ABOUT SOMALIA

Amongst all the countries in the African continent, Somalia, officially the Federal Republic of Somalia, is located in the Horn of Africa, boasting the longest coastline in mainland Africa. It is the 9th most populous country in Africa. The capital of Somalia is Mogadishu, which is the largest and most populated city, serving as a vital economic hub. According to the report of the World Bank, Somalia has been classified as a Low-Income Nation, actively engaged in reconstruction and development after years of conflict. The currency of Somalia is the Somali Shilling (SOS), and the value of 1 Indian Rupee is approximately 6.57 Somali Shillings at the time of writing this article. The population of Somalia was estimated to be around 19 million in 2024. The neighboring countries of Somalia are Ethiopia to the west, Djibouti to the northwest, Kenya to the southwest, and it borders the Gulf of Aden to the north and the Indian Ocean to the east. The official language of the country is Somali, while Arabic is also widely spoken. The overwhelming majority of the Somali population practices Sunni Islam. Currently, Somalia has several international airports, including Aden Adde International Airport in Mogadishu, Hargeisa International Airport, and Bossaso International Airport, with flights available to various parts of the world, ensuring improving air connectivity. As Somalia is bordered by the Indian Ocean and the Gulf of Aden, it has several commercial seaports, notably Mogadishu, Berbera, and Bossaso, which are crucial for fulfilling the country’s trade requirements and serve as vital gateways for imported and exported goods.

The corporate income tax rate in Somalia is generally 30% for companies with annual figures above $30,000. However, the tax framework is continuously evolving as the country stabilizes. Opesh Group of companies will be helping you in completing the Due Diligence process which includes financial planning, registration process, business options and if required, even helping you find a rental property for your office.

Establishing a business in Somalia has to be done with utmost care, keeping in mind the evolving laws of the country. The Somali government has been working on strengthening its legal and regulatory framework to attract foreign investment. A foreign investor who is planning to start his business in Somalia can typically form various company types in the country, such as a Limited Liability Company (LLC), Joint Stock Company, or a Partnership. Foreign investors are generally allowed to own 100% of their company in Somalia, particularly in approved sectors, which is a key incentive.

In case an investor is planning to establish an LLC in Somalia or a corporation business setup, Opesh Group will be helping you in taking the right decision for setting up your business in Somalia and we will also guide you about how to follow the procedure while formulating your company in Somalia.

Types of Business which can be started in Somalia:

• Livestock: This is the backbone of the Somali economy, with a significant portion of the population engaged in pastoralism. Opportunities exist in livestock breeding, animal health, meat processing, dairy production, and export of live animals or processed products.
• Fisheries: With the longest coastline in mainland Africa, Somalia possesses vast untapped marine resources. Opportunities are immense in sustainable fishing, fish processing, aquaculture, seafood export (especially tuna), and related marine services.
• Telecommunications & ICT: Despite past challenges, Somalia has a robust and rapidly expanding mobile money and telecommunications sector. Opportunities lie in expanding internet connectivity, digital services, mobile financial solutions, e-commerce, and software development.
• Energy: Somalia has significant potential for renewable energy, particularly solar and wind, to address its energy deficit. Opportunities exist in developing solar farms, wind power projects, and providing off-grid energy solutions to communities.
• Agriculture: While rainfall is inconsistent, there’s potential in irrigated agriculture in fertile riverine areas. Opportunities include cultivating food crops (e.g., maize, sorghum, rice), horticulture, agro-processing, and improving farming techniques.
• Infrastructure & Construction: Years of conflict have left a significant need for infrastructure rebuilding. Opportunities are vast in constructing roads, ports, airports, public buildings, housing, and developing urban infrastructure.
• Logistics & Trade: Its strategic coastal location makes Somalia a potential hub for regional trade and logistics in the Horn of Africa. Opportunities exist in port management, warehousing, shipping services, and land transport.
• Hydrocarbons (Oil & Gas): Somalia has significant untapped offshore oil and gas reserves. While still in early stages of exploration and development, this sector holds enormous long-term potential for foreign investment.

Advantages of Starting Business in Somalia:

• Vast Untapped Resources: Somalia boasts abundant marine resources, significant livestock potential, and promising oil and gas reserves, offering long-term investment opportunities.
• Strategic Geopolitical Location: Its extensive coastline and position in the Horn of Africa are strategically vital for maritime trade routes, offering potential as a regional logistics hub.
• Reconstruction & Development Phase: As the country stabilizes, there’s massive demand for goods, services, and infrastructure, presenting opportunities for early movers in a rapidly developing market.
• Young and Dynamic Population: A large and youthful population provides a growing labor pool and a potential consumer market.
• Government Focus on Economic Revival: The Somali government is actively implementing reforms and new laws, like the Investors and Investments Protection Law (2023), to attract and protect foreign direct investment.
• High Demand for Basic Services: Many sectors are underdeveloped, leading to high demand for essential services like electricity, internet, and modern healthcare, providing clear market entry points.

Business Opportunities for Indians in Somalia:

There are excellent business opportunities in Somalia for new investors who are planning to start their business abroad. As Somalia continues its path towards stability and economic reconstruction, it is increasingly opening its doors to foreign businesses and investors. Indian investors, with their strong entrepreneurial spirit, can find vast business opportunities in sectors like manufacturing, infrastructure development, telecommunications, agriculture, and particularly in the lucrative livestock and fisheries sectors. India has also provided developmental assistance to Somalia, which could further facilitate bilateral trade and investment.

Imports & Exports:

Many goods are imported and exported from Somalia. The imports and exports business is an ever-growing business in any country; however, you need to do proper R&D before investing in that product which you can import or export. You need to check whether that product is suitable for your target market and how much revenue you will be able to generate from that market.

Major items which are exported from Somalia to India:

• Live Animals (e.g., sheep, goats, camels, cattle)
• Hides and Skins
• Fish and Seafood
• Myrrh and Frankincense

Major items which are imported in Somalia from India:

• Rice
• Pharmaceutical Products
• Textiles
• Vehicles (especially two-wheelers and commercial vehicles)
• Machinery and equipment
• Sugar
• Spices
• Building materials

Manufacturing:

Opportunities in manufacturing are primarily focused on light industries and agro-processing, adding value to local resources. This includes processing livestock products (meat, dairy), fish processing, basic consumer goods, and potentially construction materials given the infrastructure demand.

Mining:

Somalia is believed to have significant untapped mineral resources, including uranium, iron ore, tin, gypsum, bauxite, copper, and natural gas. However, exploration and extraction are largely underdeveloped due to past instability. The long-term potential in this sector is considerable, especially for offshore oil and gas.

Major Indian companies which are currently working in Somalia:

While large-scale Indian corporate presence might still be nascent compared to more stable African economies, Indian businesses have established connections, particularly in:

• Pharmaceuticals: Several Indian pharmaceutical companies are active in supplying medicines and healthcare products.

• FMCG & Food Products: Indian companies are involved in the trade and distribution of food items, including rice and sugar.

• Telecommunications: While not directly operating major networks, Indian expertise and equipment suppliers might be involved.

• Trade: Indian traders play a significant role in the import of various goods into Somalia.

• GDP = $10.97 billion (2023)

• GDP Growth = 4.2% (2023)

• Ease of doing business rank = 190 (2017 – latest available, indicating significant challenges)

• GDP per Capita = $597 (2023)

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