Somalia losses $186m to COVID-19 as exports slump by 37%-report

GOOBJOOG NEWS|SOMALIA: Somalia’s economy contracted by 1.5 per cent in 2020 shedding off $186 million owing to the combined effect of COVID-19 and related shocks, a joint report by the government and the UN has revealed.

The Socio-Economic Impact Assessment (SEIA) released by the Ministry of Planning and the UN development agency UNDP warns that COVID-19 has erased economic gains since the 2017 drought which could be felt some years to come.

According to the report, the country also lost a growth opportunity of US$ 300 million as a result of the contraction. It noted that the ongoing assessment of the impact of COVID-19 shows that it could be worse than the 2017 drought.

“Currently, it seems like the COVID-19 pandemic will have a far worse aggregate impact than the devastating 2017 drought. Previous shocks such as export bans, drought, famine, floods and insecurity affected just a few sectors and/or Federal Member States (FMSs),” the report reads in part. “COVID-19 has however affected all sectors, bringing many of them to a temporary standstill.”

EXPORTS DECLINE

The IMF had projected a 4.4% economic growth in Somalia for 2020 but the combined effects of COVID-19, droughts, floods and locust invasions have laid waste that milestone. Exports have been worst hit as most countries imposed restrictions as a result of the pandemic.

“Overall exports have slumped by 37 per cent and by up to 50 per cent for livestock, devastating rural and nomadic communities for whom livestock exports are the main source of income,” UNDP said in a statement.

UNDP country representative Jocelyn Mason said that although Somalia had largely escaped the high mortality rates, the economic impact remains most pervasive.

“Somalia has so far avoided the catastrophic mortality rates seen in some other countries – largely thanks to swift and decisive government action – but we must also protect people from the economic fallout,” Mason.

“In this pandemic, we have seen that a global economic downturn is just one more external shock – like locusts, floods and droughts – to which Somalia is vulnerable. But we have also seen the resilience of the Somali people and we are determined to help the government build back better and greener while leaving no one behind.”

Remittances have however remained resilient falling by a marginal 0.5 percentage point. Remittances are projected to stand at 31.4% down from 31.9% the previous year.