Somaliland Income Source

A basic income (also called unconditional basic income, Citizen's Income, basic income
guarantee, universal basic income or universal demogrant) is a form of social security[3] in
which all citizens or residents of a country regularly receive an unconditional sum of money,
either from a government or some other public institution, in addition to any income received
from elsewhere.
However, an estimated 84,000 people are internally displaced (IDP) within its borders and it
shelters thousands of refugees from other countries - most notably at least 8,000 from Ethiopia
and an influx of more than 9,000 from Yemen after the crisis there this year.
Many of Somaliland's IDPs have been uprooted by conflict in the region but the majority,
according to the territory's Ministry of Resettlement, Rehabilitation and Reconstruction, have
been forced to move by recurring drought and deteriorating landscapes that have rendered life
impossible for herders.
On the peripheries of the capital Hargeisa, thousands of displaced families live in shanty towns
and ragged camps. Some IDP payments have been supported by humanitarian organizations,
while others seem starkly neglected.
Since its self-declaration of independence in 1991, Somaliland has against many odds
established a system of democratic governance and embarked upon an ambitious development
agenda including development of a National Development Plan (NDP 2012-16).
To help strengthen planning and budgeting processes, and improve the allocation of scarce
resources, the World Bank has undertaken several pieces of analytical work to help provide the
first GDP and poverty estimates for Somaliland. These will be discussed at the Somaliland
Economic Conference on Growth & Unemployment, Poverty & Inflation and Budget
Policy hosted by the Ministry for National Planning and Development and the World Bank in
Hargeisa on 29 January, 2014.

KEY FINDINGS
1.

GDP and Unemployment

Based on initial GDP analysis -to be updated as data improves and further data becomes
available- Somalilands GDP for 2012 is estimated to have been $1.4 billion(current US$
prices)[1], with GDP per capita estimated at $347. This would be the fourth lowest in the world,
ahead of Malawi, the Democratic Republic of the Congo and Burundi.
Almost 30% of GDP is derived from the livestock industry followed by 20% from wholesale
and retail trade (including the informal sector); 8% from crops and 6% from real estate
activities. In 2012, Somalilands trade deficit was approximately $496 million, which was
financed through a combination of remittances and external aid. Somaliland has very low levels
of investment, ranked approximately 180th in the World for gross fixed capital formation as a
percentage of GDP. Furthermore, Somaliland has very low employment-to-population ratios,
with 28% for males and 17% for females (15-24 year olds in Borama, Hargeisa and Burao[2]).
2.

Poverty[3] & Wellbeing

Initial estimates suggest that poverty in urban areas of Somaliland is 29%, similar to Ethiopia
(26%) but that rural poverty at 38% in Somaliland is higher. Although urban households are
better off, inequality is high and similar to levels recorded in the 2005 household survey in
Kenya.
Access to health services in urban areas compares well to other countries in the region, but in
rural areas most births are at home without a skilled attendant. Mothers are more likely to die
giving birth, and babies more likely to die before their first birthday, in Somaliland than in
neighboring Ethiopia or Djibouti.
Only about half of 6-13 years olds go to primary school in Somaliland, in stark contrast to 87%
in neighboring Ethiopia[4]. As current school enrollment is much lower in Somaliland than in
all countries in the region, Somaliland could well have poor comparative literacy rates in the
future.
3.

Budget Policy

Tax revenue as a percentage of GDP in Somaliland (approximately 7% in 2012) is less than

half the sub-saharan African average. Historical low levels of domestic revenue have only been

able to sustain core Government functions and maintain peace and stability. The lack of
investment in social services, has taken a toll on human development. The Somaliland
authorities have taken recent, commendable, strides in strengthening budgeting and planning
and enhancing revenue, and the Budget Policy Committee now ring-fences 10-13% of the
growing budget for investment activities. Establishment of the Somaliland Development Fund
(SDF) has also enabled Government to exercise greater control over external resources.
However, reform of key sectors is needed to sustain revenue generation and create a more
competitive economy.

The absence of a conventional financial system is significantly

hindering access to finance which is the number 1 constraint on private sector activity in
Somaliland.

Improving public service delivery is vital through revising decentralization

policies, civil service reform and implementing the Public Financial Management (PFM)
Reform Strategy 2013-2017.

The influence of the private sector must not prevent the

Government harnessing revenues by adopting a tax strategy with a focus on consistent and
moderate taxation of large corporations, to help bring the Somaliland tax to GDP ratio more in
line with regional averages.

Employment and Income

Labour Force Those in 15 to 64-age bracket who are employe or employable are considered the
economically active population. This group constitutes 54 percent of the population. Using
Somaliland government figures, this would mean an estimated labour force of 1.6 million,
consisting of 880 thousand in urban and 720 thousand in rural and nomadic areas, an indication
that the rural labour force is migrating to the cities and that children and older people are being
left behind in rural areas

Distribution of population by economic and employment status (%)

Population by labour
force

Economic Status

Urban Rural/Nomadic Total

Economically Active

54.9

53.4

54

Not in the labour force

45.1

46.6

46

Total Population

100

100

100

Employment Total employment among the economically active population is estimated at 28.5
percent for urban dwellers, 36.3 percent for non-urban and 32.8
Percent for the entire country. Therefore, unemployment rates are 71.5 percent in urban areas,
63.7 percent in non-urban areas and 67.2 percent for the country as a whole. The high
unemployment rate is an indication of the very hard economic conditions in the country.

Distribution of population by economic and

employment status (%)
(Urban)

54.9, 55%

45.1, 45%

ECONOMICALLY ACTIVE
NOT IN THE LABOUR FORCE

Distribution of population by economic and

employment status (%)
(Rural/Nomadic)

46.6, 47%

53.4, 53%

Economically Active
Not in the labour force

Economically active population by employment status (%)

Employment status Urban

Rural/Nomadic

Total

Employed

28.5

36.3

32.6

Unemployed

71.5

63.7

67.2

Total labour force

100

100

100

EMPLOYMENT STATUS (URBAN)

28.5, 28%
EMPLOYED
UNEMPLOYED

71.5, 72%

EMPLOYMENT STATUS (RURAL/NOMADIC)

36.3, 36%
63.7, 64%

EMPLOYED
UNEMPLOYED

Employment by major sectors In terms of sectoral distribution of employment agriculture and

livestock accounts for 38.5 percent, services 60 percent and industry (i.e. plants) one percent.
In urban areas 81.9 percent are employed in the service sector, while 51.6 in non-urban areas
are in the agriculture/livestock sector.

Employment by major sectors

Sector

Urban Rural/Nomadic Total

Agriculture/livestock

17.2

51.6

38.5

Industry

0.9

1.00

Services

81.9

47.4

60.5

Total

100
100

100

EMPLOYMENT BY MAJOR SECTORS(URBAN)

17.2, 17%
0.9, 1%

AGRICULTURE/LIVESTOCK
INDUSTRY
SERVICES

81.9, 82%

EMPLOYMENT BY MAJOR SECTORS(URBAN)

AGRICULTURE/LIVESTOCK

47.4, 47%

51.6, 52%

INDUSTRY
SERVICES

1, 1%

Household income
The survey also asked respondents to report on monthly household income by selecting from a
range of choices. The total estimated6 income per year of the countrys households amount to
$912 million, of which $648 million was from urban areas and $260 million from rural and
nomadic areas. This amount to an overall per capita income of $304; $491 for urban and $155
for non-urban areas. There is a marked disparity between urban and nonurban settlements. This
is indicative of the dramatic impact the ongoing severe drought has on the income and
livelihood of non-urban areas.

Estimated household income (US$)7

Income

Urban

Rural/Nomadic

Somaliland

Estimated

648

260

912

Per 491

155

304

Household
income
millions

capita household
income in US $

6 Using Government figures 7 Using Government figures

Estimated House Hold Income (us$)7

260, 29%
URBAN
RURAL/NOMADIC

648, 71%

millions$ per capital household income in

us$

155, 24%
Urban
Rural/Nomadic

491, 76%

Source of Income Income from self-employment constituted 28.6 percent, salaries and
remittance accounted for 16.8 percent and 12.4 percent respectively. Others sources that have
not been specified constituted 33.3 percent. There is considerable disparity in the amount of
income derived from remittance between urban and non-urban areas

Distribution of Households by source of income (%)

Source

Urban

Rural/Nomadic

Somaliland

Self-employed

29.6

27.2

28.2

Charity

4.7

8.7

7.0

Remittances

19.7

6.7

12.4

Salary

19.4

14.6

16.8

Others

23.9

40.5

33.3

Not mentioned

2.7

2.3

2.3

Total

100

100

100

Distribution of Households by source of

income (%)
(Urban)
2.7, 3%
23.9, 24%
29.6, 29%

self-employed
charity
remitances

4.7, 5%

19.4, 19%
19.7, 20%

salary
others
not mentioned

Distribution of Households by source of

income (%)
(Rural/Nomadic)
self-employed

2.7, 3%
27.2, 27%

charity
remitances

40.5, 40%

salary

8.7, 9%
6.7, 7%

others
not mentioned

14.6, 14%

Income Distribution and Poverty level

The annual income of about 63.3 percent of households surveyed is less than one thousand
dollars; broken down by location, the proportions are 47.8% in urban areas and 75.4% in nonurban areas. In other words, 1.98 million people (631 thousand people in urban areas and 1.3
million people in urban areas) live on less than half a dollar a day. Twenty-three-and-a-half
percent of households make about $1,200 and another 13.2 percent earn more than $6,000
annually.
Distribution of Households by annual income (%)

Type of

Household income $

settlement

360

270

1200

6000

12.000

Total

urban

23.9

23.9

31.8

0.5

19.5

100

Rural and Nomadic

58.8

22.6

17.2

5.9

1.5

100

Somaliland

40.1

23.2

23.5

3.5

9.7

100

Somaliland Export and Import

Livestock production is the backbone of Somaliland's economy. Around 60 percent of the
population practise some form of pastoralism or depend on animal products, primarily because
the dry regional climate allows for few different livelihoods,
This sector is an significant enhancement to the income and diet of much of the nomadic or
semi-nomadic pastoralists. Livestock now regarded as a source of cash income, as well as a
traditional unit of social status and initiate of lineage responsibility, and a last resort against
famine in the harsh dry seasons.
Eighty percent of Somaliland's export income is generated from sales of sheep, goats, cattle and
camel.
Table 1: Yearly Livestock Exports of Somaliland 2006-2011
Year

Goat/ sheep

Cattle

Camel

Total

2006

1,177,232

97,535

23,202

1,297,969

2007

1,354,246

87,476

14,149

1,455,871

2008

1,380,566

84,541

30,468

1495575

2009

1,836,970

133,670

48,608

2,019,248

2010

2,827,909

207,195

124,154

3,159,258

2011

3,104,684

150,934

107,281

3,362,899

Sources: Berbera Port Authority

Yearly Livestock Exports of Somaliland 2006-2011

2011

107281
150934

2010

124154
207195

3362899
3104684
3159258
2827909
2019248

48608
133670

2009
2008

30468
84541

2007

14149
87476

2006

23202
97535
0

500000

1836970
1495575
1380566
1455871
1354246
1297969
1177232
camel 2000000
Cattle
1000000 Total
1500000

Goat/sheep3000000
2500000

3500000

4000000

Economic challenges in Somaliland

Event
Somaliland has the world's fourth-lowest GDP per head and a mostly high income gap between
rich and poor, according to newly released data from the World Bank.
GDP per head of US$348 in 2012 ranks Somaliland above only three countriesBurundi, the
Democratic Republic of Congo and Malawithe World Bank revealed during a one-day
economic conference jointly convened with the Somaliland Ministry of Planning and Coordination on January 29th at a hotel in the capital, Hargeisa. Analysis of a household and
enterprise survey carried out by the World Bank and the planning ministry in early 2013
indicates that the uneven distribution of wealth is a major challenge for Somaliland, according
to the World Bank country director for Somalia, Bella Bird. The survey calculated Somaliland's
Gini coefficient, a measure of income distribution in which 0 represents perfect equality and
100 maximum inequality, to be 45.7 in rural areas and 42.6 in urban areas, which compares
unfavorably with neighboring Ethiopia (rural 27; urban 37). The survey also found 29% of
households in urban areas and 38% in rural Somaliland to be living in poverty.
Never having been internationally recognized since unilaterally announcing independence in
1991, Somaliland's efforts to boost development are scarce by low inflows of donor aid. Instead
the government's main source of revenue for its modest budget has been the port at Berbera.
Hopes that the oil and gas industry may provide a important new income stream received a
boost in early January when the energy and minerals minister, Hussein Abdi Dualeh, revealed
that from March a UAE-based company, RAK Gas, would start exploration in two blocks in
Somaliland. A UK-based Anglo-Turkish oil company, Genel Energy, which suspended its oil
exploration campaign in Somaliland in September 2013, owing to concerns over deteriorating
security, declared in mid-January that discussions were continuing with the government in order
to facilitate a resumption of activity. Genel holds exploration licenses for five blocks in
Somaliland and had been due to begin drilling in mid-2014.

Impact on the forecast

We maintain our existing forecast that the Somaliland government will continue to work on
improving the business environment, although progress will still be controlled by the
challenging security situation.
Reference
http://www.worldbank.org/en/news/press-release/2014/01/29/new-world-bank-gdp-andpoverty-estimates-for-somaliland

[1] GDP based on a 4 million population estimate, if a population estimate of 3.5 million is used
instead the total GDP and per capita figures would be about 5% lower.
[2] ILO Labour Force Survey 2012
[3] Findings based on the Somaliland Household Survey 2013 a representative urban sample,
and a fairly representative sample of settled rural households.
[4] Somaliland MICS Preliminary Results 2011 and WDI
http://apd-somaliland.org/wp-content/uploads/2014/12/Socio-Economic-Survey.pdf