Economic Issues in Somalia
Despite its reputation for lawlessness and piracy, Somalia maintains a functioning economy, one that outperforms many other African nations. Studies have found that since the 1991 collapse of its central government and the chaos and clan warfare that followed, Somalis have managed to adapt to life in a country that one analysis described as an economy without a state.
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History
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In 1991, civil war in Somalia resulted in the ouster of military dictator Siad Barre and the collapse of its central government. Widespread civil war, starvation and chaos followed.
Misconceptions
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Economic activity in Somalia is not limited to the well-publicized activities of pirates, who have hijacked cargo ships in the Indian Ocean and held them for ransom.
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Features
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The Somali economy, while still dependent on agriculture, has diversified to include a wide array of small business activity. Heavy trade even occurs across boundaries controlled by rival clans.
Effects
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Without a central government to promulgate regulations and collect taxes, many Somali businesses have prospered. Because there is no judiciary to enforce contracts, many Somalis conduct business based on trust and verbal agreements.
Expert Insight
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The United Nations reported in 2008 that Somalia's economy is stronger than that of many other African countries, but acknowledged that economic stagnation persists.
Warning
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Some businesses have exploited Somalia's natural resources. Logging and burning of forests to produce more charcoal for export has raised fears of long-term environmental impacts.
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