Somalia is an emerging market-based economy recovering from years of conflict and a lack of governance. It has an estimated population of over 17 million, with over 70 percent of the population classified as youth under 35. An estimated 47 percent of the population lives in urban areas. Somalia is an emerging market with unexploited natural resources and investment opportunities in such areas as oil and gas, energy, telecommunication, ports, and other services. It has a market-based economy with high rates of entrepreneurship and a strong business culture. Somalia has a young and dynamic population, including a large diaspora in the United States and other western countries, many of whom are visiting, returning, and investing in the country through capital infusions, knowledge transfers, and skill applications to drive growth and expand the economy. Somalia occupies a geostrategic location in the vicinity of some of the world’s busiest shipping lanes and has the potential to serve as a gateway to Ethiopia, a landlocked country with a population of some 120 million. The United States supports Somalia’s economic recovery, governance, and stabilization efforts.
In 2022, primary U.S. exports to Somalia totaled $85.1 million and goods imports totaled $1.1 million. Primary exports from the United States to Somalia were cereals, vehicles, electricals, and machinery equipment. Some recent U.S. investments in Somalia are in the oil and gas sector, with U.S.-based Coastline Exploration being awarded Production Share Agreements (PSAs) to explore and drill Somalia’s coast for petroleum resources. Recently the Somalia company Daallo Airlines signed a partnership to lease airplanes from Boeing, an American multinational corporation that manufactures aircraft. Other U.S.-based companies operating in Somalia’s food industry include Pizza Hut and Cold Stone Creamery which both operate in Hargeisa, and others through franchise models, including Coca Cola which operates with local partners. Turkey, UAE, China, and neighboring East African countries such as Kenya, Ethiopia, and Djibouti are the largest trade players in the Somalia market.
Somalia’s Gross Domestic Product (GDP) is estimated at about $8 billion per year, with an estimated growth rate of 2.8 percent in 2023 and GDP per capita of about $450. The World Bank forecasts that Somali’s GDP will grow by 3.7 percent in 2024.
Somalia has made progress in creating a business-enabling environment to attract foreign direct investment. The passing of the foreign investment law in 2015 promotes and allows foreign direct investment in the country. Somalia has sought to improve the investment environment through policy and process changes related to business registration, licensing, and legislation. The new processes include simplified business registration, improved legal protections, the promotion of foreign investment, and the easing of profit repatriation.
Somalia has a thriving and robust diaspora across the world that remits approximately $2 billion annually and drives investments in key sectors such as real estate, telecommunications, finance, and energy. Personal remittances received constitute an estimated 20 percent of GDP. Returning diaspora bring much-needed technical experience, expertise, and business practices aligned with international norms.
Political Environment
Visit the State Department’s website for background on the country’s political and economic environment.