An Exciting New Business Just Opened in Mogdishu

[Idilinaa]

exactly . For us to build a serious industrial base will take decades. But there are things we could do speed this up. One of the things I think that would be intresting for a future administration to do over the next decade is to create some special initiatives or programs that work with Somali owned foreign companies in other parts of the world that do stuff like manufacturing or construction or engineering. give them a tax break or some other perks to setup branches in somalia and maybe even move their headquarters here . I could easily see once we have something like this setup it would help skilled diaspora engineers or other similar types of professionals quickly contribute by being hired as employees of these companies.

Right now Somalia is at Initial Industrialization and Basic Manufacturing stage this will take around 5-10 years. Like agricultural processing, textiles and garments and basic consumer goods manufacturing(soaps, bottled water, construction materials, boats, aliminium, plastic pipes, wires, glass, cement, stone processing, furniture etc etc)

I like how Somalia is approaching this with small to medium sized localized factories spread across. This decentralized and localized approach makes production: Cheaper to set up, Faster to deploy, More resilient to disruption etc

This is bottom up industrialization and laying scalable foundation. It shows Somalia is developing from the ground up, not waiting for massive foreign investment or mega projects.

Establishing intermediate and advanced manufacturing will probably take 15 at minimum or 30 years realistically speaking. . It would require: Large-scale infrastructure (ports, logistics hubs, rail, energy grid upgrades), Skilled labor force, Technology transfer and investment, Industrial clusters or special economic zones.

We're already beginning to see the early signs of this shift, and also starting to see Somalia entering intermediate manufacturing through projects like the steel mill in Mogadishu (SomSteel) but in totality achieving this transition at a national scale it will take many tens of billions of dollars. Even paving all of 18,970 km remaining roads is estimated to cost $9.5 billion USD

What would be a game changer is oil and mining revenue. It would speed things up as well. It could cut the timeline down by 5–10 years, especially if combined with smart investment, transparency, and regional integration.

Revenue could fund national infrastructure (railways, roads, industrial zones). Resource-based processing industries (e.g., refining, petrochemicals, metal smelting) could be built domestically.

 

[Idilinaa]

Found this newly Somalia Business Directory although it is incomplete and large number of businesses/industries are left out of the listing, it shows you that hotels are a minority. The vast majority of industries and businesses are in diverse sectors.

Tourism and Hospitality is actually just logistic, airline/travel and cargo services when you click on it. The fact that there is so many of them 854 shows you that Somalia is essentially a regional trade hub, with large volume of travel and movement of goods. Somalia is clearly a transit corridor for goods across East Africa

Another thing is the sheer number of construction, energy and engineering companies 667 shows Somalia’s internal development.

Home | Kulmie Business Directory

www.kulmie.com

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[geeljre49]

Right now Somalia is at Initial Industrialization and Basic Manufacturing stage this will take around 5-10 years. Like agricultural processing, textiles and garments and basic consumer goods manufacturing(soaps, bottled water, construction materials, boats, aliminium, plastic pipes, wires, glass, cement, stone processing, furniture etc etc)

I like how Somalia is approaching this with small to medium sized localized factories spread across. This decentralized and localized approach makes production: Cheaper to set up, Faster to deploy, More resilient to disruption etc

This is bottom up industrialization and laying scalable foundation. It shows Somalia is developing from the ground up, not waiting for massive foreign investment or mega projects.

Establishing intermediate and advanced manufacturing will probably take 15 at minimum or 30 years realistically speaking. . It would require: Large-scale infrastructure (ports, logistics hubs, rail, energy grid upgrades), Skilled labor force, Technology transfer and investment, Industrial clusters or special economic zones.

We're already beginning to see the early signs of this shift, and also starting to see Somalia entering intermediate manufacturing through projects like the steel mill in Mogadishu (SomSteel) but in totality achieving this transition at a national scale it will take many tens of billions of dollars. Even paving all of 18,970 km remaining roads is estimated to cost $9.5 billion USD

What would be a game changer is oil and mining revenue. It would speed things up as well. It could cut the timeline down by 5–10 years, especially if combined with smart investment, transparency, and regional integration.

Revenue could fund national infrastructure (railways, roads, industrial zones). Resource-based processing industries (e.g., refining, petrochemicals, metal smelting) could be built domestically.

Do you believe Somalia has oil? And if so, is it enough to significantly boost our revenue?

 

[Idilinaa]

Do you believe Somalia has oil? And if so, is it enough to significantly boost our revenue?

It has been proven it has oil reserves. So it's not a matter of belief.

Research indicates that there are proven reserves of 35 billion barrels of oil in the Somali maritime zone.

and it could announce its oil production by the end of this year or next year.

Mogadishu (HOL) – Somali Minister of Petroleum and Mineral Resources, Dahir Shire Mohamed, announced that the majority of oil exploration conducted by the Turkish company in Somalia has been completed, and Somalia could announce its first oil production by the end of this year or early 2026.

Somalia to announce first oil production by 2026, minister says

Mogadishu (HOL) – Somali Minister of Petroleum and Mineral Resources, Dahir Shire Mohamed, announced that the majority of oil exploration conducted by the Turkish company in Somalia has been completed, and Somalia could announce its first oil production by the end of this year or early 2026.

www.hiiraan.com

The government is establishing a state owned oil company. Called Somali National Oil Company (SONOC) and drafted a 2020 Petroleum Law, and a Somali Petroleum authority. What good about it is that it is modeled after after successful companies like Norway’s Equinor (Statoil), allows Somalia to own a piece of its resources, instead of just collecting taxes and royalties.

SONOC holding up to 30-20% in oil projects ensures long-term revenue, influence, and capacity-building

Another good thing the law allows for regional petroleum companies controlled by Federal Member States to achieve up to 10% ownership in petroleum projects under these agreements.. it's a smart political move. It creates:

• Local buy-in and support
• Revenue sharing across regions
• Incentives for stability and cooperation

Having the Somali Petroleum Authority (SPA) as a separate regulator (not the same entity as SONOC) promotes:

• Transparency
• Checks and balances
• Better oversight of contracts and environmental standards

Somalias approach is excellent , it has a federal sharing system, seperate regulator, ownership, local participation, Modern legal framework, Decentralized Industrial Policy(Across all sectors)

The key challenge will be for the Somali government to negotiate favorable terms with foreign oil companies, use its revenue wisely,

The current government unlike say the Kacaan regime don't really have any lucrative state owned industries it could pull revenue from to self finance itself and it struggles to tax the massive informal economy , so it's taxation-to -GDP ratio is extremely low. It only gains revenue from taxing modest amount of international trade.

So the the state owned oil company will be potentially the first state owned industry they can pull large amounts revenue from to fund development and finance governance. It will create a sort of self-financing mechanism and investment vehicle.

So what @Midas has been saying is right, it could be a game changer.

 

[Midas]

O

It has been proven it has oil reserves. So it's not a matter of belief.



and it could announce its oil production by the end of this year or next year.

Somalia to announce first oil production by 2026, minister says

Mogadishu (HOL) – Somali Minister of Petroleum and Mineral Resources, Dahir Shire Mohamed, announced that the majority of oil exploration conducted by the Turkish company in Somalia has been completed, and Somalia could announce its first oil production by the end of this year or early 2026.

www.hiiraan.com

The government is establishing a state owned oil company. Called Somali National Oil Company (SONOC) and drafted a 2020 Petroleum Law, and a Somali Petroleum authority. What good about it is that it is modeled after after successful companies like Norway’s Equinor (Statoil), allows Somalia to own a piece of its resources, instead of just collecting taxes and royalties.

SONOC holding up to 30-20% in oil projects ensures long-term revenue, influence, and capacity-building

Another good thing the law allows for regional petroleum companies controlled by Federal Member States to achieve up to 10% ownership in petroleum projects under these agreements.. it's a smart political move. It creates:

• Local buy-in and support
• Revenue sharing across regions
• Incentives for stability and cooperation

Having the Somali Petroleum Authority (SPA) as a separate regulator (not the same entity as SONOC) promotes:

• Transparency
• Checks and balances
• Better oversight of contracts and environmental standards

Somalias approach is excellent , it has a federal sharing system, seperate regulator, ownership, local participation, Modern legal framework, Decentralized Industrial Policy(Across all sectors)

The key challenge will be for the Somali government to negotiate favorable terms with foreign oil companies, use its revenue wisely,

The current government unlike say the Kacaan regime don't really have any lucrative state owned industries it could pull revenue from to self finance itself and it struggles to tax the massive informal economy , so it's taxation-to -GDP ratio is extremely low. It only gains revenue from taxing modest amount of international trade.

So the the state owned oil company will be potentially the first state owned industry they can pull large amounts revenue from to fund development and finance governance. It will create a sort of self-financing mechanism and investment vehicle.

So what @Midas has been saying is right, it could be a game changer.

One of the reasons I talk so much about oil revenues. Is because the oil industry seems to be the only get rich quick economic shortcut that works. It's not vene just the gulf states even Russia's recovery from the societ collapse and Iran survival after being sanctioned decades ago is all because of oil revenues. Even Singapore( which by the way has a gdp per capita of 80k+) generated its intial economic growth from being the place to refine oil.

 

[Zak12]

O

One of the reasons I talk so much about oil revenues. Is because the oil industry seems to be the only get rich quick economic shortcut that works. It's not vene just the gulf states even Russia's recovery from the societ collapse and Iran survival after being sanctioned decades ago is all because of oil revenues. Even Singapore( which by the way has a gdp per capita of 80k+) generated its intial economic growth from being the place to refine oil.

Oil more often than not isn't really a viable get rich quick scheme since you are at risk of not having any other sector to develop. Many rich countries use oil as an additional boost to their economy, not the main source of their wealth. Norway and Saudi Arabia are good examples of that dichotomy, the former is diverse economically while the latter has little in way of industries and mainly relies on foreign labor. That isn't sustainable and countries like Singapore instead focused on developing strong human capital instead.

As Idilina said, Somalia should focus on using oil to shorten industrialization time and as a quick stimulation to its languishing public sector but not as a main source of revenue.

 

[Zak12]

@Midas This sums up my point well regarding how oil is used by various countries

@Shimbiris @NidarNidar @Hurder @NordicSomali @Taintedlove

The Gulf Economies (UAE, Kuwait, Qatar , Saudi etc) are doomed in the long run.

Oil is running out and at the same time fossil fuel is becoming less in demand.

The attempts diversify is not even working, they try to move away from it by building tourism, finance, and tech sectors but all rely on foreign labor and expertise.

Most of their "new industries" are still funded by oil money, meaning they are not self-sustaining.

They lack local human capital, most citizens are not involved in economic productivity.

You cannot "diversify" an economy that is 80% dependent on foreign workers. Local Gulf citizens lack the work ethic, technical skills, and industrial base to sustain these economies without oil.

Their extreme dependence on foreign labour & capital is their achilees heel. The Gulf economies rely almost entirely on migrant labor from construction to service industries.

For example 90% of Dubai’s workforce is foreign, what this means is that if the expats leave, the economy collapses.

Investors are already pulling out due to political instability, corruption, and declining oil revenues. Once oil revenues drop, these economies will no longer be attractive to investors or expats.

They also are losing influence and are weak innovators. Gulf nations have little technological innovation, they mostly import expertise from the West and Asia. China and India are developing their own energy independence, meaning they will not rely on Gulf oil forever. Western countries are diversifying their energy sources, weakening the Gulf’s geopolitical leverage.

They drive massive government spending into unrealistic mega projects , that don't create real economic growth. End up in-debt. Kuwait and Bahrain for example are struggling with rising debt.
Dubai and other Gulf cities are built on real estate bubbles, not sustainable industries.

Unlike countries like Japan, Singapore, or Norway, they did not build strong local industries.

I am also pretty sure they bit their own tail by entangling themselves into regional geo-politicial conflicts and threats, by playing manipulators and infighting. So it will all just converge into them once they don't have the wealth and influence defend against it.

Also Internal dissatisfaction will rise, since the native citizens are used to easy wealth but are now being forced to work harder. The elite ruling families will not survive and economic hardship will spread, they will all fall like domino.

 

[Midas]

Oil more often than not isn't really a viable get rich quick scheme since you are at risk of not having any other sector to develop. Many rich countries use oil as an additional boost to their economy, not the main source of their wealth. Norway and Saudi Arabia are good examples of that dichotomy, the former is diverse economically while the latter has little in way of industries and mainly relies on foreign labor. That isn't sustainable and countries like Singapore instead focused on developing strong human capital instead.

As Idilina said, Somalia should focus on using oil to shorten industrialization time and as a quick stimulation to its languishing public sector but not as a main source of revenue.

By get rich quick shortcut I meant that it's the only realistic way for a country to indutralize quickly. Since it allows a country to have money that they can invest into infrastructure and other projects to speed up indutralization. Saudi Arabia and the gulf countires were in a unique situation where they had incredibly small pouplations and were incredibly poor.

 

[Midas]

@Midas This sums up my point well regarding how oil is used by various countries

Yeah this applies to Saudi arabai but the other gulf countires have already diversified away from oil with the oil sector only representing 15% of uae gdp. They also have a very small native pouplation which is less than a million.