Somalia's Commerce and Industry Minister Jamaal Mohamed Hassan has emphasized the need to expand domestic manufacturing to reduce the country's heavy reliance on foreign products. The country imports goods worth nearly $9 billion annually, with some items potentially producible locally if manufacturers had better access to investment, infrastructure, and a supportive business environment. Hassan stated that he would prioritize working with individuals who produce goods, own factories, create jobs, and invest in the nation.
The International Monetary Fund projects Somalia's goods imports at $8.2 billion in 2026, with exports estimated at $1.3 billion, resulting in a significant trade deficit. Food accounts for a substantial portion of the import bill, with World Bank data showing that it made up about one-third of Somalia's merchandise imports in 2024, reaching $2.5 billion after a 26% increase from the previous year. The country also relies heavily on imported fuel, medicines, consumer goods, and construction materials.
Minister Hassan urged Somali businesses to invest more in manufacturing, citing the country's workforce and economic potential to produce a larger share of the goods it consumes. He also encouraged consumers to buy locally made products, arguing that stronger domestic demand could support job creation, reduce reliance on imports, and stimulate economic growth. However, Somalia's manufacturing sector faces longstanding challenges, including expensive electricity, limited access to financing, and weak infrastructure.
The World Bank has identified high energy costs as a significant constraint on business competitiveness and industrial expansion in Somalia. Electricity generation is heavily dependent on imported diesel, leaving businesses vulnerable to fluctuations in global fuel prices. A 2025 survey found that 71% of Somali households reported access to electricity, but only 21% received more than eight hours of power daily. Hassan acknowledged these challenges and stated that the government intends to work with businesses to ease them.
To address these issues, the Commerce Ministry plans to establish industrial and special economic zones aimed at attracting investment and expanding domestic production. The ministry is also drafting legislation covering commerce, competition, and consumer protection, as well as developing regulations for e-commerce. Hassan called on banks and investment firms to direct more financing toward manufacturing, agriculture, and fisheries, as investment currently remains concentrated in trade and construction.
Somalia's narrow export base has contributed to the persistent trade imbalance, with livestock traditionally being one of the country's main merchandise exports. Recurrent droughts and floods have constrained agricultural production, increasing demand for imported food. The push to expand domestic production comes as Somalia seeks new sources of private investment while economic growth remains under pressure, with the World Bank estimating 3% growth in 2025, slowing from 4% in 2023 and 2024.
The government's efforts to boost domestic manufacturing and attract investment come amid recent developments, including President Hassan Sheikh Mohamud's announcement of confirmed deposits of uranium, lithium, and cobalt. Mohamud stated that critical minerals could become an important area of economic development, with the world keenly interested in these resources. The Somalia Development Financing Forum was held in Mogadishu, where Mohamud's comments were made, highlighting the country's efforts to attract investment into its natural resources sector.
Key points
- Somalia imports goods worth nearly $9 billion annually.
- The country aims to boost domestic manufacturing to reduce reliance on foreign products.
- Somalia's manufacturing sector faces challenges including expensive electricity and limited access to financing.
