Somalia A Potential Economic Powerhouse for Africa

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Given its advantageous position, abundant natural resources, and strong private sector, Somalia has the potential to become an economic powerhouse for Africa. Despite decades of conflict and unrest, Somalia has managed to sustain a thriving informal economy that contributes the majority of its GDP (GDP). The World Bank predicted that Somalia's GDP will reach $4.918 billion in 2020, growing at a 2.9% annual pace. Agriculture, particularly cattle, which accounts for around 60% of the GDP and 80% of exports, is one of the key drivers of the economy. In addition, Somalia has unrealized potential in the fields of fishing, mining, oil, and gas, as well as clean energy sources like solar and wind.

Yet, Somalia confronts numerous obstacles that prevent it from developing economically and fighting poverty. They include recurring droughts and floods, unrest and violence, shoddy institutions and governance, a lack of essential services and infrastructure, high unemployment and inequality, and a heavy external debt load. Moreover, Somalia has to broaden its economic base, boost productivity, and become more competitive on the national and international markets. Somalia must make investments in the growth of its human capital, social protection, public financial management, private sector development, trade facilitation, and environmental sustainability in order to meet these objectives.

In the past few years, Somalia has significantly improved its relationship with the international community and advanced its political and economic reforms. Under the Heavily Indebted Poor Countries (HIPC) initiative, Somalia reached the decision point in March 2020, opening the door to debt relief and access to preferential financing. In August 2022, Somalia successfully held its presidential and legislative elections, displaying its dedication to democracy and stability. The goal of Somalia is to develop into a peaceful, prosperous, and open country that can use its potential for the good of both its citizens and the surrounding area.

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