Somalia

Investment & 
Operational
Climate

Generally, the government welcomes and seeks foreign direct investment; however, the current investment climate poses considerable risks for U.S. or other foreign investors. Formal economic activity is largely restricted to Mogadishu and the regional capitals that are under the control of the federal government or regional administrations. Somalia lacks a legal framework that would provide the basis for safe investment, including a strong judiciary, enforceable property rights and arbitration and dispute resolution processes. Corruption is rife in all government sectors and civil courts are largely non-functional. Despite economic reforms, according to Transparency International’s perception index, Somalia was perceived to be the most corrupt country in the world again in 2019. Despite this, there has been a positive economic trend over the past couple of years. According to the International Monetary Fund (IMF), economic growth has rebounded, inflation has slowed, and the trade deficit has narrowed. Somalia’s Ministry of Finance reports domestic revenue collection in 2019 reached $230 million, up from $183 million in 2018. Economic sectors such telecommunications, agriculture and construction have experienced steady growth in recent years. The current administration has undertaken crucial reforms, including biometric registration of security personnel, paying civil servants by direct deposit, and fighting rampant corruption in the public sector. This has significantly raised the confidence of the Somali people, as well as Somalia’s international partners. Further, Somalia’s government is inviting bids for an offshore hydrocarbon licensing round.