Investment Opportunities in the Agriculture Sector


Agriculture is one of the most important sectors in the Somali economy when we see its contribution to national food security, income earnings and employment. It accounts for about 20% of the GDP and employs 30% of the workforce.

It is second to Livestock sector which contributes about 40% to GDP and more than 50% of export earnings (see table 1 & 2). Livestock (consisting primarily of camels, cattle, goats, and sheep), hides and skins, fish, charcoal, frankincense, sesame and lemons are Somalia’s main export products, while sugar, rice, qat, electronics, construction materials and manufactured foods are the principal imports. In 2014, the export data indicates that Somalia exported 4.6 million goats and sheep, 340,000 cattle and 77,000 camels in 2014, worth an estimated $360 million (Figure 1). Somalia’s small industrial sector, based on the processing of agricultural products, has largely been destroyed or looted during the civil war in 1990’s and did not recover due to lack of infrastructure and investments support.

Table 1: Contribution of Agriculture sector to GDP 2000-2009

Economic indicators




GDP: Gross domestic product (million current US$)

2 052

2 316

2 012

GDP: Growth rate at constant 1990 prices (annual %)




GDP per capita (current US$)




GNI: Gross national income per capita (current US$)




Share of Agriculture  to  GDP (%)




Share of Industry to  GDP (%)




Share of Service to  GDP (%)





Table 2: Estimated Share of Livestock, agriculture, fishery and forest contribution to agriculture sector





Share of Agriculture to GDP (%)




Livestock (%)




Agriculture (%)




Fishery (%)




Forestry (%)




According to the official reports from central Bank of Somalia, imports of goods total about $460 million per year, and have recovered and even surpassed aggregate imports prior to the start of the civil war in 1991. Exports, which were estimated to be $270 million annually, have also surpassed pre-war aggregate export levels but still lead to a trade account deficit of about $190 million US dollars per year. However, this trade deficit is far exceeded by remittances sent by Somalis in the diaspora, which have helped sustain the import levels and National balance of payment.

Figure1: Total annual trend of livestock exports in Somalia 2009-2014

Source: FAO, 2015

Agriculture production remains today the second most important production system after the Livestock sector in Somalia. In the past, agriculture contributed up to 19 per cent of GDP and accounted for some 20 per cent of employment (IUCN, 1997), but current values are expected to be higher although is not known. Southern Somalia’s alluvial plains are the country’s most fertile soils and, together with the inter-riverine area of Bay, used to account for almost 90 per cent of agricultural production.

It supplies much of the local food consumption and accounts for 25% of the country’s foreign exchange earnings. Somali agriculture is characterized by a variety of crops. Cereals, particularly maize and sorghum are the most important (accounting for 80% of the cultivated land area), followed by fruit and vegetables (10% of the cultivated land area). Of the remaining crops, sesame is important as an export crop and cowpea is vital because it provides all of the country’s bean requirements. Crop production uses both rain-fed and irrigation systems. The Somalis have traditionally engaged in rain-fed dry-land farming or in dry-land farming complemented by irrigation from the waters of the Shabeelle and Jubba rivers. Corn, sorghum, beans, rice, vegetables and sesame are grown by both methods. In 1980 about 50,000 ha were under controlled irrigation and 110,000 ha under flood irrigation. Large commercial schemes of irrigated sugarcane, rice, banana, citrus and other fruits used to operate in the Shabelle river below Jowhar (middle Shabelle regions) and in the Juba river below Jilib ( middle Juba region). Since the early 1990s, much of the irrigation infrastructure has deteriorated as the result of civil war and instability. However, the opportunities exist to revive old schemes or to grow the same crops in smaller schemes.

Two and a half decades ago, the country was a net exporter of agricultural products to regional markets. Due to war-related destruction, poor infrastructure and lack of investment in the agriculture sector, Somalia is now a net importer of food. It currently imports as much as 60% of its needs, including 80% of its cereals from international markets (rice). Total food imports are estimated to be in the range of $100-150 million a year.

Table 3: Trend of Annual crop production in Somalia 2010-2014 (metric tones)


Cereal production(MT)

Sesame Production (MT)
















Source: FSNAU, 2015

Much of the sector activity is currently focused on low-output subsistence agriculture instead of production for markets. Among the significant reasons for this are: (i) It involves small scale farmers scattered over wide expanses of land area, with small holding ranging from 0.5 to 3.0 hectares per farm land, which are characterized by rudimentary farm systems, low capitalization and low yield per hectare (ii) the need for improved agricultural inputs and techniques such as seeds and fertilizers, storage facilities and advisory services, and irrigation development; (iii) the difficulties faced by farmers in accessing markets due to the poor road network, lack of other transport modes and nuisance taxes and charges; (iv) the lack of a critical mass of farmer and rural producer associations as a means of entering the market place with the aim of minimizing the cost of inputs, accessing loan finance at affordable rates and influencing farm-gate prices; and (v) uncertainties pertaining to political instability.

However, there is great potential to cater to export markets for bananas, sesame, limon, hides and skins. According to the Somali Federal government priority investment sectors, the fruit and vegetable sector is a high priority industry for the development of the rural sector. In particular, the agricultural products export market at US$ 100 million in 2013 is a nascent but fast growing business with good long term prospects. The following sub-sectors are very high potential for export and have good opportunities to invest:

2.1 Cereals

Around 80% of crop harvests in Somalia are cereals, particularly maize and sorghum. According to the Food and Agriculture Organization of the United Nations (FAO), Somali produced 230,000 MT of cereals annually between 1995-2014, which 57% of production is sorghum, while rest is maize. Most of the production comes from southern regions of Lower Shabelle, Bay, Middle Shabelle, Juba region, Gedo and Hiiran. These crops are the major dietary energy suppliers and provide significant amount of protein, minerals (potassium and calcium) and vitamins (vitamin A and C). They also represent an important source of income for both riverine and agro pastoral communities, as the cultivation provides farm labor opportunities to poor farmers. In addition to that, the bran, husk, plant parts and other residues are useful as animal feeds.

However, the sectors are mostly involved in small scale farming with small holding ranging from 0.3 to 1.0 hectare per farm land, which are characterized by rudimentary farm systems. Most of the farmers lack technology and financial power to increase production and yield per hectare although the frequent occurrence of drought occasioned by erratic rainfall distribution and/or cessation of rain during the growing season is the greatest hindrance to increased harvested crops. The lack of private business participation in the cereal sector has hindered the potential production increase to meet the national demand of cereals, particular rice and maize which have high demand in growing populations.

2.2 Bananas

The banana subsector had been one of the major foreign exchange earner in Somalia only second to livestock up to 1990s; when the export market collapsed due to civil war. At its peak, banana plantation covered around 12,000 hectares, employing over 120,000 persons. The banana business increased with more than two-thirds of export quality being exported to Europe, especially Italy and the Middle East which were the main destination markets. As a result, the banana industry has developed as a traditional agribusiness- exporting chain, and exports 90,000 metric tones annually, amounting to USD 25 million. This volume is equivalent to 13% of the total export volume and contributes to 5.4% of the GDP. Another 50,000 metric tons of banana were consumed locally.

The onset of civil war in the early 1990s saw banana production decline, although the export sector was partially revived from 1993-97, and finally collapsed in late 1997 due to floods, input constraints, political instability and loss of preferential trade conditions. The earlier production of banana was run by the Somali parastatal and the Italian De Nadai group merged in a joint venture called Somali fruit which managed the packaging and marketing of Somali banana, while banana plantation farmers were responsible for productions. Currently only about 2,000 hectares are estimated to be under banana cultivation for serving the domestic market throughout Somalia compared to 12,000 ha before the breakup of the war. Although banana exports are not feasible with the present security conditions, banana remains the most promising agricultural export from Somalia should peace and stability return. For this reason, the Somali Federal Government, through bilateral donor’s supports, has started to finance the introduction and testing of improved tissue culture varieties center. They also repaired the primary canals for banana irrigation in lower Shabelle. This will improve the production of bananas for the domestic market in the short run and allow Somalia to restart exports once peace and stability have returned.

Production of bananas for export is concentrated in the lower Shabelle and Lower Jubba regions, which are located in Southern Somalia, whereas banana production for the domestic market is widespread but exhibits a much lower crop area and volume. Banana production in Somalia started in 1927 in the Lower Shabelle region in the south, with more than 32,000 tons exported every year. The River Shebelle is a main source of water irrigation, supplemented by some use of groundwater from boreholes, when river levels are low.

The prosperity of the banana sector is seen by many to be important to the stability of Somalia and job creation. Therefore both the Somali federal government and donors are keen to give the priority in the national development strategy planning. They encourage the private sector (both local and international investors) to participate and invest in banana sectors. The banana plantations mostly are situated in the riverine areas of Shabelle and Juba Valleys where access to irrigation and other infrastructures such as export facilities are within reach.

Currently Banana is one of the commercially cultivated fruit crops cultivated in 1,400-2,000 ha in the Lower Shabelle region. Growing bananas on a large scale and in combination with investments in package facilities will enhance fruit production thereby generating income and employment throughout the year for the farming community as well as country.

Successfully growing and exporting of more tropical fruits will require extensive private and public investments in expanding production and improving the supply chain links into rural areas. Despite the possibilities, significant challenges still remain. These include inadequate financial services, poor rural infrastructure that hampers access to markets, weak agricultural research and extension services, lack of control to pests and diseases, and a shortage of skilled labor. Lack of European markets access, political disruption in the Lower Shabelle region and recurrent floods have impeded banana production.

Table 5: Volume and Value of Banana Export Somalia,1981-1990


Banana export (MT)

Value ( US$ million)
































Sesame is another important crop of Somalia’s agricultural production and export. The crop is grown in all southern regions of Somalia. It is a high value crop with ready domestic, regional and international markets. Sesame is produced by smallholder farmers who grow it both for home consumption and as a cash crop. With the recent surge in global demand for sesame and sesame oil, farmers in Somalia have turned increasingly to growing sesame as a cash crop. The production of sesame in the past six years has shown a tremendous increase. In 2014, the sesame production was 40,200 Metric tones (Table 4), where 30% of the production was exported. Major destinations for export include China and the Middle East. The higher demand of Sesame is due to its many uses both in domestic and export markets. The crop is used as an additive for bread and the confectionery industry, for food in Middle Eastern cuisines, and as a source of valuable and high quality oil for local consumption. However, due to excess sesame supply in the market and falling global prices since early 2015 as the result of demand contraction in the China market, many sesame farmers have reduced planted areas.

Table 4: Trend of Annual Sesame produc- tion in Somalia 2010-2014 (metric tones)


Sesame Production(MT)












The wide range of the sesame seeds market is a great opportunity to earn additional foreign exchange for the country if its production potentials are exploited. The realization of the potential of sesame production in the acquisition of foreign currency and food security for the country made increased production of the crop a prominent priority in the national Agenda of the Federal Government. To this end, farmers are being encouraged to produce sesame in all southern regions of the country. Somalia does not have the technology to produce significant output of sesame for export in view of the current condition in terms of yield and technology.

Needed policies

To attract the needed private investment, the government policies should be designed in a manner that will make it easier and more attractive for investors to lease and develop large tracts of land into commercial scale farms. Furthermore, the federal government should offer several incentives to facilitate private sector investments in the form of duty free imports of agriculture machinery and low tax rate for export income. Public private partnership models are already in place to lease or auction / lease suitable parcels of land to the targeted sectors such as Banana, Sesame, vegetable cultivation, Dairy farms and processing facilities. As I mentioned earlier, agriculture is the main stay of Somalia’s Economy with abundant opportunities for investment in the following areas:

• Revitalization and Improving rural infrastructures (roads, packaging facilities, experimental and extension centers)
• Improvement and repairing the irrigation systems and water distributions
• Development of production support services, with particular emphasis on how the private sector can be harnessed to provide various services including input delivery and mechanization.
• Reducing illegal taxation and road blocks which hindering the transportation of harvests to main markets.
• Expansion of agricultural markets, value chain development and finance, with special emphasis on agribusiness development.

Investment opportunities in Agriculture

As I mentioned earlier, agriculture is the main stay of Somalia’s Economy with
abundant opportunities for investment in the following areas:

» Fruits (Banana, Mangoes, Melon, Lemon, etc.)
» Cereals (rice, corn, sorghum, etc.)
» Sesame and sunflower.
» Industrial crops ( cotton, Sugarcane)
» Seed productions.
» Manufacture of fertilizers, prayers and pesticides.
» Installation of irrigation systems to forestall the overreliance of rain fed agriculture; which is susceptible to variation of the weather.
» Hides, Skins and leather products.
» Milk and milk processing.
» Dairy farming.
» Veterinary medicine and services.
» Adjacent business including processing, equipment, inputs, packaging and crop marketing.

Why invest to Somalia

Somalia presents unique opportunities and cuts a competitive edge in the horn of Africa region as a good prospective location for investment. It stands out because of the following reason:

Strategic location: Somalia is strategically located in the Horn of Africa allowing easy access to international transportation hubs in both the Red sea and Indian Ocean. There are four main ports with are a short distance to and from the main agriculture production areas.
Large arable land: Somalia holds large agriculture potential, with almost 10 million hectares suitable for farming. Varied climactic zones, fertile soil and ample water create ideal conditions for a wide variety of food and cash crops, with the potential of yielding two crop cycles (Gu’ and Deyr rainy season) a year in much of the country. There are many agriculture opportunities with high return on investment, including bringing current production to scale, developing new production capacities, and investing in processing facilities, storage, and commercialization.
Labor force: large pool of cheap and young labor forces.
Well established and mature private sector: the private sector is the engine of economic growth and rebuilding of the country, and there have been adopted various policy options aimed at facilitating and providing and optimum environment for enhanced private sector growth. The Somali market is fully liberalized with no restriction on capital transfers and low barriers for market entry.

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