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Somalia vs. Ethiopia

Economy

SomaliaEthiopia
Economy - overview

Despite the lack of effective national governance, Somalia maintains an informal economy largely based on livestock, remittance/money transfer companies, and telecommunications. Somalia's government lacks the ability to collect domestic revenue and external debt - mostly in arrears - was estimated at about 77% of GDP in 2017.

Agriculture is the most important sector, with livestock normally accounting for about 40% of GDP and more than 50% of export earnings. Nomads and semi-pastoralists, who are dependent upon livestock for their livelihood, make up a large portion of the population. Economic activity is estimated to have increased by 2.4% in 2017 because of growth in the agriculture, construction and telecommunications sector. Somalia's small industrial sector, based on the processing of agricultural products, has largely been looted and the machinery sold as scrap metal.

In recent years, Somalia's capital city, Mogadishu, has witnessed the development of the city's first gas stations, supermarkets, and airline flights to Turkey since the collapse of central authority in 1991. Mogadishu's main market offers a variety of goods from food to electronic gadgets. Hotels continue to operate and are supported with private-security militias. Formalized economic growth has yet to expand outside of Mogadishu and a few regional capitals, and within the city, security concerns dominate business. Telecommunication firms provide wireless services in most major cities and offer the lowest international call rates on the continent. In the absence of a formal banking sector, money transfer/remittance services have sprouted throughout the country, handling up to $1.6 billion in remittances annually, although international concerns over the money transfers into Somalia continues to threaten these services' ability to operate in Western nations. In 2017, Somalia elected a new president and collected a record amount of foreign aid and investment, a positive sign for economic recovery.

Ethiopia - the second most populous country in Africa - is a one-party state with a planned economy. For more than a decade before 2016, GDP grew at a rate between 8% and 11% annually - one of the fastest growing states among the 188 IMF member countries. This growth was driven by government investment in infrastructure, as well as sustained progress in the agricultural and service sectors. More than 70% of Ethiopia's population is still employed in the agricultural sector, but services have surpassed agriculture as the principal source of GDP.

Ethiopia has the lowest level of income-inequality in Africa and one of the lowest in the world, with a Gini coefficient comparable to that of the Scandinavian countries. Yet despite progress toward eliminating extreme poverty, Ethiopia remains one of the poorest countries in the world, due both to rapid population growth and a low starting base. Changes in rainfall associated with world-wide weather patterns resulted in the worst drought in 30 years in 2015-16, creating food insecurity for millions of Ethiopians.

The state is heavily engaged in the economy. Ongoing infrastructure projects include power production and distribution, roads, rails, airports and industrial parks. Key sectors are state-owned, including telecommunications, banking and insurance, and power distribution. Under Ethiopia's constitution, the state owns all land and provides long-term leases to tenants. Title rights in urban areas, particularly Addis Ababa, are poorly regulated, and subject to corruption.

Ethiopia's foreign exchange earnings are led by the services sector - primarily the state-run Ethiopian Airlines - followed by exports of several commodities. While coffee remains the largest foreign exchange earner, Ethiopia is diversifying exports, and commodities such as gold, sesame, khat, livestock and horticulture products are becoming increasingly important. Manufacturing represented less than 8% of total exports in 2016, but manufacturing exports should increase in future years due to a growing international presence.

The banking, insurance, telecommunications, and micro-credit industries are restricted to domestic investors, but Ethiopia has attracted roughly $8.5 billion in foreign direct investment (FDI), mostly from China, Turkey, India and the EU; US FDI is $567 million. Investment has been primarily in infrastructure, construction, agriculture/horticulture, agricultural processing, textiles, leather and leather products.

To support industrialization in sectors where Ethiopia has a comparative advantage, such as textiles and garments, leather goods, and processed agricultural products, Ethiopia plans to increase installed power generation capacity by 8,320 MW, up from a capacity of 2,000 MW, by building three more major dams and expanding to other sources of renewable energy. In 2017, the government devalued the birr by 15% to increase exports and alleviate a chronic foreign currency shortage in the country.

GDP (purchasing power parity)$20.44 billion (2017 est.)

$19.98 billion (2016 est.)

$19.14 billion (2015 est.)

note: data are in 2016 US dollars
$248.972 billion (2019 est.)

$229.755 billion (2018 est.)

$215.094 billion (2017 est.)

note: data are in 2010 dollars
GDP - real growth rate2.3% (2017 est.)

4.4% (2016 est.)

3.9% (2015 est.)
10.9% (2017 est.)

8% (2016 est.)

10.4% (2015 est.)
GDP - composition by sectoragriculture: 60.2% (2013 est.)

industry: 7.4% (2013 est.)

services: 32.5% (2013 est.)
agriculture: 34.8% (2017 est.)

industry: 21.6% (2017 est.)

services: 43.6% (2017 est.)
Population below poverty lineNA23.5% (2015 est.)
Household income or consumption by percentage sharelowest 10%: NA

highest 10%: NA
lowest 10%: 4.1%

highest 10%: 25.6% (2005)
Inflation rate (consumer prices)1.5% (2017 est.)

-71.1% (2016 est.)
15.7% (2019 est.)

13.9% (2018 est.)

10.8% (2017 est.)
Labor force4.154 million (2016 est.)52.82 million (2017 est.)
Labor force - by occupationagriculture: 71%

industry: 29%

industry and services: 29% (1975)
agriculture: 72.7%

industry: 7.4%

services: 19.9% (2013 est.)
Unemployment rate

NA

17.5% (2012 est.)

18% (2011 est.)
Budgetrevenues: 145.3 million (2014 est.)

expenditures: 151.1 million (2014 est.)
revenues: 11.24 billion (2017 est.)

expenditures: 13.79 billion (2017 est.)
Industrieslight industries, including sugar refining, textiles, wireless communicationfood processing, beverages, textiles, leather, garments, chemicals, metals processing, cement
Industrial production growth rate3.5% (2014 est.)10.5% (2017 est.)
Agriculture - productscamel milk, milk, sheep milk, goat milk, sugar cane, fruit, sorghum, cassava, vegetables, maizemaize, cereals, wheat, sorghum, milk, barley, sweet potatoes, roots/tubers nes, sugar cane, millet
Exports$819 million (2014 est.)

$779 million (2013 est.)
$3.23 billion (2017 est.)

$2.814 billion (2016 est.)
Exports - commoditiesgold, sheep, goats, sesame seeds, insect resins, cattle (2019)coffee, sesame seeds, gold, cut flowers, zinc (2019)
Exports - partnersUnited Arab Emirates 47%, Saudi Arabia 19%, India 5%, Japan 5% (2019)China 17%, United States 16%, United Arab Emirates 8%, Saudi Arabia 6%, South Korea 5%, Germany 5% (2019)
Imports$94.43 billion (2018 est.)

$80.07 billion (2017 est.)
$15.59 billion (2017 est.)

$14.69 billion (2016 est.)
Imports - commoditiescigarettes, raw sugar, rice, broadcasting equipment, textiles (2019)aircraft, gas turbines, packaged medicines, electric filament, cars (2019)
Imports - partnersUnited Arab Emirates 32%, China 20%, India 17%, Turkey 7% (2019)China 27%, India 9%, United Arab Emirates 9%, France 9%, United Kingdom 7% (2019)
Debt - external$5.3 billion (31 December 2014 est.)$27.27 billion (2019 est.)

$26.269 billion (2018 est.)
Exchange ratesSomali shillings (SOS) per US dollar -

23,960 (2016 est.)
birr (ETB) per US dollar -

25 (2017 est.)

21.732 (2016 est.)

21.732 (2015 est.)

21.55 (2014 est.)

19.8 (2013 est.)
Fiscal yearNA8 July - 7 July
Public debt76.7% of GDP (2017 est.)

93% of GDP (2014 est.)
54.2% of GDP (2017 est.)

53.2% of GDP (2016 est.)
Reserves of foreign exchange and gold$30.45 million (2014 est.)$3.013 billion (31 December 2017 est.)

$3.022 billion (31 December 2016 est.)
Current Account Balance-$464 million (2017 est.)

-$427 million (2016 est.)
-$6.551 billion (2017 est.)

-$6.574 billion (2016 est.)
GDP (official exchange rate)$7.052 billion (2017 est.)$92.154 billion (2019 est.)
Ease of Doing Business Index scoresOverall score: 20 (2020)

Starting a Business score: 46 (2020)

Trading score: 51.6 (2020)

Enforcement score: 54.6 (2020)
Overall score: 48 (2020)

Starting a Business score: 71.7 (2020)

Trading score: 56 (2020)

Enforcement score: 62.8 (2020)
Taxes and other revenues2.1% (of GDP) (2014 est.)13.9% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)-0.1% (of GDP) (2014 est.)-3.2% (of GDP) (2017 est.)
GDP - composition, by end usehousehold consumption: 72.6% (2015 est.)

government consumption: 8.7% (2015 est.)

investment in fixed capital: 20% (2015 est.)

investment in inventories: 0.8% (2016 est.)

exports of goods and services: 0.3% (2015 est.)

imports of goods and services: -1.6% (2015 est.)
household consumption: 69.6% (2017 est.)

government consumption: 10% (2017 est.)

investment in fixed capital: 43.5% (2017 est.)

investment in inventories: -0.1% (2017 est.)

exports of goods and services: 8.1% (2017 est.)

imports of goods and services: -31.2% (2017 est.)

Source: CIA Factbook