?

 

 

The key word is indeed "estimates", which means very little apart from pointing out the modesty of urban economy (the GDP per capita can easily double if we just add rural milk production at its market value); how can we compare it then to places like Ethiopia?

It is also the case that GDP figures, often understated, were heavily raised up in some African countries, not to mention the informal sector etc (aid or remittances do not count).

 

Still, what is most interesting is that revenues stand at 8% yet the central budget alone is roughly $200 millions this year (around $250 m overall); is this not yet another gross inconsistency? Does that not means that Hargeysa can at least double if not quadruple its revenues to attain the same level as many similar or African countries where revenues range from 20 to 30% of the national output or GDP?

 

It is all very interesting but to be taken with a pinch of salt of course...

[OdaySomali]

<cite>

@Abu-Salman

said:</cite>

The key word is indeed "estimates", which means very little apart from pointing out the modesty of urban economy (the GDP per capita can easily double if we just add rural milk production at its market value); how can we compare it then to places like Ethiopia?

It is also the case that GDP figures, often understated, were heavily raised up in some African countries, not to mention the informal sector etc (aid or remittances do not count).

 

Still, what is most interesting is that revenues stand at 8% yet the central budget alone is roughly $200 millions this year (around $250 m overall); is this not yet another gross inconsistency? Does that not means that Hargeysa can at least double if not quadruple its revenues to attain the same level as many similar or African countries where revenues range from 20 to 30% of the national output or GDP?

 

It is all very interesting but to be taken with a pinch of salt of course...

 

The $200m budget figure is by no means accurate, not least because the exchange rate between dollar/shillings is arbitrarily set.

 

I would love to know how the WB arrived at their estimate

[N.O.R.F]

Abu Salman,

 

I understand the WB has limited information to go by but the way bloomberg is reporting it makes their estimates look even more of a finger in the air estimate.

 

On the $200+ budget, we haven't seen the breakdown yet. I'm quite sure most of it will be through some sort of programs for development. Not sure how much of it goes directly to government.

[Abu-Salman]

<cite>

@Zakariye2014

said:</cite>

The $200m budget figure is by no means accurate, not least because the exchange rate between dollar/shillings is arbitrarily set.

<cite>

@N.O.R.F

said:</cite>

On the $200+ budget, we haven't seen the breakdown yet. I'm quite sure most of it will be through some sort of programs for development. Not sure how much of it goes directly to government.

 

Fair enough, nobody takes their figures at face value (else, Africans would have long starved); yet, the exchange rate can not be fully arbitrary for an open economy and the current finance ministers are renowned for being clean.

Regardless, if revenues stand at 8% (much scope for increase), the budget should stand at not much more than 100 millions (highly doubt half of it would be aid financed or totally phantom).

 

But all that is academic for we already know there is a huge gap between income groups;

nobody thus needs the WB to tell us that the likes of Telsom, dahabshil, villas in hargeysa or traders need serious taxation for the underprivilged to access vital services.

 

That or public airwaves and land need to be nationalised as public goods just like in other places (there is no escaping serious land taxation anyway, esp for bigger and commercial properties).