Northern Somalia is very arid and is heavily reliant on imported food: rice from China, potatoes from Ethiopia and wheat from Italy. It is also dependent on Yemen for chicken, vegetables and beans.
But Yemen is in the grip of its most severe crisis in years, which is affecting its neighbours. Critical food imports have been suspended and Somali traders are suffering. Photograph: Dmitry Chulov/Dmitry Chulov
Northern Somalia’s dependence on imported food weakens the economy, and increases its vulnerability to famine. This reliance on imports is partly due to constraints on the agricultural industry’s access to the finance needed to spur technological change and growth: farmers cannot afford vaccinations needed for livestock or solar-powered irrigation systems for producing cash crops.
Since 1991, Somalia has not had a formal banking sector. Businesses are reliant on community trust and informal financial arrangements; large amounts of cash are routinely exchanged in the street.
Businesses often struggle when the US dollar – which is used to pay for imports – strengthens against the shilling. There are no saving mechanisms which constraints investment and growth.
Now things are changing. For the first time, Somalia’s biggest remittance company, Dahabshiil has introduced a new microfinance service which is helping farmers’ access credit to acquire the technologies to grow their business. One such technology is solar power. Somalia has one of the world’s most expensive electricity supplies, making it hard for small-scale businesses to survive. Solar powered water pumps help farmers improve the quality and volume of their produce. This photo shows spinach and lettuce production with and without solar power supplied by SolarGen Technologies.
Somali farmers and other businesses are now accessing credit to improve their output: import dependency will be reduced, exports will increase revenue and Somalia will work towards resilience against the negative impact of regional crises. The Somalia Stability Fund, a multi-donor fund supported by the European Union and many nations helps build relationships between the private sector, civil society and the government. The Fund is currently helping SolarGen Technologies and Dahabshiil, develop their ideas for a planned, long-term joint venture – a model of development and sustainability.
Source: The Guardian
