COVID-19 impact on Somali Productive Sectors: a working Paper on selected Economic Strategies going forward
MOGADISHU, June 24th, 2020 — The global impact of COVID-19 pandemic is still being analysed but preliminary reports clearly indicates that there will be major global economic slowdown with GDP growth rate of major countries that will go negative with massive business and job loss. It is to be expected that Somalia also will be impacted due to this global trend resulting in considerable implication over the country food security, GDP growth rate, balance of payment and trade. Furthermore, Somalia dependency on foreign contributions to its economy will considerably impact the country’s efforts towards a sustainable socio-economic stabilization. Global disruptions in the supply chain will be felt also in Somalia. Nevertheless, this can become an opportunity where the country can take steps to move from trading to a production-based economy, particularly starting by focusing on the production of essential food items, COVID-19 preventive items and increasing the output of local content goods.
It is in this framework that UNIDO and the FGS Ministry of Commerce and Industry (MoCI) is supporting MSMEs across Somalia by delivering enterprise development, investment promotion and access to finance (through two programme embedded credit facilities for Somali MSMEs). In this context, UNIDO and FAO are also partnering to facilitate private sector and IFI investments in critical food value chains, targeting sectors with the potential to reduce dependency of food imports or diversify Somalia’s export base.
The exercise undertaken by UNIDO and MoCI has analyzed the various areas of economy that will be impacted by the disruptions to be created globally at the macro level and its percolation to the Somali context. Further, the paper looked at the possible interventions that can be implemented at the country level that will promote self-sufficiency, which will not only help the Federal Government to tide over some immediate effect but will give future perspective to intervene.
UNIDO has proposed specific advisory to MoCI on how to strengthen the economy in view of the immediate impact due to disruptions like fall in remittances, interruptions in trade route, fall in government revenue, balance of payment issues etc.
These proposed interventions have been adopted by MoCI in order to assist public and private institutions to transform the Somali economic ecosystem, making domestic markets, jobs and livelihoods more resilient to shocks, facilitating business production continuity while reducing dependency on humanitarian assistance. In the short term this should help mitigate the COVID-19 impact on the Somali already fragile economic ecosystem. In the medium-long term, it shall support a trajectory towards stabilization, effective recovery and prosperity.
