Page 19 - Azerbaijan State University of Economics

Hashim Al-Ali: Towards a realistic medium term macroeconomic and fiscal framework and
outlook for the Somali national economy (2017- 2019)

The envisaged gradual investment growth and flows during the SNDP period will, undoubtedly,
contribute significantly to diversify and expand the domestic productive capacity and total exports.
Hence, this would increase total exports by an annual growth rate of 21.5 percent and 29.7 percent
for “Baseline” and “Hopeful” Scenarios setting respectively, during the period 2016-2019. Thus,
represent about 23.0-26.0 percent of the GDP in 2019, for both assumed growth scenarios.
Accordingly, increasing investment and diversification, as well as expanding productive capacity
to increase the domestic production of various commodities that characterized with high national
comparative advantages, would satisfy important part of the domestic demand, reducing imports
through import-substitution strategy and increasing exports. Notwithstanding, such investment
required to expand the productive capacity and increasing the level of domestic production, would,
undoubtedly, requiring more equipment, tools and inputs materials from the rest of the world,
therefore, this will generate an increase in imports, from outside Somalia, to support these
investment and inputs requirements of growth and the expansion of the domestic production base.
This is in addition to the fact that the expected higher income level would boost the total demand
for imports as well. Thus, imports are expected to grow at an average rate of 1.3 percent per
annum, in the “Hopeful” Scenario, though its contribution would be reaching 54.0 percent of GDP
in 2019, down from 61.0 percent of GDP in 2016. This, by and large, reflects the effectiveness of
balanced development policies, and would contribute to the aimed at improvement of the status of
the country balance of payments, through 2019.

However, it is worth mentioning that the contracting share of imports in GDP in 2019, is attributed
to the expected growth and expansion in domestic production, and hence, GDP during the SNDP
period, at a rate higher than the rate of growth of imports into the national economy.
Notwithstanding, Table -2- shows expected expansion of the Somali economy, envisaged by the
development strategic approach of the national development plan, and its impact on the behavior of
different components of the final demand components and expenditure variables of the GDP, in
Somali economy, during the SNDP period. At this conjuncture, it is worthy to stipulate the fact that
the present exports are based on a number of main commodities and products, such as livestock,
fisheries, fruits particularly banana, charcoal [Recently the Government of Somalia has issued a
ban on export of Charcoal. This was the case where export of charcoal with such huge quantities
has a negative environmental impact. It is considered to present an “environment crime”, where
production and export charcoal in such commercial level, would, undoubtedly, contribute to the
country desertification and deforestation.], etc. Nonetheless, the SNDP has assumed a high
potential for substantive increase in exports during the next three years, as fisheries, banana and
other fruits, horticulture and other agriculture and livestock products remain under utilization.
Accordingly, there are further opportunities and a wider scope for improving and deepen the
production quality, to a given level, to be of international standard and quality, and hence,
expanding the volume and increasing the value of the Somali exports to the rest of the world.

It has to be stated that, and under the SNDP assumptions and objectives, these envisaged
developments and expanding trends, within the domestic economy of the Somalia, would support
and sustaining the aimed at enhancing the level and improving the condition of the domestic

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