Research and consulting in Somalia

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Research and consulting in Somalia

Country overview:

As Somalia works to recover from decades of civil war and address ongoing terrorism, IOA’s research and consulting highlight the country’s progress in re-establishing governing institutions. IOA analysts have observed a strong national determination to overcome challenges to stability, including warlords and terrorist groups. While the al-Shabaab terror group poses significant obstacles, international goodwill and aid play a crucial supportive role. Additionally, an international flotilla of warships remains stationed offshore to deter piracy.

With the longest coastline in Africa, Somalia possesses valuable natural resources. Proper regulation of its fisheries can provide sustainable livelihoods for both traditional and industrial fishing. Moreover, its beaches have the potential to support a revitalized tourism industry.

Key opportunities in Somalia:

  • Livestock and skins, the country’s primary export products, offer significant potential for development in local value-added industries
  • IOA analysts foresee Somalia’s extensive coastline presents opportunities for investment in tourist resorts and other attractions within the tourism sector
  • The fishing industry has considerable growth potential, provided the coastline is protected from illegal foreign fishing and sustainable practices are implemented

Key concerns/risks in Somalia:

  • As a Least Developed Country, Somalia still requires extensive post-war reconstruction of infrastructure, alongside the rehabilitation of its education, industrial, and governance systems
  • The persistent threat posed by al-Shabaab remains a significant challenge to national security
  • Somalia, like other nations in the Horn of Africa, is highly susceptible to drought and the broader impacts of climate change
Somalia

Tips on doing business in Somalia:

Starting a business:

  • The absence of formalised systems across most of Somalia results in company and property ownership being managed on an informal, case-by-case basis. However, the self-declared region of Somaliland stands out, offering formal investment incentives
  • The unresolved dispute over Somaliland’s independence from Somalia’s central government in Mogadishu introduces substantial legal risks for investments in the region
    (Read more at: https://sominvest.gov.so/)

Doing business:

  • While Somalia has achieved some stability since the height of the civil war in the early 1990s, it remains one of the region’s most challenging business environments
  • Limited infrastructure and the lack of centralised government control over many remote areas pose risks to asset security and complicate the legal framework for investments
  • Despite these challenges, recent progress includes the re-establishment of a commercial banking sector, reconnection to international payment systems, and a modest return of skilled expatriates educated abroad

Culture and society:

  • Displaying the soles of one’s feet is regarded as disrespectful. It is customary to use the right hand for handshakes, shared meals, and other interactions
  • As a predominantly Muslim society with significant Islamist militant activity, it is important to avoid behaviours that could be perceived as offensive
  • The lack of formal governance and the influence of non-state actors create ongoing risks of political corruption, fraud, and terrorist financing. These risks necessitate thorough vetting and mitigation strategies

A sample IOA research report on Somalia: