Monday December 23, 2024
The Somalia Integrated Business Census 2024 has been released by the Somali Bureau of Statistics, providing critical insights into the country's business landscape. According to the census, Somalia has a total of 174,149 businesses, with 55.9% concentrated in three key cities:
1. Mogadishu: 48,387 businesses (27.8%)
2. Hargeisa: 29,560 businesses (17%)
3. Bosaso: 19,308 businesses (11.1%)
These cities, particularly Mogadishu as the capital, benefit from higher populations, favorable business conditions, and consumers with greater purchasing power. Conversely, Jowhar has the lowest number of businesses, with only 1,208 establishments (0.7%), highlighting Hirshabelle’s economic challenges and limited job opportunities for its people.
The census also indicates that 172,770 establishments (99.2%) are micro-enterprises employing 0-9 workers, while only 1,345 businesses employ more than 10 people. This highlights significant barriers to the development of large businesses, including inadequate regulations, weak institutions, poor infrastructure, limited access to finance, political and social instability, a small consumer market, and a skills deficit.
Trading activities dominate Somalia's business sector, accounting for 74.5% of establishments. This reinforces the long-held view that Somalis are primarily traders rather than producers. Other sectors face significant barriers, including high electricity costs and political and social instability, which disrupt business operations and long-term planning.
Sole proprietorships dominate Somalia’s business landscape, accounting for 82,842 establishments (90.9%). This reflects a strong preference among Somalis for self-employment, driven by limited economic opportunities that require minimal capital and effort.
The establishment census revealed that 52.6% of businesses in Somalia operate formally, while 47.4% remain informal.
Below are the recommendations for how the business establishment can expand and create jobs.
Enhance Regulatory Frameworks: Strengthen legal structures to support both formal and informal businesses, encouraging more enterprises to transition to the formal sector.
Improve Access to Finance: Develop microfinance institutions and low Murabaha rate loan programs to help small businesses scale and create employment. The current Murabaha rate of 10-15% per annum is not conducive for businesses to finance their working capital and the growth of their businesses.
Invest in Infrastructure: Improve electricity, transportation, and communication systems to lower operational costs and enable businesses to expand. The electricity price ranging from $0.40 -$1 per KWH is not a catalyst for business expansion and manufacturing.
Promote Skills Development: Invest in vocational training and educational programs to address the skills gap and equip the workforce for diverse industries.
Support Entrepreneurship: Provide incentives such as tax breaks or subsidies for businesses that innovate or employ large numbers of people, particularly in manufacturing and agriculture.
Foster Political Stability: Strengthen governance and reduce political instability to create a more conducive environment for long-term business growth.
Encourage Public-Private Partnerships (PPP): Facilitate partnerships between the government and private sector to invest in infrastructure and other critical sectors, promoting job creation.
Enhance Market Access: Expand domestic and international market access for Somali businesses through trade agreements and infrastructure improvements.
The full report can be found at: https://nbs.gov.so/wp-content/uploads/2024/12/Business-Establishment-Census-Report-SIBEC-2024-19-12-2024.pdf
Hussein Abdullahi Yusuf,
Consultant, Economist and Financial sector Analyst in Eastern Africa.
Contacts
Email: [email protected]
whatsapp: +252621698907
Facebook: https://www.facebook.com/profile.php?id=100069787405612&mibextid=ZbWKwL
X: https://x.com/HusseinAYusuf2?t=y-Snvyo2rdz0_KVyuSyWjw&s=35