Regional trade is very important in Somalia’s economic system, which is increasing very fast with time. The country’s GDP is growing at an average rate of 3.4% per annum. Somalia’s inclusion in the African Continental Free Trade Area improves market access, which improves Somalia’s economic system.
The country is bordered by the Red Sea and the Gulf of Aden. Due to this, the importance of sea trade is increasing. This can develop Somalia commercially. Trade opportunities are increasing, which is very important for the country’s development.
Also, efforts to improve infrastructure are attracting foreign investment. Regional trades are increasingly involved, with trade with Ethiopia and Kenya being an important initiative. which is very important for the economic development of Somalia.
Strategic Location and Maritime Trade Potential
Maritime trade is also developing rapidly in Somalia. Because Somalia controls more than 3,300 kilometers of coastline. This makes it one of the longest beaches in Africa. Some important shipping routes facilitate the country’s trade with Europe, Asia, and the Middle East.
These trades are very important for the economic and commercial development of Somali society. These trades play a very important role in the country’s development. Maritime trade is growing in Somalia’s main ports, Mogadishu and Berbera. Which is playing an important role in commercial development. Apart from this, the cargo movement is increasing by 10 to 15% annually. These are important steps to strengthen Somalia’s infrastructure.
Somalia’s Role in the African Continental Free Trade Area (AfCFTA)
Somalia’s integration into the African Continental Free Trade Area (AFCFTA) increases market access. In 2021, Somalia officially joined the (AFCFTA). This opened a $3.4 trillion market in 54 African countries. These markets have had a profound impact on financial inclusion and infrastructure in Somalia and are likely to boost Somalia’s economy and economic growth.
Due to lower tariffs and improved trade flows, Somalia’s exports have increased. In the next decade, Somalia’s exports have the potential to grow by 20.25%, especially in livestock and agriculture, which constitute the main share of Somalia’s exports. The main objective of the African Continental Free Trade Area is to increase intra-African trade from 15% to 25% by 2030, which will increase exports and grow the economy.
Infrastructure Development and Foreign Investment in Regional Trade
Somalia is making great efforts to develop infrastructure and improve regional trade. Currently, the government of Somalia is investing in various sectors of its country along with neighboring countries like Turkey, United Arab Emirates, and China. This will increase Somalia’s GDP by 5 to 6% annually.
A 7 to 10% annual increase in Somalia’s GDP is being recorded in foreign investment. Most foreign investment is being made in Somalia’s basic infrastructure, energy, ports, roads, and airports. This investment will employ the unemployed people of Somalia and improve the economy of the country.
Due to better strategy and measures Somalia, its economic condition is also improving. Especially with foreign investment, the economic growth of Somalia has increased from 3 to 5% annually. Foreign investment has not only increased economic development, but its livelihood will also be better than before. In terms of trade, Somalia’s trade with neighboring countries such as Kenya and Ethiopia will increase by 15 to 20%. And because of this trade, Somalia’s total GDP will increase by 5 to 6% annually.
