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 Uistr.

UNITED NATIONS INDUSTRIAL

D12V5 LIMITED
UNIDO/ICIS.77
24 July 197*
DEVELOPMENT ORGANIZATION Original: ENGLISH

COUNTRY INDUSTRIAL DEVELOPMENT PROFILE OP

THE SOMALI DEMOCRATIC REPUBLIC*7^

Prepared by the
International Centre for Industrial Studies

y Thi« document has been reproduced without formal editing. The

designation« employed and the presentation of material do not
imply the expression of any opinion whatsoever on the part of
the Secretariat of the United Nations concerning the legal
status of any country or its authorities, or concerning the
delimitation of its frontiers.
id. 78-4781
 - 11 -

PREPACE

The International Centr« for Industrial Studies, Regional and

Country Studies Section, has undertaken, under its 1978-I979 work
programme, the preparation of a series of Country Industrial
Development Profiles. These profiles are desk studies, providing
statistical and economic analyses of the industry sector, its
growth, present status and future prospects. It is hope that
the profiles will provide analyses of use to programming technical
assistance, industrial redeployment and investment co-operation
activities.

This profile on Somalia is based on documents, reports and

studies available at UNIDO Headquarters. No field survey has
been undertaken and some of the data on industry are not up-to-date.

The views or comments contained in this document do not reflect

those of the Government of Somalia nor do they officially commit the
United Nations Industrial Development Organisation to any particular
course of action.
 - ili -

TABLE OF CONTENTS

SUMMARY AND CONCLUSIO MS pages (i) - (iv)

1
QENERAL ECONOMIC BACKORfflnm Paras
Geographical Situation, Land and Resources
Population
Gross Domestic Product 1 - 11
External Trade and Balance of Payments

The Main Sectors« agriculture, livestock and fisheries 12 - 15

11
STRUCTURE OP THE MANUFACTURING SECTOR
Large Establishments
Small-scale and Traditional Industries 16 - 23
Regional Distribution of Manufacturing Industries

HI CONSTRAINTS ON AND PROSPECTS FOR INDUSTRIAL

DEVELOPMENT
The Main Constraints
24
(i) Shortage of Natural Resources
(ii) Lack of effective domestic demand
(iii) Inadequate Institutional Infrastructure 25 - 33
(iv) Critioal Shortage of Skilled Manpower
(v) Scarcity of Financial Resources

W
INSTITUTIONAL INFRASTRUCTURE FOR INDUSTRIAL
DEVELOPMENT
Industrial Planning and Co-ordination
Overall Industrial Development Functions
Public Investment in Industrial Projeots
The Somali Development Bank
The National Commercial Bank (CBS) > 34 - 5 3

The National Insuranoe Corporation

Promotion of Small-soale Industries, Industrial
Estâtes, Handicrafts, Industrial Co-operatives, etc.
Training and Manpower Development
The Somali National University
Targets
 - IV -

Paras

V MAIN FEATURES OP INDUSTRIAL DEVELOPMENT

OBJECTIVES. STRATEGY. POLICY MEASURES AND
PROGBAMMINO OF IMPLEMENTATION

Objectives
Strates- 54 - 6-
Prospects for Industrialization

VI POTENTIAL AREAS OF FUTURE TECHNICAL ASSISTANCE

TO SOMALIA
(a) Rationalization of the Institutional Infrastructure
(b) Manpower Development
(c) Feasibility Studies
(d) Strengthening the Management of Existing Industrial
Enterprises
(e) Promotion of Small-scale Industries and Handicrafts > 66 - (31

(f) Co1, lection, Processing and Compilation of

Infonnation
Promotion of Technical Economic Co-operation
between Somalia and other Developing Countries
(h) Redeployment of Productive Capacity
(i) Establishment of a Machinery for Co-operation at the
National Level

ANNEX pages 41 - 54
 J?

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 - vi -

EXPLANATORY NOTE

References to dollars ($) are to United States dollars, unless

otherwise stated.

The monetary unit in Joaalia is the Somali shilling (SoSh.).

In April 1977 the value of the (SoSh.) in relation to the United States
dollar was US $1 = 6.295 SoSh.

Totals in tables may not add precisely because of rounding.

v>
 - Vil -

SUMMARY AND CONCLUSIONS

1. Somalia is one of the least developed countries. It has an

area of 637.000 square kilometers which may be classified between
arid and semi-arid. The estimated population is }.2 million, with
a growth rate of about 2.6 % per annum (1970-75). About 80 % of the
inhabitants are engaged in agriculture and livestock, 7 % in industry
and 13 f, in services. The per capita GDP is estimated at t 100 (1975).

2. Harsh climatic conditions, poor soils and lack of adequate

water resources are some of the major obstacles to the expansion and
diversification of the agricultural and livestock sector. In addition,
the inability of farmers to introduce modern methods and techniques
of farming, including the use of fertilizers, has hindered improvement
in the quar.city and quality of crops and livestock. Most of this is
attributable to the fact that the sector is still predominantly at
subsistence level.

3. Underdevelopment in agriculture and animal husbandar.y is

severely constraining industrialization, especially the establishment
of agro-based and allied industries. A number of existing industries
are operating far below installed capacity due to failures in the Bupply
of local agricultural and livestock raw materials. Inadequate food
production compelB the country to spend funds on purchasing imported
food, inBtead of investing it in industries and other activities or
services. The expansion and diversification of the primary sector is
of paramount importance to industrial development.

4. Somalia hae been living beyond its income sinoe independence,

and earnings from exports have not been sufficient to pay for
imports. In 1975f for example, they covered only 42 £ of the bill for
imports. Grants and loans on concessionary terms have been the main
source of funds for financing the trade deficit and development. Although
foreign capital inflows and loans heve enabled the couniry to avoid
 - 711 1 -

balance of payments crises, the total external debt has become

üo larre that its servicmr is becoming a heavy burden. In the
mid-lie of : )j6t the debt stood at 3 ^00 million; and it is
estimated that by l?tìl, the service payments will be at the rate
of about ? ?0 million per annum. This poses a major problem
regard inp future public investments.

Tne supply of funds for financing industrial ami other

nroje.tc or activities will depend on the Government•3 ability
to mobilize both domestic and foreign resources, ac we]1 as
reduce recurrent expenditure. This will entail oefAiig grants
and loans on concessionary terms and with lo^f maturities, for
investment in priority areas. Success in attracting investments
to iniustr • will depend on the identification, formulation and
evaluation of economically sound projects.

6. The manufacturing sector is composed of a few relatively

large-scale publicly-owned enterprises, and a large number of
small-scale units, which constitute the private sector. The
public sector owns 11.8 % of the total number of industries,
but employs about r)6.5 % of the total industrial labour force.
The adoption of public ownership as a way to the development and
management of industries will mean an increasing dominance of
public industrial enterprises over the private sector in terms
of investment, output and employment. The success of this policy
will necessitate vigorous mobilization of financial and human
resources capabile of providing efficient management.

7. Most of the industries are agro-based, using locally

produced materials from agriculture, livestock and fisheries.
Consumer goods industries accounted for 97*4 % of all estabisihments,
and represented 95 % of the total value added, of which food
processing industries contributed 75 $ »nd 58 $ in 1972 and 1973
respectively. The drop was due mainly to changes in the prcing
policy of the Government and the general downturn of the economy
as a result of failure of the rainfall. Gross output increased
 - IX

from So. Sh 206.4 million in 1971 to So. Sh 349.8 million in 1974,

or at an average rate of 17 % per annum. During the same period,
the value added increased from So. Sh 112.1 million to So. Sh II8.9
million; this represents an average growth rate of I.5 % per annum.

8. The objectives of the Government are to increase the

production of consumer goods, to establish agro-based industries
for export and for import substitution and to develop building
materials industries and intermediate and capital goods industries.
The main elements in the industrial strategy are: increasing the
efficiency and profitability of existing public enterprises; establishing
new publicly-owned industrial enterprises, promoting industrial co-
operatives and industrial estates and establishing industrial joint
ventures with foreigners.

9. The investment target of So. Sh 588.25 million represents

15.2 % of the total planned investment of the current plan. The
allocation was revised to So. Sh 1,078.8 million, or 21.9 % of the
total cost of the programme. Of the original allocation So.Sh 378 million
would be raised from external sources, leaving So. Sh 120 million for
financing from internal sources. The target is very ambitious in
comparison with past performance.

10. Factors which are retarding industrialization include:

critical shortages of local people with the necessary capabilities,
shortages of funds, the very small size of the domestic market, the severe
weakness of the institutional and physical infrastructure, lack of
natural resources, and underdevelopment in the agricultural sector.

11. Assistance is required in the areas of institutional reform,

particularly to clarify responsibility; manpower development; small-
scale industry promotion; planning and co-operation with other countries.
 - X -

12. Many bilateral and multilateral donors of technical

and financial assistance have aid programmes in Somalia. It is
therefore proposed that machinery for consultation and co-
ordination should be established. Somali officials and all
interested donors of assistance should have a framework at
the country level within which they could discuss and make
recommendations on all matters concerning industrial development.
 - 1 -

I GENERAL ECONOMIC BACKPROIMD

1. Somalia covers an area of 637,000square kilometers, which

is estimated to be distributed as follows:

Potentially cultivatable 12.5

Suitable for grazing 54.9
PorePts and scrub 13.8
Other land 18.8

100.0

Most of the country is classified as arid to semi-arid and more than

half of the land is suitable for livestock production. Cattle rearing
predominates in the South while goats and sheeps constitute the main
livestock in central and northern regions. Camels are found everywhere,
and are the mainstay of the nomads. Despite its long coastline and
strategic position in the Indian Ocean and Gulf of Aden, Somalia has
not developed her fishing industry. Pishing is mainly a seasonal
occupation between October and March. Mineral resource endowments
too are limited. Appendix A shows the mineral potential of Somalia.

2. According to the 1971/2 manpower survey, the population was

estimated at 3.2 million with a growth rate of 2.6 per cent per
annum between 1970 and 1975« The following table shows the
estimated and projected population by age groupa from 196O-198O:
 - 2 -

Table 1 - Estimated and Projected Population 1960-19Ö0

(in Thousands)

Age Group I960 1965 1970 197e) 19Ö0

0-9 707 899 930 994 1193

10-14 267 317 368 4 35 410
15-19 231 263 307 357 42}
! 20-24 197 218 254 296 346
i 25-44 525 541 628 733 86o
¡4 5-54 14b 136 158 I84 210
¡55-64 9} 80 92 108 I2d
I 65 + 59 47 54 63 76

TOTAL 2226 25«) 2789 3171 36r)4

Source: The Manpower Implications of the Current Strategies.

Manpower Survev Pro >ct Vol. 1, August, 197?

The changes in occupational structure between I96O-I98O have been

roughly estimated as in the following table.

Table ? - Distribution of Labour Force by Industry Group I960 - I980

Year Agriculture/
Animal Husbandary Industry S«rvie«s Total Emplo.yraei t

(000) P
'o (000) % (OOO) % (OOO)
|

1960 812 87.85 41 4.56 71 7.70 924

1970 397 82.75 70 6.46 117 10.79 IO84

1975 1006 80.00 87 7.1 150 12.90 124 3

198O III5 78.80 109 7.7 191 13.50 1415

Source: The Manpower Implications of the Current Strategies.

Manpower Survey Project Vol. 1, August 1972.
'. These are rough estimates arri Ghoul 1 oe treated
with caution. It is estimated that ib-40 'I of the oopulatior.
are still purely nomadic; 2S-"}0 >j engaged in some mixed stock
raising; lb-20 ',"0 enraged in sedentary cultivation, mainly in
the South, and the rest of the population is in cities.

4. During the period 1960-7 % the GDP in real terms is

estimated to have increased at a rate of 2.4 per cent per
annum; the agricultural sector, however, has remained almost
stagnant. Tnis has brought down the share of agriculture in
GDP from about M per cent in I960 to }6 per cent in 1 il• . The
manufacturing sector has increased its share from a ver • low
base of 2.' per cent in 1?6< to ?.\ per cent in 197 >. Tne other
sectors whose contribution to GDP increased appreciably during
the period under review are wholesale and retail trade and
transport and communication. —' Some of the important indicators:
of the Somali economy are presented in Table }.

Table } - Indicators of Growth of tv Somali Economy (1970= IOC)

Annual growth rate

Indicator I960 190^ 1970 197b
1960-75 1970-75

1. GDP 30.2 78.6 100.0 109.7 2.4 - 1.1

2. GDP per capita 100. b 87.7 100.0 96. b 0.0} - 1.4
3. Value added of
manuf. sector U.2 20.8 100.0 156.9 15.8 8.8
4. Private con-
sumption exp. 81.1 84.6 100.0 105.5 1.4 1.2
5. Per capita cons.
exp. 101.6 94.4 100.0 92.8 - 0.9 - 1.3
6. Investment in
fixed assets 72.0 79.1 100.0 204.7 6.9 15.4
7. Exports 106.4 114.8 100.0 181.5 2.8 9.8
8. Imports 91.9 117.8 100.0 246.6 4.6 21.8
9. Population 79.8 89.6 100.0 113.7 2.3 2.6

\J It is believed that expenditure on defence accounts for a substantial

share of total expenditure (see UNCTT.'iD document t r/73/oiì, June 1975fP.4)
 A -

5. It i.i interesting to note that though real GDP increased

during the period 1960-75, the per capita GDP remained almost
stagnant. Real per capita GDP in 1975 was only S 76.5 expressed
in 1970 prices and exchange rate, as compared to $ 79.3 in 1970.
And real per capita consumption dropped from 158.7 in 1970 to
$54.5 in 1975, expressed in 1970 prices and exchange rate. It is
obvious from the table that the growth rate during 1970-75 slowed
down appreciably, largely due to the drought in 1973 and its effects
thereafter.

6. The rate of increase of investment in fixed assets has

been of the order of 6.9 % per annum during 1960-75. In terms of
GDP, investment in fixed assets constituted 28.6 <f> in 1975, as
against 1}.7 % in I960. The available data do not permit the rate
of savings to be cumulated, but for 1970 it is estimated at 14 % of
GDP.

7. Sport» - Export data is not wholly reliable, due largely

to the difficulty of certifying cattle exports. An UHCTAD report
suggests that different estimates vary by up to 16 %. •» In 1975,
total exports rose to So Sh. 557 million, an increase of U.1% over
1974. ""he principle items are livestock, bananas and meat products,
which together account for some 85 % of total export earnings. &

8. Imports - Total imports for the period 1970-1974 appear in

Appendix E. The value of imports rose 26 % over the past five years,
but in 1975 the increase was only I5 %. In 1975, imports rose in
value to So. Sh I.I80 million, including an estimated So. Sh 260 million
of food aid relief. The proportion of food in total imports declined
from 37 i in 1971 to 20 % in 1974. Since 1971, the value of food
imports has remained relatively oonatant (about So. Sh I80 million),

1/ UNCTAD Document IW/73/013, p.l8

%J This is based on IBRD report Ho. 1421a-50 of 7 April 1977, paras 62-72
 - 5

but the volume has dropped. The share of petroleum products increased
from 4 % ir 1971 tt .n eetimated 9 - 12 % in 197% while imports of
machinery and transportation equipment represented 25 % of total
imports in 1971 but 42 % in 1974 about double the proportion in 1971.

9- Balance of Payments

Table 4 - Summary Balance of Payments

(So. Sh million)

1971 1973 1Q74 1975 *)

Exports (of goods and
non-factor services) 228 358 405 Y)l
Imports (of goods and
non-factor services) ¿26 704 973 1.118
Trade Balance 98 - 346 568 - 561
Net factor services 35 - 77 88 - 132
Current transfers 93 180 328 754
Current Account Balance -m 328 + 61
Capital Inflows, net 19Ö 266 271
errors and omissions 4 6-6
Change in Reserves ( - means
increase)
-Sa +^ià +_& -ili
International Reserves (Year Change) 110 249 183 504
Ratio of Reserves to Imports 34 i 35 % 19 * 45 %
tat io, Lower Income Countries 27 % 31 # 23 % 21 56

*) Preliminary Figures

10. Somalia has had chronic deficits in her intermtional trans-

actions since independence.Over the period 1969-1971 exports covered
on the average 65 i of imports of goods and net services; in 1973-75
the ratio fell to about 45 %. There was a surplus of So. Sh 326 million
in 1975, due largely to the extraordinary increase in unrequited
transfers, which included about So. Sh 260 million in food aid and

I/ Somali data, reported in UWCTAD, op. cit, p.25

 - 6 -

So. Sh 420 million in cash, and due to very good export earnings
from livestock and meat, external aid and capital inflows
financed a larpe trade deficit, and increased foreign exchange
reserves to So. Sh 504 million in December, 1975. Although
concessionary assistance has helped Somalia to finance her
deficitR in the past, these sources will become inadequate in
future. The deficit has grown from 3 15-20 million per vear
during the late sixties and early seventies, to « 80-90 million
oer year during the recent years.

11. Correspondingly, the foreign public debt has grown from

about * 2)0 million at the end of 1973 to about S 445 million
at the end of 1975 and to over ? 500 million by the middle of
1976. Discursea debt increased from about S 3 million in 1971-73
to ; '-6 million in 1975» and if it were not for a moratorium on
debt payments to the USSR, they 'would reach about 3 20 million in
1)81. The resulting debt service burden is likely to constrain public
investments and development in the future. (Projections of Debt
Servicing Payments appear in Appendix B.)

The Main Sectors

12. Agriculture - About 80 % of the population is engaged

in a "Ticulture and livestock rearing, largely of a subsistence
kind. A small commercial sector is mainly engaged in growing
bananas, sugarcanes and some cotton depending on controlled
irrigation; the non-monetary sector mainly produces cereals, relying
on rainfall and inundation irrigation. The expansion and diversification
of agriculture are made difficult by the lack of suitable soils,
inadequate rainfall and water supply and insufficient knowledge of
modern techniques of farming. Dryland farming, for example, is
subject to frequent interruptions by droughts resulting from failure
of rainfall, while irrigation is retarded by shortage of water.
 - 7 -

M. One way for. improving agriculture production is the increased

use of fertilizers, but lack of foreign exchange for importing
fertilizers prevents their increased use in Somalia. The excess
capacity in the world fertilizers industry (which tends to make
fertilizers cheaper) and lack of demand in the country compelled the
Government to abandon its contemplated investment of $ 50 million
in the establishment of a local plant with an installed capacity of
90.000 tons of urea.

U. Livestock - Export earnings from livestock and livestock

products have long been the biggest source of foreign exchange. Since
around 55 % of the land is suitable for grazing, there is potential
for more extensive development of this activity. At present, however,
the production of hides and skins is well below potential. Poor
collection and marketing facilities are the chief problems. ^

15. Fisheries - There are similar obstacles to the development of

fishery-related industries. Insufficient harbour facilities, allied to
the fluctuations in the supply of pelagic species and the weather,
combine to make this a seasonal and hazardous observation at present.
There are around 2,500 full-time and 16,000 part-time fishermen with
2,500 small boats at present. There are five fish processing plants,
three of which are canneries and two of which are for freezing and
storage.

II STRUCTURE OF THE MAMUFACTURIMG SECTOR

16. The manufacturing sector is composed of a few relatively

large-scale publicly-owned enterprises and a large number of smaller
units. Most of the industries are agro-based, using mainly locally-
produced raw materials from agriculture, livestock and fisheries.

1/ Study by Dr. Hendrikson, "Group of Hides and Skins, Leather and

Footwear Economy in Somalia", for the UNDP/PAO Hides and Leather
Development Centre, June 1972.
 - 8 -

In 197It consumer goods accounted for 97*4 per cent of the number
of industrial establishments, and for over 95 per cent of the
total value added. -* Pood processing is by far the most important
industry, providing in 1971 84 f> of all industrial value added,
and 56 i» of all industrial employment.

Table 5 - Summary of the Industrial Sector in 1973 IT

Public Private Total

Manufacturing establishments 32 241 273

Employment 448.2 2377 6859
Wages and Salaries (Sh million) I89.9 64.1 246
Value Added (Sh million) 106.8 18.7 125.5
Gross Fixed Capital Formation (Sh million) 18.7 4.7 23.4

\J Somali's Five Tear Plan (1974-1978), pa«« 64.

%J Industrial Sector Review, UÄID0-DP/Som/72/007, January, 1976

c» —
 - 9

»,
Table 6 - Size Distribution of Manufacturing Establishments in 1974

! No. of Establishments> by Size

Industry Group Large w) Sma 11 Total
No. Percent No. Percent No. Percent
1. Pood Manufacturing 01 22.4 2503 41.6 2584 40.5
2. Beverage Industries 5 1.4 4 O.i 9 0.2
3. Manufacture of
Textiles 29 8.0 339 5.6 368 5.8
4. Manufacture of
wearing apparel 54 14.9 450 7.5 504 7.9
5. Leather and Footwear 29 8.0 548 9.1 577 9.0
6. Furniture and
Fixtures 37
10.2 182 3.0 219 3.4
7. Printing and
Publishing 1 0.3 - - 1 _
8. Other Chemicals 10 2.8 5 0.1 15 0.2
9. Manufacture of
plastic products 3 0.8 - — 3
10.Manufacture of Potter r,
Chinaware and Earthen
ware 4 1.1 561 9.3 565 8.9
11.Structural Clay Produ its 5 1.4 36 0.6 41 0.7
12.Lime 27 7.5 87 1.4 114 1.8
13.Metal Products 36 9.9 400 6.6 436 6.8
14Jewelry, etc. 28 7.7 30 0.5 58 0.9
15.Industries, 13 3.6 876 14.6 889 13.9
Total 362 100.0 6021 100.0 6383

Souroe: 1974 Census of Industries,Central Statistical Department

* employing 5 or mors workers.
 - 10 -

Table 7 Large establishments

Growth, 1967-1974

T9S7 Ï97T T972 1971 Ï974 % Growth

over 1971
Number of Establishment
'of 5 or more Workers 121 187 221 271 390 208
Number of Workers
¡employed 1910 3489 5415 7394 10 3.44 296
Value of Gross output -
in million So. Sh 73 206.40 228.33 246 349.07 169
Value added - (million of
So.Sh) 43.b 112.1 127.I 12^.5 118.9 106

Source: Census of Industries, 1974, Central Statistical Department

Table 8 - Larf« Kstablishmentc _ Value Added in Current Prices by

Industry Groups

(mill So.Sh)
Industry Group 1972 1973
Value added Percent Value added Percent
-1
1. Food Manufacturing 95.6 81.7 7 3.0 0' . b
: ->
2. Beverage Industry 1 2. . 2.1 2.tí
3. Manufacturing of Textiles 4.7 4.0 H.2 11. >
4. Manufacture of Wearinr
Apparel 0.9 0.8 1.2 1.1
% Leather and Footwear 1.1 0.9 2.8 2.5
6. Furniture and Fixtures 1.7 1.4 2.3 2.1
7. Printing and Publishing 6.6 5.6 7.8 7.0
8. Other Chemicals 1.6 1.4 2.0 1.8
9. Manufacture of Plastic
Products 0.1 0.1 1.8 1.6
10. Structural Clay Products 0.9 0.8 1.8 1.6
11. Lime * • 0.2 0.2
12. Metal Products 0.5 0.4 0.9 0.8
1}. Jewelry 0.3 0.3 0.4 0.4
14. Industries 0.6 0.5 1.0 0.9

Total 117.3 100.0 111.2 100.0

Source: Central Statistical Department

 - 11 -

J
17. Although in 1 )h\ only .° manufa^tur i ri - ostati ! isnment. vor"
in the public sector, thev were disproport nnateì; '.arre. The
employed -)6.S # of the industrial laoour for^e, and a^cour.te: for
r
70. .) > of cross output and 71 1 of value ad lei in 1 17 •.

16. Table 7 shows tit t tne number of lar--o ep.taoi i:>hmont.

grew from ld7 in 1)71 to VIO bv W'., an ave-a-e rrowth rat« if
?7 A per annum, ämploymer.t tr.erpin rose frort. >.,.'. "> l to ! ,-'.', a:. ;
.TOSS output rose frorr, So. bn ^ó..'! mil 1 ion in 1)71 to iJo.Ur. •/"•).c
million in 1974.These larpe establishments are concentrate i in termr
of output-mix. 'ut cf a total value added of So.Uh P7.! million ir
1 )1? rougnly 3? j wat; oontriDutei py food manu fac tur mr a'it.:.

1 ). The majont of manufactunnr plants are small. -,v-

the \b? lar,!'e unite recorder ir, tne 1 <7/. cen^u;- of inni,/.-:
?':'. employed betweer and < wTker¡>. There are, ir. a I-i i •
o,';;-t small estât . i. riment:- i' tne private sector, ci :. •-.-
7
fewer t.r.an wo rue IT ->'.' It:»' na! . units, , (
errare i ir. food nro':":::an *; •••. [). ') are m .'itv>- ,
ar" in leatner ani l >otwenr >• ii-tio', .',- '.i.-. ì ar>' ¡.<; 'anrieht t

.) ari' m " t,. i> m i ri"s ; ( . ) aro i': 'ia>: t : o .i I

i"'- m?i'V.it i ' :r;-. ' ;: • i tu --• • .• • f xturor .

A rni' ' ' t : e Indirtria' ''•r,:-.u;. o4' 1 )7-l, ìnv-'ótme: '

i'. •'"•i1 i e ta: 1 íuhmento ha:; peer. ie<-1 ming: tnir, poses a poir
prot. lem fir the Government, at; outlined in chapter /.

°1. In addition to large and small establishments, tnere are

traditional and handicraft industries, run by families; most of them
are also engaged in food processing. It is envisaged that organizing
these numerous units into co-operatives will facilitate financing from
the Ministry of Finance, project evaluation and the administration
of loans. Small capital grants are provided to these co-operatives,
and so far So. Sh 4 million has been lent to 27. The fact that, in
1975» the 16 handicraft co-operatives produced more in value added
than the investment per person employed (So. Sh 2,750 as againBt
 - 12 -

So. Sh 2,430) confiras that this is an attractive vehicle for

industrial development.

Table 9 - Co-operative Handicrafts

Co-operative Location Product Ho. of Participants

Handlooms Benadir Cloth 52

Metalwork Mogadiscio Iron products 22
Handicraft Mogadiscio Handicrafts 30
Footwear Mogadiscio Shoes 30
Essence of HawalpJco Mogadiscio Ladies esb *¿es 26
Handicraft of Merca aday Merca Cloth 40
Day ah El-bur Bl-bur Sapnlite
handicrafts 102
Gelib Handicraft (handlooms) Gelib-Mei*ca Cloth 113
Hanla woyn handloom Mala Heyn Cloth 53
Kismayo Footwear Kismayo Shoes 21
Wotalworks Burao Burao Metal pi-oducts 42
Tailors Hargeisa readymade .warnont»! 20
Chalk Production Hargeisa Chalk ¡ 25
Baskets, ropes or Cardage Bandar Byla Baskets, ropes j
and cardage j 52
7
octwear Korseed Burao Shoes ! 30
Dil milla Mogadiscio edible oil and
cakes lOd
iandlooms Brava Cloth 33
Baskets, Ropes and Cardage Bassaso Baskets, rope6
and cardage , 120
Jewelry Mogadiscio Oold and cilver I
product es I 33

Source : Ministry uf Ind'ia-try

 - 13 -

Regional Distribution of Manufacturing Industries

22. Mogadiscio and its neighbouring areas have the largest number
of industries. In 1972, 45 per cent of the total number of industrial units,
61 per cent of the private factories and 44 per cent of the public sector
and traditional sectors were located there. The following table shows the
distribution of industries in the country in 1972.

Table 10 - Regional Distribution of Manufacturing Industries

Pubi Lc Sector Private Sector

No. % Mode rn Traditional Total i

Private % Sector %
Sector
Mogadiscio 8 44.4 127 60.8 1139 44 1274 45.?
Jowhari 2 11.1 5 2.4 56 2.2 63 2.3
Merca (Lower
Schebelli) - - 19 9.1 325 12.6 12.2
344
Baidoa ( Upper Juba) - - 3 62
1.5 2.4 65 2.3
Kiemayo (Lower Juba) 2 1.1 14 6.7 179 7.0
6.9 195
Belet Weine (Hiran) - - 5 2.4 49 1.9 54 1.9
Oalkayo (Mudug) - - 5 2.4 0.6 20
15 0.7
Garowe (Nugal) - - — _ _
Bossaso - - 4 1.8 7 0.3 11 0.4
Burao (N.E.Region) 2 1.1 14 6.7 112 128 4.6
4.3
Hargeisa (N.M.
Region) 4 22.3 13 6.2 646 24.8 663 23.4
18 100.0 209 100.0 2590 100.0 2817 100.0

Th
Ho$a¿ « fifur«« in this Table do not tally with those in Table 7
beoauee of cove rag», tine difference, etc.

Sources Baaed on data fro« Manpower Survey Report Vol. 2, 1972

 - 1/. -

1 :
• The -v/ailabil it;/ of natural resources and inf ra:itm ;ture
facilities hac played a major role in industrial location. Industries
based on imported inputs tended to be located around the Mogadiscio
Fort area, while hifh power, diesel oil and transport costs in the
northern and .¡entrai Regions discourar^d industrial develonraent there. =J
The concentration in Mogadiscio appears to be increasinp rather than
decreasir,.-.

III. CONSTRAINTS OH AND PROSPECTS POR INDUSTRIAL DKV-ILOPKENT

The Main Constraints

24. Somalia ir one of the least developed countries. Its main

constraints are, therefore, rooted in: (i) lack of natural resources;
(ii) verv small size of effective local demand; (in) inadequate physical
institutional infrastructure; (iv) critical shortage of trained manpower;
(v) scarcity of finance.

(i) Shortage of Natural Resources

2% The expansion and diversification of agriculture is made difficult

b.v the bad climate, poor soils, inadequate rainfall and shortagr of water
resources for irrigation. Thus, the underdevelopment of the agricultural
sector is retarding the promotion of agro-based or allied industries. A
number of existing industries are working far below capacity because of
shortage of raw materials, e.g. the sugar industry, the fruits and
vegetables processing plant, etc. The scarcity of good grassland and
pastures also lias an adverse effect on the quantity and quality of

1/ See Industrial Survey of Somalia UNIDO/lPPD. 1}} of 7 December, 1973

Pages 16 and 17. This report discusses individual industries in detail.
 - 15 -

livestock production, and this is exacerbated by frequent droughts.

26. Somalia has, partly ir consequence, failed to achieve self-

sufficiency in food. Progress has not been disappointing, however.
Por though the value of food imports has remained roughly constant
since 1971» the volume must have fallen due to the rise (of around
130$) in world food and beverage prices between 1971 and 1974.
Furthermore, the share of food in total imports fell from 37 % in
1971 to 20 % in 1974, in value terms.

(ii) Lack of effective domestic demand

27. Import substitution in Somalia is naturally constrained by

the small size of the domestic market. With a population of 3.2 million,
of whom 70 % are nomads living at or near subsistence level, and an
overall per capita income of S 100 or less, demand for the output of
new industries would clearly be slight initially. This also hampers
the forging of vertical and horizontal linkages between parts of the
economy.

28. More extensive industrialization in Somalia will therefore

depend on the development of export markets. The promotion of such
external markets is dependent upon the availability of Somalis with
the necessary marketing know-how and the competitiveness of Somali
manufactured goods in foreign markets. At present, none of those
requirements exist except, perhaps, in meat and meat products, and
hideB and kins for use in tanneries and in the production of leather
and leather goods. Even in these two cases, much has to be done for
promoting Somalia's competitiveness in foreign markets. Export
promotion in manufactures will require technical assistance experts,
industrial joint ventures with foreigners who oan provide marketing
know-how and channels, and marketing co-operative arrangements with
other countries. In this connexion, if forts should be made to take
 16 -

advantage of Somalia's associate membership to the BBC and the

Arab League.

(iii) Inadeguate Institutional Infrastructure

29. The socialist policy of state ownership, control and

management of commercial, financial, industrial and other
activities has led to a proliferation of parastatal organizations
and agencies. The allocation of the scarce human and financial
resources among all these organizations has left most of thorn
critically short of qualified staff and funds, and hence many
are incapable of performing effectively the functions for which
they were established. In particular, the Ministry of Industry
is inadequately staffed to promote small-scale enterprises, and it
may be that a separate organization should take responsibility for
this.

30. The absence of institutions for industrial research and

development; collection, processing and compilation of industrial
information and data, also hampers industrial planning and the
adaptation of technology. There is no testing laboratory, nor is
there an integrated system for quality control of industrial inputs
and outputs. An institution to deal with these matters is required.
Undtr Project SOM/72/0U7 UNIDO submitted to the Government proposals
for the establishment of a multi-disciplinary industrial testing
laboratory and an industrial information centre. -> Most industries
provide their own power-generating plants, water supply and treatment
facilities, efficient disposal systems, approach roads and transport
equipment. This clearly discourages the development of new plants,
since it adds to the initial capital requirements and the risk of

1/ See Page 5 of Document DP/S0H/7?/0O7 of December, 1977

(Industrial Sectoral Review)
 - 17 -

the project. The exploitation of iron ore deposits in the Upper Jubba
region, for instance, has so far not been feasible because it is
dependent upon prior construction of 80 miles of railway to Mogadiscio.
Roads are still the principle means of traneport. Progress is, however,
bein* made in other areas of infrastructure provision. Mogadiscio
Port is well under way and the bad network has recently been considerably
improved.

(iv) Critical Shortage of Skilled Manpower

31. In the current Development Plan, much emphasis is laid on

training. But training is costly and its effect on industrial
efficiency takes some time to show substantial results. The immediate
step should be to examine carefully the most pressing needs for specific
skills, with a view to allocating the very limited human resources to
the identified priority areas. Any needs which are not met from local
qualified personnel should be met by technical assistance personnel.
It is imperative that the present high turnover rates be reduced.
Accordingly, the personnel requirements of all existing and proposed
industries, over a period of five yea-s, should be assessed, in order
to determine the type, method and place of training, as well as technical
assistance personnel to be requested. Consideration should be given to
concluding management agreements of certain public industrial enterprises,
or seek OPAS type of managers, engineers, accountants, etc. from UNIDO
and other sources of technical assistance. Such experts as these should
provide in-service training to local people as well as organize local
courses which are relevant to the needs.

^v) Scarcity of Financial Resources

32. Somalia set herself a target of about 67 % foreign financing

and 33 % domestic financing in the 1974-1978 Plan. These are very high
targets, whose achievement would call for vigorous steps in the
mobilization of resources both at hoiue and abroad. Somalia has been,
for a number of years, carrying a large trade deficit, which has
been financed by external aid and capital flow^. It is mainly through
external aid and loans on concessionary terms that ehe has been able
 -ia-

to implement a number of projects. Moreover, most of the loans

received from Arab countries are of short-term maturities, ranging
from under 10 to 20 years. In view of the already heavy indebtedness,
the maturity of debts ìB likely to cause increased debt servicing
problems, thereby exacerbate the scarcity of funds. In the circumstances,
it will be necessary to have as many loans as possible rescheduled;
increased mobilization of external resources consisting of grants and
loans with longer maturities and at concessional rates of interest,
and vigorous promotion of exports. Otherwise, foreign exchange scarcity
is bound to constrain public investment and gè arai development.

3Ì. As regards revenue from internal sources, the Government

depends upon direct and indirect taxes. Much of the direct tax
revenue is derived from "turnover tax" on public enterprises. This
turnover tax rose from So. Sh 26.9 million in 1974 to So.Sh 47.7 million
in 1?7L;. It should be noted, however, that in its efforts to mobilize
financial resources through taxation, the Government might reduce the
ability of its parastatals and individuals to save. In fact, the
Government's share in the profits of public enterprises and other
interventions in their financial management reduce their ability
to build up reserves from which they can invest in new projects,
expansion and modernization. Indeed, large public enterprises' indebtedness
has been one of the problems. The critical shortage of funds makes it
imperative for priority to be given to the most productive projects in
xbe allocation of resources, lifforts have to be made to promote savings
by individuals, some of which might subsequently be channelled into
investments in small-scale industries, handicrafts and industrial co-
operatives.
 19 -

IV. INSTITUTIONAL INFRASTRUCTURE FOR INDUSTRIAL DEVELOPMENT

}&. There are a number of public institutions in Somalia charged

with the administration and direction of the economy. Given the
central role of the public enterprise as a tool of development
strategy, it is not surprising to find a diverse range of public
authorities.

V). Industrial Planning and Co-ordination - The function of

overall planning and co-ordination is mainly in the hands of the
Planning Commission —' (PC), (which is now part of the President's
office) and the Ministry of Finance. The membership of PC is:
The President of the SRC (Chairman), the secretaries responsible
for Planning and Co-ordination (Vice Chairman), the Secretaries for
Finance, Agriculture, Animal Husbandry, Industrv, Commerce, Public
Works, Transport and Communications, Education and Health, LaDour,
and the President of the Somali National Bank.

\6. The Secretar-- for Planning (formerly the Ministr• of Planning

and Co-ordination) provides Secretariat servicer, to the Commission and
acte ac its executive agenc.. His powers iie in planning (including
plan implementation and monitoring the progress of implementation),
co-ordination, determining the requirements of external assistance
and being the sole channel of negotiations with aid agencies, collecting
and compiling statistics, making studies, requiring information from
other ministries and agencies, and the evaluation of projects. Because
of shortage of qualified staff, the Central Planning Organ is not
performing many of its functions. Consequently, the Planning Commission
has not been fed with enough material to enable it to execute its
responsibilities.

\J The former Ministry of Planning and Co-ordination was incorporated

into the Office of the President.
 - 20 -

37. The Ministry of Finance is the other key organ in planning.

This too is critically hampered by a shortage of qualified staff.
Audits take at least three years after the completion on Annual
Accounts, a»i even unaudited figures tend not to be available on
time to facilitate policy decisions. There is poor co-ordination
between the Secretariat for Planning and the Ministry of Finance
in the annual planning and budgeting process. Lack of effective co-
ordination even between key and complementary organs has had an
adverse effect on economic management, ana the targets of the plan
remain unattained.

38.Overall Industrial Development Functions - The Ministry of

Industry is responsible for formulating and initiating industrial
plans, but this Ministry too is constrained by lack of skilled
staff, and bilateral and multilateral experts have been •=/ widely
used for planning. There is almost perpetual excess capacity in a
number of industries mainly because investments were made without
prior assessment of the market and availability of raw materials.
More technical assistance will be needed for the formulation and
evaluation of existing study reports, as well as studies of the
problems of the existing excess capacity.

39.Public investment in industrial projects - As stated, the

Ministry of Industry is the initiator of investments by the state
in industrial projects. There are about six industrial enterprises
under the supervision and control of the Ministry.

40. In the main, these autonomous agencies are subject to the common
regulations governing financial planning and management, such as those

\J Under UNDP/UNIDO Project SOM/72/007, 8O studies were carried out

during 1975-77. These include» pre-feasibility, project, management
and sectoral studies. Most of these studies call for follow-up
action regarding proper formulation and evaluation for their successful
implementation.
 - 21 -

integrating the finance of autonomous enterprises with those of the

Central Government. Each enterprise has to submit its plan to the
parent Ministry and to the Ministry of Finance every year, covering
purchases, output, sales, profits and changes in assets and
liabilities. Investments in new enterprises and expansion of
existing ones are financed from central public budget, while
investments for the acquisition of modernizing equipment, improving
and mechanizing production through new methods of production etc.
have to be financed by appropriations from the enterprises' surpluses.
Any surpluses after meeting various obligatory provisions have to be
surrendered to the national treasury. The pricing of the oroducts
of public enterprises is also centrally controlled.

41. The present arrangements subject the state-owned manufacturing

enterprises to excessive ministerial supervision and interventions, and
its is evident that initiative b- the staff of the enterprises has been
inhibited. Consequently, there is general inefficiency, a hirh staff
turnover, and inadequate surpluses out of which enterprises could
pay incentives to their workers. Tnat is why some- enterprises '.i/ive in
the past resorted to short-term borrowing fron; the Commercial Bank
even to finance investments ir f: >.e-i assets. Moreover, the ever-present
supervision of general management rma financing is likely to reduce
the attractiveness of Somali enterprises to foreign investors who
might have wished to establish industrial joint ventures.

42
• The Somali Development Bank - This is the most important
source of medium and long-term funds for financing industrial •
development. In 1975t the Bank's disbursement of So. Sh 51 million
accounted for 14 % of total investments in the country, and 27 % of
industrial investment. At 31 December 1976, the Bank's cumulative
investment approvals, net of canoellationB, amounted to So. Sh 180 million,
of which 17 million were equity investments. The following table shows the
banks loan approvals by sectors.

j
 - 22

Tan le , 1 - Loan Approvals by Sector, I968 - 1976

' (In :a. Sr. 'OCO)

.. -r. - r ">. to 197;, : v6 1953-197c Percentage
I'o. .-'.".ounl .0. Arr.our.": Lo. Ar.ou'-.r '.'0. Arr.our.t
1 :.- _._-.r•• .-lo 107.9^3 3 i:.2ó¿ 51 119.21/ 9
( : .. Ó3
1 ...S---.-0 327 2>.Có9 116 4.092 44 ì 29.961 77 17
--••'•-• ~-^ -: 7 3» •''/>'• - 3C0 ô 3.79--; 2 2
2, 1.77Ô 3 229 }2 2.0G7 ~j
1 1

Í T."-:..,-ort O.Ò99 3 3-493 10 1°. w2 ~\ 7

-—-
.I-- r ' r.' : .op", jnt 2.517 - - '•• ?.c/-7 ¿ 1
\ ••-•'. '.r.ziior. ar, : i:ou:;i: - '- 2.OÛ0 1 C. - 3.611 - ?
2 4.231 - - 2 /,.2o: - •>. 1
-. • ?.. c. 1.7T, i7
D.1S3 ; 1

! :o-ui •V O I0O.Ü06 ii 6 22.7o/, -.76 102.050 iOG 100

sy-rx^T • 2., 1^77

4 3. The above table illustrates that 65 % of the total approvals

(or So. Sh 119 million) were for manufacturing. In the industrial
sector, the average size of the loan was So. Sh 2 million, and most of
the industrial loans were to the public enterprises as well as to the
Bank's directly promoted projects. In addition, the industrial clientele
of the 3ank includes 12 private borrowers. The Bank has actively embarked
upon a programme for increased assistance to handicrafts, industrial and
other co-operatives. The Bank has also played a major role in promoting
the establishment of agro-industries, though the average size of loan
there is relatively small.

44. In the absence of a specialized investment agency, the Somali

Development Bank has also shouldered the responsibility of promoting
projects in the industrial sector. To date, these projects include 6 grain
mills, a fruit processing factory (ITOP) and a flour and pasta mill. The
 - 2}

Bank provided 100 $ loans and seconded its senior staff to manage
these enterprises. But this has strained the Bank's already very
scarce manpower resources and it is recommended that the Bank
should avoid, as far as possible, assuming managerial responsibilities
for these projects, and find independent management for them. ->

/I1;. The authorized capital of the Bank is at present So. Sh 200 million,
all subscribed by the Government; and the Central Bank of Somalia (CBS)
is permitted to own one-fourth of the SDB's subscribed equity capital.
The paid-in capital of the Bank at 31 December 1976 «as So. Sh 113.3 million;
it is intended to increase it to So. Sh 200 million by I980 in five equal
instalments of So. Sh 20 million starting from October, 1976. Other funds
as of December 31, 1976 were: Retained earnings of So. Sh 3 million; a
medium-term 1-^n of 3 million from the Central Bank; a loan of So. Sh 26.1
million from the Government for 10 years at an interest rate of 2.5 % p.a.
a loan of So. Sh 4.5 million from Iraq; and a loan of S 50.000 from
USAID. IBRD (IDA) was considering a loan of S 5 million to the
Government in 1977, to be re-lent to the Bank at 5 % p.a. As indicated
earlier, the Bank received a grant of Kuwaiti Dinars 100,000. It is clear
that the Bank is active in the mobilization of both domestic and foreign
financial resources.

46. The National Commercial Bank (CBS) is the other institution

performing the function of financing. It was established in 1975, by
merging the then Somali Commercial Bank and the Somali Savings and
Credit Bank. The CBS has a paid-in capital of So. Sh I5 million,
contributed equally by the Somali Government and the Central Bank of
Somalia. The Commercial Bank has twenty-five branches of which six
are in Mogadiscio. It normally provides only short-term loans. (A few
para8tatal enterprises have in the past used short-term funds from
the Commercial Bank to finance capital expenditure). At the end of
1975f its deposits totalled So. Sh 564 million, of which So.Sh 179
million were in savings and time deposits. The Bank is planning to
open up more branches in order to mobilize more personal savings.

\J IBRD Report No. 1341a - So. of 31 March 1977, para 3.07 page 10
 24 -

47. The National Insurance Corporation. This indirectly

finances industrial development through its surplus funds which it
invests in fixed deposits with the National Commercial Bank (NCB).
In addition to undertaking fire, accident, marine, aviation and
motor insurance, SICOS is arranging to establish a reinsurance joint
venture with an Italian Insurance company. -' This is an important
institution for mobilizing local financial resources which could be
channelled into long-term investments in industry, either as loans
or equity participation. It is, therefore, suggested that consideration
be given to increasing use, where possible, of surplus funds of the
insurance corporation as a source of funds for financing long-term
industrial investments.

48. Promotion of Small-scale Industries. Industrial Estates.

Handicrafts« Industrial Co-operatives, etc.

There is no separate institutional machinery for undertaking

activities concerning the development of small-scale industries,
industrial estates, handicrafts and industrial co-operatives. The
responsibility for these matters rests with the Ministry of Industry.

49. The existence of a very large number of small-scale and

handicraft establishments and the prospects for industrial development
in Somalia point to the need for increased assistance in this area.
It is necessary to examine the capabilities of the Ministry to perform
all the necessary promotional functions and to provide efficient
2/
extension services. —' There may be a strong case for establishing
a separate public agency (a Small-scale Industrial Development
Corporation), and at least one industrial estate.

1/ UNCTAD was considering providing experts to the State Insurance

Company in 1973. See "Somalia's External Sector" Study Proposals
UNCTAD/HD/86 GEM. 75-48-047 of July 1975, Para 135 or 1}6
2/ In 1974, UNIDO's Expert on Small-scale Industries recommended,
inter alia, assistance to be provided in the identification and
formulation of projects, provision of long-term loans, fully
developed industrial plots, in an Industrial Estate to be built
in Mogadiscio and financial incentives.
 framing and Kanpowe • !'eve lopment - The main local
in.; tit îtion: which provide tuning are! The Somali Institute
••'' Ueveiüprnent Administration and Management (oIDAJv) Mogadiscio
1
.'-.hr.ica, Institute, ilargeisa Technical Institute. Burao Technical
Ln. tit.ite ami a Craft Training Centre under the Ministr- of
Lu-our. A hMvtechruc ir- m the course pf beinr established in
t- o--ad ireio.

I'iif :;omali Inrtitute of Hove lonment Administration

and Manaro-nent. (Ji;)A- ) 1;; the ^nrea,inr to the former -omaLi
Inrtit'ite >f i.iblic Administration (CTI'A). SIPA (which was established
lM í(> w th
' ' ",JÜF assistanceÌ nad as its objectives: to analyse and
atvi.-.e on -lini-n r trat i ve Problems; oían and implement training
programme:- : or public servanti- of all levels; to plan and execute
administrative reform and to provide an information and documentation
service or, administrative and allied suoiects. The Institute couti only
concentrate on in-service and pre-service training, running numerous
courses and seminars, ranging in duration from one day to four months
and mainly part-time. Due in part to bad selection of enrólleos,
staff turnover, etc., the results tell short of the expectations.

3I!)I."A u the only existinr institution offering training

to high and medium level managerial personnel, and it also runs
courses for fresh entrants. The three technical institutes will
oe mainly concerned with middle l^vei technical personnel. The
Crafts Centre offers courjes of three to six months duration in
electrical, machineshop and woodwork. The existing institutional
machinery for training is too far less than the industrial needs
for managerial, scientific, technical, skilled and semi-skilled
manpower.

53« The Sonali National University is theother institution

in the country which is contributing to the high level manpower
development. It was established in I969.
 - 26 -

V
- «AIN FEATURES OF INDUSTRIAL DEVELOPMENT OBJECTIVES. STOATyr.v,
POLICY MEASURES AND PROGRAMMING OF IMPLEMENTATION

Objectives 1/

C
J4. Broadly, the objective of the industrial programme is
to establish a strong industrial base that is commensurate with
the resources of the country, with more emphasis being placed on
intermediate and capital goods industries. The plan lays stress
on the development of the building materials industry because of
its strategic importance and the availability of certain raw
materials. Emphasis is also laid upon the establishment of agro-
based industries for export and for import substitution. Further-
more, the programme aims at maximising resources utilization in
the production of both commodities and services, as well as creating
conditions for the equitable distribution of the national product
among the people.

Strategy

5% Public ownership of industrial enterprises has been

selected as a tool for industrial sector development. For example,
the '.ornali Development Bank has been playing the role of entre-
preneur, promoter and financier.
The main elements of the strateg. are:

(i) increasing the efficiency and profitability of existing

public sector industries (this will entail reducing
existing excess capacity);

(ii) setting up new publicly-owned industrial enterprises;

(iii) the organization of small units into co-operatives;

1/ Sonali,.s Five Year Development Plan (1974-78) - An Outline of

the Economic Programe, page 7.
 27 -

(iv) permitting foreign investors to establish ,ioint-ventures

with public and private enterprises; and

Targets

•jó. During 1974-76 the target for investment in the industrial

sector is So. Sh ;,88.?b million (or 1%? ,' of the total investment
of the programme). U (The share of industries in the total
expenditure of the 1971-7 5 programme was 8.8 /->). In absolute te rms,
this means a tarret of annual investment of So. Sh 118.c million under
the current piai., compared with an investment of So. Sh ?'».0 million
per annum under the 1971-7 5 programme. Out of a total investment of
So. Sh :;88 million So. Sh 578 million would be external, ieavinr
So. Sh 210 million for financing from internal sources of funds.
About So. Sh r,0 million is for the improvement, exnansion, rehabilitation
or replacement of existing nlar.tc. out of the remaining So. Sr. : \j mil 1 ion,
So. Sh 524./; is to be invested in an oil refiner-, cement factor-, -laner
and board factory, and a surar comnlex.

1/ This figure was later revised to So. Sh IO78.8 million

(or 21.9 % of the total planned expenditure of the programme).
See Industrial Sectoral Review DP/S0M/72/oO7 Technical Report
of December 1977, page 3.

J
 :tí

Tibie .2 -Proposed Investment in Indur.t r; _ H74_78

Planned Outlay ( in '000 So. Shi)

Pro.iect Total
1974-78 1974 1)7'. 1976 1077 1978

fornai te y - 3alal 96.150 27.000 69.150 — — —

SUAI - Jowhar 40.000 20.000 20.000 — — —
I.'ilk Factor- T.OOO 2.000 1.40c 1.100 50 —
r
Laskore.v Fi" h lärmet v 6.000 1.000 2. -«' ' ->. IO'1 — —
Meat Factor -
Kirim u 1.000 2.000 l.n.v
Boat Buildinr Yards 5.500 1.000 1.50n I.5OO I.500 —
:
Foundar' 1?.320 v">0<> 2.620 — 200 2.700
RyDRum Pilot Plant 2.320 1 .X < 1.T20 — — —
Oil Refiner • S4.000 2. SO( ' — — 3.500 —
Oil Mills and
Extraction Units 6.000 4 ).000 49.000 49.000
Hew Sugar Compiey 1 Y7.000 — — 49.000 49.000 49.roo
Flour - Gum- Pasta
Mill I5.OOO 10.000 5.000
Slaughter House,
Hergeisha 3.200 2.000 1.200
Mogadiscio Slaupher
House 1.172 1.172
Hides or Skins
Development 7.000 1.800 I.8OO 1.200
Paper and Pulp Board 75.000 — — 1 i.OOO 30.000 30.000
Fish meal Plants 1.000 1.000 — 1.000 1.000 —
Wan. of Fishing Gear 1.000 500 — — — —
Cement Factory 60.400 22.800 22.800 22.800 — —
Pharmaceutical
Institute 16.000 3.000 8.000 5.000
Salt works 5.696 2.271 1.724 850 850 —
Small-scale Industri es
and Handicrafts 15.000 1.000 3.000 3.000 3.000 3.000

Total 5Ö8.257 107.043 144.314 II8.65O 112.150 106.100

• sKs:aBa«Easssc ssss sa _«»_..* S*C=«3=.3 K ._»... ....»..• ...»_.• • ••••i

Source t Ministry of Planning and Co-ordination: Five Yaar Development

Programme 1974-1978.
 1
Actual ari'ì Planned I nv-.,',me;it m liri'i^tr-.• iii:~¡,

i^XH.'u .10. oh' )

Í TO,lent 1 »7.! 1 )7ü

Actual Actual -' Planned
Somaltey ?'. .7.) M. 000
Su^ar Factory-Jowhar P).o] i í.1.11 ÓO. 3 P
t^ew Üufiar Kactory-Lower Juoa bOO 3.800 700
Milk Factor/, Motilado P.270
olaup-hter Hout-.e, Mogadiscio 5.000 Pó.iXtí)
IJlau^t ter House, Her^eisa ?. OOi )
Laskoray Fish tannery 1.06* 1.' : 38
Activation of Freezer Plant, Kismayu °.100
Meat Factor', Kisma.ru 200 <:•!• V-0
i'il Mills and extraction 1. v->\
Flour-Oum-Pasta Mill I4.O0O
Mogadiscio Grain Mill 1 .'""1"
Galkayo Grain V.ii\ "k> 2. •.(>:•
Burao Grain Mill r\cv« 2.'>oo
Cement Factory, Her.»era ..'Ol 5.0O0 1^.000
Asbestos Cement Factor.' .^.101 Ó.OO'l
Gypsuri Pilot, Plant l.po
>'i: iitifiner 1. CO 3.000
Fonniiar. P.'iOO i. 000
Hideb and okin;; Development S.488 8.5OO
Fishing Gear Factory 500
Fibre-Gears Boat Building Yard 6.138
Marble Factor/ 4.000
Paint Factory 3.000
Soap Factory 3.000
Salt Works 1.000
Small scale Industries and Handicrafts 948 I.I59 1.500
Total 71.no I3O.478 153.995

% of Original Five Year Plan 66.6 % 00.4 i 129.8 %

Note: The table does not include investments made by SDB, . as ITOP Fruit-
Processing or Afgoi Brick Factor/
1/ Investment during January through June 1976 only, although total for
year was not expected to be above hudlet allocation of Bo.Sh isn.15 miiuor
Source: General Directorate of Planning and Co-ordination, Follow-up Report on
Plan Implementation (: «W), and Annual Development Plan, 1976.
 - \0

7. The revised fibres of development investment in industrv

for 1)16, 1777 and 197Ö are So. Sh 151.99,,000, So. Sh 112.150,000,
and So. Sh 106.100,000 respectively. A comDarison of planned and
actual firures (see the foregoing two tables) reveals that the
implementation was below tarp^t, and when adjustments are made with
re-^ani to the effect of inflation on the total cost of projects, the
onortfali would be preater still. The rate of implementation was,
however, lower in apiculture, which was initially ver- badly
affected oy the drought.

Prospects for Industrialization

(a) Agro-based and Allied industries

•3d. Some opportunities exist for the esvablishment of

industries for the processing of food and agricultural products.
This will call for expansion and diversification of the agricultural
sector by introducing crops which ield both food and raw materials.
For examnle, increased production of cotton, oilseeds, fruits and
vegetable will lead to more utilization of the excess capacity
which is causing problems to most of the existing industrial plants.
Import substitution and an increased measure of self-sufficiency in
food production will save funds which would otherwise have been
spent on imports, for investment in industrial production. All this
is dependent upon successes in the introduction of new methods and
techniques of farming, including irrigation, use of fertilizers and
improved farm management. UNIDO and PAO should co-operate with the
Ministries of Industrv and of Agriculture in studying the potential
for developing agro-based and allied industries in future. A case
already apparent is the need for setter banana packaging for export,
for which a UNCTAD report recommended a UNIDO expert. ^

\J UNCTAD, op. cit., p. 22.

 u

(b) Livestock-based InduBtries

)9. The establishment of industries baaed on livestock

production appear to offer opportunities. At present, Somalia
has meat and meat-processing plants, and tanneries. The main
problems are in the inadequate quantity and low quality of
livestock. Currently, there is excess capacity of about 45 %
in one meat factory, and about 2^ % in the other. Factories for
the manufacture of leather and leather products might be feasible.
Indeed, there are already shoe factories and tanneries. The most
important requisites appear to be ensuring the reliable supply
and quality of livestock, hides and skins and external markets.
UNIDO provided in December 1977 an expert under SIS to study and
report on all these aspects. A plant to manufacture animal feedstuff
provides an investment opportunity to be studied. This proposal is
already contained in Project S0Nl/72/007.

(c) Fisheries-based Industries

60. The current development plan provides for increased

investment in fisheries and the fish processing industry. 13,500 nomads
have so far been settled along the coast to train as fishermen. Planned
projects have been implemented. Other projects to be explored include:
expansion of cold storage facility at Laskoreh, expansion of Mogadiscio
boat building yeard for boats made of wood, establishment of a plant
for manufacturing fishing gears, and establishment of three new fish
meal plants. The 1971-73 period saw investments of So. Sh 4.45 million
in the fisheries sector; the 1974-78 Plan envisages an investment of
So. Sh 106 million.

61. The potential depends upon a substantial increase in the

fiBh catch. This will necessitate a large expansion of the fishing
fleet and an improvement in the fish harbour facilities. A Soviet
Somali Fishing Company was established recently. It has 9 fishing
trawlers of which one is »quipped with processing and freezing
facilities, and facilities to produce fish meal. Somalia, in collaboration
 - Î2 -
1
with a Swedish firm (Volva Penta) established in Mogadiscio a fibre
glass boat building yard with a capacity to produce 100 boats of at
least 6 meters annually. PAO has offered assistance to establish a
large-size export-oriented fish meal plant in the North which will
also produce fish oil. This proposal is subject to a market study.

(d) Mineral-based Industries

62. In Table A in the appendix a list of the most important

known minerals in Somali is given. The increase in imports of
cement has led to proposals for expansion of the Cement industry.
Imports increased from 74,000 tons in 1974 to 98.000 tons and
130,000 tons in 1975 and 1976 respectively. The-e are indications
that the rising trend will continue. It is therefore proposed to
establish a new plant. The gypsum pilot plant, being erected at
Berbera with UNIDO's assistance will help in determining the extent
to which the gypsum deposits near Berbera can be utilized. Tha
establishmentof a ceramics industry based on the available Kaoline,
quartz and feldspar deposits is the other possibility requiring further
studies of the three main raw materials, etc.

(e) Small-scale Industries and Handicrafts

63. There is already a large number of small-scale industries

and handicrafts. The Current Development Plan lays emphasis on
increased assistance to small-Bcale units and the establishment of
industrial co-operatives, and industrial estates. Given good organization
and management, this is an area offering industrial potentials. Investment
for increasing the quantity and quality of small-scale establishments
and industrial estates could play a major role in export and import
substitution small-scale industries as well as create jobs. This will
call for financial assistance and assistance in marketing, procurement
of raw materials, provision of extension services, etc. The development
of small-scale industries and handicrafts call for detailed studies of
all aspects.
 - u-
1
(i) Industrial Co-operative Arrangements

•J4. Comalia does not at present belong to any economic grouping

in Africa. Nor does the present relationship with her neighbours auger
well at this time for the establishment of industries in Somalia
whose products may have access to the markets of her neighbours.
Comalia is now a member of the Arab League, and IB receiving substantial
•unds from Arab Countries. The establishment of industries in Somalia,
possibly under joint venture agreements, to supply markets m the Arac
countries should be explored. There is already co-operation between
Comalia and the USSR in fishing, fish and meat processing plants with
USSR providing an export market for much of the meat. In addition,
Somalia is a signatory to the Lomé Convention. Joint-venture industrial
orojects with firms from the REC member countries, offer opportunities
for the establishment in Somali of industrial plants to supply those
markets.

(ii) Industrial Free Zone

6S. Given products for export, Somalia is very strategically

situated along the Indian Ocean, with the Red Sea and the Suez Canal
providing sea routes to most of the likely markets. This, together
with the improvement of lier harbours, also point to the potentials
for establishing export-oriented industries using imported raw
materials. It has, therefore, been suggested that an Industrial
Free zone should be considered as being one of the ways for attracting
foreign investments for establishing plants under subcontracting agreements,
licences, etc.

.•J
 -VI-

VI. POTENTIAL AREAS OF FUTURE TECHNICAL ASSISTANCE TO SOMALIA

(a) Rationalization of the Irmitutional Infrastructure

66. There is a proliferation of institutions, and a lack of

co-ordination in their supervision and management. The ministries
of Industrv, Commerce, Planning and Finance perform a number of
functions which bear a direct relationship to industrial development,
but which are not properly co-ordinated. Nor is the relationship
between the supervising ministries and the supervised autonomous
orpanizations clear. In particular, the transfer of oowers over
financial management and personnel matters from the parastatale
to the Ministry of Finance and the Central Establishments Office
throws into question the autonomy of the parastatals. The often
arbitrary interference by state agencies in the running of public
enterprises has also been identified as an obstacle to efficienc '
and stability. Some enterprises have in the past resorted to short-
tern borrowing from the Central Bank - even to finance fixed asset
investment - rather than undergo protracted negotiations with different
state agencies. The lack of clear responsibility guidelines will,
moreover, reduce the attractiveness of Somali joint ventures to
outside investors.

67. Accordingly, it is proposed that a stud- of the institutional

infrastructure for industrial development in Somalia should be under-
taken. The study should cover, inter alia: the structure, staffing
and administration of the Ministries and Industr - and Commerce and
the individual institutions; the financial relationship between the
Central Government on the one hand and the institutions on the other;
the effect of the centralized personnel management on the performance
of the institutions; any other policy matters concerning the development,
supervision and co-ordination of an institutional infrastructure as
a unified service for industrialization in Somalia.
 1
.") Manpower Development

od. The critical shortage of manpower with the necessar •

qualifications and capacities has a ver severe adverse effect on
all sectors, functions and activities. Somalia's needs for various
kinds of traininr are, therefore, insaUaule. Honors of assistance
should discuss with the ¿ornali authorities the possibilities of
establishing co-operation in the traininr of industrial nannower
over a period of five ears. To this end, tne present aM futuro
manpower requirements for each exist i nr and planned industrial
enterprise and institution snould be assessed. Then traininr
programmes should oe drawn up, indicatine the kind, place and
duration of traininr, (e.r. traininr in loca! and oversea;; institutions,
special courses, worksnons and seminars, m service tramir.,-, fellow-
ships). In this connexion, assistance should be provided ir. findinr
traminr facilities b- encourarinr co-ooeration, between Somalia and
other countries. In addition, consideration should oe -iver. to trie
provision of experts to undertake trairir.r of local neorie on-t v:-
job. It is emnhar.ired that a s-stematic and -ontinour Pro-ranne ^ould
be developed in this field.

b'h A Pro, osai was rna.i- -' • or t. •• establishment of a !i;ot

Vocationa1 Tramir.r Jentre, for trami,.- skilled workmen at Lower
levels, i-,udm? skilled workmen ir. nasic trades, machine operations
and niant maintenance. It was nmr.osed that this project snould oe
co-ordinated with tne Second Pnase of tne UNESCO/lLO Project SUÏ./72/-)).
To avoid duplications and overlapping, consultation with the Government,
UNESCO and ILO in the formulation and execution of traininr programmes
is recommended.

(c) Feasibility Studies

70. The dearth of bankable projects and the problems facing

existing industrial enterprises due to inadequate project formulation

1/ Refer to the Industrial Sectoral Review D0/S0M/72/007 of

December I977 page 42.
 - ï6 -

and evaluation, noint to the need for assistance in ettablishinr

machiner- for the identification, formulation and evaluation of
industrial projects. An abstract of studies and reports on industries
was nrenarod in September ] V under Project Ho. SOM/7?/007 "Project
for ntren; theninr the Ministrv of Industry". These óO projects and
report:; call for further detailed feasibility studies ir andatine.
The f.'inistr of Industry, a unit in the Directorate of ; ! arming and
the Liomali Develooment Bank are all en^ap^d in the formulation and
appraisal of industrial projects. In order to avoid duplication, as
well ar to economize on the scarce human and financial resources, it
is suir-ested that UNIDO and Somalia shoul i co-onerate ir, eata >1 i:nin^
a unit to "arr" out this tank.

71. A nroDosa! was made for the establishment of an Industrial

Studies and Development Centro (iòDC) to succeed Project No. SOM/72/007
for the strengthening of the M.m.;tr' of Industry ^ The proposed
objectives of the Centre include: formulation, evaluation and follow-up
of industrial projects, macro studies for industrial policy formulation,
establishment of multi-disciplinary testing laboratory, establishment of
pilot research units for better utilisation of raw materials and
adaptation of technology, etc. The proposed duration of the project is
4 years, with a total cost of % 4.6 million and 2}8 expert man-months.
It may be advisable to start with a well organized and staffed unit or
department within the Ministry of Industry rather than create a full
fledrred institution from the outset.

\J Industrial Sectoral Review Technical Report of December 1977, pa^e 41

 - <7

(d) strengthening the Management of listing Inuustna!

Enterprises

7°. The expansion of public enterprises will no doubt aggravât«

the scarcit • of local oeople wit.i suffi :ient managerial technical
and scientific knowledge to nana««' tr.osn organizations. Consideration
should, t ne re lo re, oe given to the provision of top managers ani
technician on an OPAL basis to run the affairs of industrial enter-
prise as well as train local counterparts, for an agreed period,
liorna lia should be assisted in negotiating management agreements
v;ith third parties for the manare nient of existing or planned industria
nr-i-erts. occasional or casual assistance or advice b, short-tern
experts, albeit important, does not provide an adequate solution t.i
this formidable and perpetual Droblem. The provision of out:: ilo
management personnel, either from UNIDO, or under agreement conciri.-i
with other narties in therefore advocated.

(e) Promotion of bmall-scale Industries and Han IK rafts

M. There is avivai.-, a vor;: o ir nuniher of small-scale industrien

and handicrafts. The.,- cor rititut- -ir • rxvate sector. Small-scale
industries could oont-ii,ut ? si,~ii mart 1 y to import substitution
am "•nor: earning.-, --roviled that thev are managed efficiently,
and ,-ivcn continuous financial assistance, marketing know how, and
extension services. The Development Plan lays stress on the
promotion of industrial estates, industrial co-operatives and
handicrafts. In fact there is already a proposal for the establishment
of three estates, and the Ministry of Industry is already organizing
small establishments into co-operatives, as well as recommending deserving
ones for loans.

74. There is a host of factors which contribute to the success

ire of an estate, which must be stui
or failure studied thoroughly before
a decision is made to establish an estate. —' The factors include:

\J Refer to "The Effectiveness of Industrial Estates in developing

Countries, UNIDO/lCIS. 32 of ?o May 1977, pages & to 47.
 >d -

national and local economic activities; socio-cultural patterns;

estate .oeation an'l si e ami related infractructure; Government
oo.iectivef in establishing an estate; the denth of feasibility
ani rro-inventment Studien; financing methods; supnort of the
Government and other authorities; selection of industries, product
lines, tedinolo-ies and entrepreneurs and the organization and
•nana^e''int of the estate.

7
. It IT; evident that the Government v;i 11 need assistance
in carr in-- out studies. If the results of the studies are
'lojitive 1'urtner assistance will be require' in drawing un a clear
prorramne for the establishment and manarenent of industrial estates,
industrial "o-ooeratives, and other kinds of small-scale industrial
units. Consideration will also nave to be riven to the establishment
of either a section in the : inictr of Indur.tr- or a separate entity
to formulate, implement or review, from time to time, programmes for
small-scale industries. The Government should be aonroached with a
view to establishing co-operation in the Dromotion, organization,
manarement and operations of small-scale industries.

(f) Collection. Processing and Compilation of Information

76. The formulation of industrial olans and policies is hampered

b lack of conrorehensive up to-date information and statistical data.
Industrial census undertaken at ver,r lonn intervals are inadequate.
The main cause is a^ain the critical shortapr« of personnel with the
necessar know-how. A proposal was made for the establishment of an
industrial information centre, but it is felt that in view of the
ver' scarce human and financial resources, the timing of its establishment
is inadvisable. It is suggested, instead, that UNIDO should offer the
services of an expert for 24 man-months, to assist in the establishment
of a machiner/ in the Ministr" of Industry for the collection, processing
and compilation, on a systematic and continuous basis, of all important
industrial information. It would be verv useful if the same expert
were qualified also for assisting in industrial planning.
 - 19

(s) Promotion of Technical economic Co-operation between

Somalia and other Developing Countries

77. Training, joint financing, joi.it ownership of institutions,

joint industrial research, studies and exchange of information on
technology etc. are some of the areas in which Somalia will benefit
from co-operation with other developing countries. Co-operation in
the marketing of specific industrial products will also assist
Somalia in reducing excess capacity as well as facilitate the
establishment of industries which would otherwise be too large for
her national market. For example, Sudan and Somalia might wish to
establish co-operative arrangements in the development and improvement
of their leather and leather goods industry by sharing technologies,
training facilities, exchange of personnel and information.

78. UNIDO can play a major role in promoting this co-operation

by collecting information on Somalia's needs and disseminating it
among other developing countries which may be likely to co-operate.
At UNIDO's meetings organized for discussing technical co-operation
among developing countries, participating countries should be re-
quested to submit proposals on fields or projects in which they may
wish to co-operate with others. In the case of Somalia, it would be
advisable for their needs to be submitted to UNIDO as and when they
are identified in order that they may be circulated directly to
interested countries or published in UNIDO's Newsletter.

(n) Redeploy»«nt of Productive Capacity

79. Somalia's livestock wealth offers great opportunities for

the expansion of her leather and leather goods industries. There is
already a plan for the establishment of another tannery, the expansion
and modernization of a shoe factory, etc.
 - 40

(i) Establishment of a Machinery for Go-operation at

the National Level

80. It is proposed that a national Industrial Consultative

Group, or Advisory Committee should be established in Somalia.
This would constitute a machinery or framework within which
industrial plans, policies and strategies would be reviewed
at regular intervals (say once every year) in the light of
changing circumstances. The group or committee should identify
the problems and constraints and suggest a programme of
concerted remedial measures to be instituted in each sector,
industry institution or field of activity. Indeed, this
arrangement would facilitate the implementation of the provisions
contained in paragraphs ^0 and 62 of the Lima Declaration and
Plan of Action.

81. Participants should be drawn from such Ministries,

Government Departments, and local institutions as are directly
concerned with industrial development, and from interested donors
of technical and financial assistance. The Minister of Industry
or his representative should participate in all preparations for
the meetings. This proposal will introduce flexibility in the
formulation and implementation of industrial plans and policies,
according to changes in economic and industrial conditions. It
is strongly recommended that the proposal for the establishment
of a machinery of this kind be discussed with the appropriate
Somali authorities.

I
 APPENDIX "A"
- 41 -

Mineral Potential of Somalia

»,
(EOA Summary)

GOVERNMENT 7? M SoSh (about 12 M USI) provided for mining

sector in the 1974-78 Development Programme.
National Petroleum Agency possible to be created
soon.

EXPLORATION

Technical Assistance

UN UNDP project "Mineral and Groundwater Survey".

Phase III completed April 1974.
A new small-scale project will provide assistance
in "strengthening the Geological Survey of Somalia"
(0.5 million USt for experts and I.5 million US*
from rubles fund as equipment for mineral explora-
tion from USSR).

Bulgaria Survey for tin and lead deposits in Bosasa area,

Northern Province, carried out by a team of
Bulgarian experts.

USSR Survey for various minerals, mainly for piezo-

electric quartz in Berbera-Hargheisa area carried
out by a team of Soviet geologists.

Potential Re sources

Atomic Minerals

Bur region. Alio Ghelle deposit of urano-thorianit

containing 250,000 int. ore with i.\ per cent Th.O ,
0.12 per cent U 0Q and 0.08 per cent Y 0 investi-
gated by UNDP arid KNI-Nucleare Somalia Bliowed non-
economic at present market economic conditions.
Similar conclusions reached by Western Nuclear on .Tac
Brava anomaly.

Mudugh area; carnotite mineralization in Miocene

sandstone, U 0ß averaging 0.1 per cent in Wabo de-
posit with proved and inferred reserves about 5OOO t
of U,0g and I5OO t of Vanadium.
Other* Interesting anomalies with 0,0? - 0,1 per cent
U^Og at Mirig, Dusa Mareb, Bulaleh, Hamur, Wamoley.
 - 4? -

Black Sands About 10 million tons reserves of sand with high

content of ilraenite and 1 per cent T,0? in Kisimaya
area, preliminary investigated by UN expert.

Building Mterials The following occurrences will form the ob.ject

of detailed surveyr of GSD during 1974-78:
Asbestos - Hargheisa, Bohol, Mora, Bana
Bentonite - Busa Mareb, Berbera
Peldopates - Berbera, Hargheisa
Mica - Je Hagaz
Marble - Bur Acaba
Talc - Las Durah, Mira, Qotan
Vermicul ite - Burgalan, Selei, Berbera, Manas

Copper Occurrences in r^aint, Las-Kore area, to be

studied during 1974-78.

Ivosum Suriah-Malableh deposit, 5E of Berbera, *0 M

tons proved and probable reserves, 80 - 85 per cent
gypsum and anhydrite under study for further
development.

Lead Occurrences in Golujet and Pulanful.

Iron ore In Bur region, the deposits for Bur Galan and
Dairmir studied and considered as uneconomic for
development by UITDP. Banded hematite and
magnetite in faruginous quartzites, av. Y-> per cent Pe,
in Bur-Galan for 1r>7 million tons geological reserves
and 20 - \0 per cent fc, about 50 million ton;- in
Daimir.

Oil During the period 19e) >—72 several comnanies have

drilled r 1 exploratory and structural dry hole."!
total lin"- 40.1009 feet.
Burma Oil Company (assoc. with Hammer), lîlf-
Somalie, Deutsche-Texaco and Conoco are carrying
out seismic surveys on offshore and some onshore
areas. The offshore well Hafun will be spudded
in May 1974 by Elf. Government intends to
initiate itself some exploratory works during
1974-78.

Piezo-electric
3MÚL Bilateral agreement established with USSR for
exploration and mining in the Northern province,
Bur Mado area, exceeding 2500 sq.km. with piezo-
quartz mineralization; Wau-Wau deposits studied
for development.

Other interesting areas: Manderia and Abulcadir.

 demolite '¡I i;ur Jeposit -.:ith ron'-: noi; ini if- 71 1er vnt
•'Jepiolite, e^nloite? on vor "nil x.]°.
j'stenitic exploration re -ne~te or "urtr.or
ievelonrcer.t.

i in ^ijf v-1..
ni.no .near ?,o.v>rr-o in tr. 'orthnrn
Provine? i.- nren.-'.re-ì 'n ;>. 3ui.<-\riun TVir for
reoneninT ani further »xtennion.

UID:-:R DI:V:;LOPHIHT A?FD PRODUCTTQ-I

Salt 1000 tone/ car crtin.-nal nroiuction for dor.ertic

use, V' ov-toor-aion. lle^otiatio i- "or t. p.- -or
extraction niant near Hvfun (' ni 11. t/ ear)
ntartci in 1971, arnurentlv surno-v'e'-.'
 - 44 -
APPENDIX "B" 1
SUMMA - H*aim aid Unj Tara EctvnMi t'ubile Sobt
a« it Deccatar 31. 1973.

Projected Bebt Servie* Nymata

(in Milioni of UM H

OtUloal Frlnci«!
Dleburaad Total Debt Service
Currency of SDR aud Out- Undla- (of which, liti-i« t)
taita Peaoalnatlon tqulv. • tandlna. buriad iSZi ism an. istzF »»o : J61

Developacnt Inatttutlona

African Developaent U.A. 5.3 3.85 2.44 3.41 •1( .26 30 .30 .29 .29
•Mk/Pund
(.13) (.17) (.17) (.17) (.16) (.!5)
Arab Fund for Econoalc USS 7.1 6.24 6.24 -
«N aovlti UDV.
<-) (-) (-) (•) (-) (-)
IDA m) 60.rf' 51.23 25.71 23.02 2» .34 .39 .42 . 46
LÜ1 UH Uü JL-Wi
Sub-Total 63.34 ÜLi» 21.43 .47 .60 .69 .72 . .Î .75
Uli hütl LUI LIU i^2¿ ¿¿y

luliarla utl 1.3 1.2« 0.61 •M 14 .13 .13 .13

(.02) (.02) (.02) (Ol) (.01)
China, heplw' top. of RY 135.0 5*.12
Swn 10.0 26.08 62.13 22.07 2.30
(-) (-) (-) (-) (-) (-)
Ceraeny, Fad. Rap. of DM 42.5 13.(6 12.35 .82 .61 .61 .83 .82 .77
(.13) (.13) (.12) (.12) (.11) (.10)
Ira«. I.D. 2.0 3.77 1.02 .22 .22 .21 .21 .20 .04
(.02) (.02) (.02) (•01) (.01) (-)
Italy Lira J,»66.4 7.46 4.20 .»7 94 .91 .SS .84 .51
(23) (.*» (.16) (.13) (.IC) Í.OM)
Kinailt KD 4.2 18.00 18.00 .0« .16 .2/ .27 .»9 .9»
( 9») (.16) (.27) (.27) (.27) (.26)
Libya US( 9.8 8.34 2.M 5.78 .77 1.34 1.30 1.26 1.23 :.i»
(.34) (31) (.M) (.26) (.22) (.21)
Qatar US» 10.0 (.34 1.34 .2« .97 .83 .92 .90 .88
(.Í6) (.24) (.21) (.1*) (.17)
Saudi Arabia USS 4i.( ».11 15.31 23.80 2.39 4.C7 4.C7
(-) (-) (-) (-) (-) (->
United Stataa USÍ 14.5 12.39 12.39 .12 .12 .61 .60 .6» .68
(.12) (•lì) (.20) (.28) '..27)
U.S.S.R. R. 104.0 117.20
60.03 .87 2.20 2.91 6.02 5.93 5.0.
(St | 1.3 2.59 39.10
(.21) (.20) (.91) (.931 :.-"•) (.6J;

Sub-Total 3U.74 179.14 128.75 4.17 6.70 ,.90 13.51 15.«0 16.64
1L*J1 SldtÙÛL »•»> xL-m a..93_i g. Mi;
CRAW) TOTAL »*•<>• ^lS.53 157.18 4.64 7.30 8.J9 H.23 16.52 17.3°
d-*» (!•««) (2.71) (7.54) (2.0J) (;.i¡)
Heao Itea: (at of Dec. 1973, SDR)
(106.6) (112.*)

Note:

African Develop•,'Ld^.'"síoV a tù^loT' ¡Ä^ d „,

..s.,.«. „,.... «„, _ (I0 yMr. ,t 2,)$f^Vuh::'f.ron;£^Ar.b^i^..^o,c ^I^ILc^U1—
1/
ui,n7on",^„rLr,r2:3n;iofsrrr0¿!¡.iríi lu^i.0ru ¿i\r-°-94
Kuw.lt Dinar 0.3*<.35; Roubü 0.88734
n, tL.si|.
S U 0u.vB.,,
578 SoSh.
so.She. 17.36*3.
Mix ' ?!«. , I "^"'v'1Financial
(IHÍ, tntarnatlrral " «»-'.Stitntlce^,

U Include« US$1.9«. eachenge «djuaaeent and JÍ30.000 Project Pr-atatlon Credit

V
bTtn-r^unt'org^^j^^r^-^.r^-::.!-/'- - °< «-«- - ^„^c (SUR 3,0,1 .lu.n)
Source Date provided by the Cen'r.l Rank oi r,uaalla and xl.elon ceti»tea.
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 - 47 - APPENDIX "Ew

MMLU • TAMrti ky CIMI «Hl«». lt70-74

(to •till«*« «1 lOOs)

U2L-— —mir- jm jjn Jli

Ht "IC TJT"
Vllw HK Ulm» ««M MIM (l V*lM IMI v«Wa

Caiuli t«4 tirili tnten 14.7 24 7.5 7.7

fratti «al <n«itakl«i 1.1 1 1.1 « l.J 1.» 1.7

tuaar aai aaair ir«auitj 0.1 - 0.1 - 1.0 5.7 0.1
Caffi«, CM, UM) *•••* 1.1 1 1.1 l.S l.S 1.0
«•«•tlfll icW t«k««c« 1.1 1 l.f 1.0 1.» 1.0
Miai «B4 *i|itakli ilW «ne fan a.i S 1.1 I.» l.l 1.7
««•••«111« MMaal «Ml <l|lt«lll «ruai
Hlllllll ì.i 1 1.0 1.4 1.0 1.7
Ht ri li« ••< il Ut «4 «nauti i.i « 1.7 1.1 1.0 0.0
üMICJI ml »niraaitvtUiL «raavcti 1.! 1 1.0 1.5 5.0 J.l
OMBICII «ni rukkar »»ave ci 1.« 4 1.« 4.4 4.5 7.0
••IMI IM MMI «néutti t.» * 4.0 1.7 4.0 o.s
•M, l««Mt «Mi c«rk i.i 1 0.* 0.« l.J 1.7
TmtlUi i.i ( S.l 4.0 7.5 11.4
CUtklaa i.» 1 l.t l.t 1.« Ï.7
«till (klM) ì.i J 1.1 l.J 1.1 0.«
•kit«! «mi atMial —iwftctyrn t.i S l.S S.l S.4 0.0
lUctrli«! HikiMry o.t 1 1.1 5.4 J.S 5.0
•»•IM tritìi «KklMry i.« s t.; S.t 0.5 11.4
ltlMlll*M«u< mm»ltct»n4 irttclu i.« 4 1.7 5.0 J.O 5.1
IraaaMTUtiM laalsaaat 4.» » 4.0 7.4 11.3
Otk«t Oil _,
T«*at 4S.I MO M.t 100 0.1 •0.5 100 110.7

y An «MltUMl SM t.O HUM •( traaaaartatiaa «wlaaaat, Maflua k* *• «000, an raaarta« •> dw Cwcnl On* «f ImlU.
•tot«: I«.Mi. MI SN tlvir«« cat« tor «aria«) - Mum »70: 7.145i »71: 7.14*3; 1071: 7.ST7S; 1071: 7.4004: »74: 7.S000.

Hnctiriti Grant «f rtaaalaa, mi CwiOlaitUa. teacnl SutlitUal rowlk» trial «tura »70. it». 1171 «a«
il» I« lutimeli Akltr.it. 1071.
 APPENDIX "F"
-48-

NNU.U • Coaaoalty laporta by Country of Orilla, l»»0-74

Cía allUoa* of SOU)

1»70 1171 1»72

Tir Nr
W* 1*74
for Far Ht
Valu« cant valut coat Vain* coat Valu« cant Valu* cone

a In», Moni««' UpualU of O.i 4.C U.f 7.5

Ethiopia 1.2 1.1 1.7 1.»
franc. O.J 0.7 1.1 4.4
**T*an». Ftdural tepukllc of 4.1 1.1 4.7 4.0
Italy U.I 10 17.0 27 20.4 M 21.) 12.« II
'apon 3.« 1.» 1.1 4.1
<*nya 2.4 1.5 l.é 5.7
c
tn|apor* 2.2 2.1 1.0 1.7
frailan« 0.2 - 2.0 ~ « 4.4
mitad Klnatta I.» 4.2 4.1 4.2
'Jtutcd Stato« 3.» 4.5 2.2 2.»
l.S,¿.I. 1.0 4.1 10 1.5 14.« 11
Yoaao, faapla»' Ota. gap. of 1.4 1.2 1.1 2.1
Cthor Arab ¿ouotrlai 1.5 O.i 1.« 4.1
Ctnar 4.7 J£ -*¿ Ji 10.0 J± -LI -11 24.li/ Ji
othor 45.1 100 »2.i 100 M.l 100 100
N.5 110.7 100

..' I-clud«. so« 4.} Billion for tugar laaorta froa Haurltlua tad IN 3.4 all Ilea «cat IT for cantila aal vara laporta froa
ra«l»t*n.

No-.« So.»«, »r SB« (avara|* rate for porlod) - thru 1»70: 7.143; 1971: 7.1411; 1072: 7.5775; l»73: 7.4M4; 1174: 7.3404.

Sourc« Dircctorac« C.naral of Plaaalai aad Coordination, Contrai Stallatica! DaearCBaat, Fortita tra*, latum« l»/0. 1172
• 97'. «n^ '.V. «ne ¿ttttttlcal ».«tract. 1172. m*« »Til »HiTf tf'Vi H't,,
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Apparai* "j"

- 5? -

:CIP1ICAL A53ISTÀUCE PROJECTS BEOTO UNDERTAKE OR RECENTLY COMPLETED

IN RELATION TO THE INDUSTRIALIZATION OBJECTIVES

C?. The total investment target for industry laid down in the 1974-1970
Plan is about Co. 3h 1079 million. The various projects are shown here below. -^

Projects Financed by UNDP/UNIDO;

Technical co-operation projects and activities wholly or

martially financed by UNDP/UNIDO during the period 1972-I976 and in
1977 are nummarized below:

Project/Activity Title Project No. Agency Expenditure ftJSl)

1972-76I977
COMPLETED PROJECTS;
1. Training Centre for hides SOM/67/511 PAO 255,173
2. Development of building
materials industries SOM/71/80^ UNIDO 9,500
806 UNIDO >5,250
SOU/7 V
3. Industrial development SOM/68/021 UNIDO 8% 207
4. Industrial Organization SOM/71/803 UNIDO 1?,50O
"1. Industrial Survey SOM/72/OO4 UNIDO 'H.152
ó. Small Industries Adviser SOM/72/006 UNIDO r
íiW.
242.282

ONGOING PROJECTS!
7. B.v-Products utilization plant SOM/72/010 PAO 296,467 29,776
0. Oypsum pilot plant SOM/71/007 UNIDO 74,027 44,000
9. Strengthening the Ministry of
Industry SOM/72/OO7 UNIDO 412,737 117,300
10. Building materials industries SOM/74/002 UNIDO 54,227 659
11. Foundry and Mechanical Workshop SOM/73/004 UNIDO 285..05.1 113,009
1.12?, 5.O9 304i7tf

]/ See Industrial Sectoral Review Technical Report DP/SOM/72/007

of December 1977, pages 37 - 39
 51 -

TRUST FUND AND OTHER FUND PROJECTS,

1?. Assistance to SOMALI Development Bank RP/sOM/76/001 UNIDO
11. Animal feed plant TF/sOM/77/001 UNIDO-FRO
14. Solar Water distillation Plant UNTDO-UNTCEF

TRUST FUND PIPELINE PROJECTS

Oil seed and bean production S0M/501/NECP TF(FAO-IRA;J
V. Solar Salt Production UNIDO
17. Development o'' Charcoal industries UNIDO
10. establishment of an Edible Oil Factory
UNIDO/BULOARIA

In addition to the above mentioned country Dro/jects, three regional

and inter-regional projects are beinp financed b;- UNDP, namely :

Title Pro.iect No, •egerie:.

Advisor-; Groin <m Pood and Agricultural
Industries 'jprel onme i* RAF/7?/0? !
:'Ao/ y,\
Industrial Jem Ventures RAF/74/OV .INTDO
Central Advi.\>r. Services to IDCAS ííKM/71/^W UNIDO
Bilateral Cam t.-.j A:.;ci::taucc:

Man,v mediu- ,'• 'ar^ r^-M- nrojf-L.-. wpre financed through bilateral
ai!S,
"tl1 '• '*'• ;V|
' ' >> 11." list providers such projects with th»>
bil-it^rn ' • r and ••.iur- of capital assistance offered.
 - S1 -

Project I/onor Country Capital assistance

Petroleum 'm'iner' 6,500,000
//nincion of Textil« Till SAUDI ARABIA 17,000,000
;<i r-rxr Fntov SAUDI ARABIA 6,900,000
y^o-iT'r" air! Mechanical Jorkshon YUGOSLAVIA 240,000
"eat Factor', Kismayo USSR N.A.
v
"il" .'int,or •, I*o"Tidiscio USSR N.A.
-
"ir¡h tinier , Lan-Koreh U3-1 N.A.
p
Printin" recn USSR N.A.
'".tate Priitinr Preen FEDERAL REPUBLIC
OP G3RI1ANY 480,000
Cement ?actorv, Berbera NORTH KOREA 5,800,000
:i
alad Irrimtion Project to
Sunnlv Cotton to 50I1ALT2X NORTH KOREA 18,700,000

o5. Other capital assistance has been extended by multilateral

orfani nations. United Nations Capital Development FHind has provided a
rrant amounting to USî 1,^55,000 to establish seven maize drying units
together with associated ancillary equipment in the six major maize-
nroducing districts of Somalia. Also a 1 5 million IDA credit to the
Somali Development Bank (SDB) is recommended, of which an amount up
to •> 260,000 would be available for meeting part of the cost of the
ntaff development nrogramme and the balance amount of \ 4.74 million
would be utilized for meeting the foreign exchange cost of sub-projects
financed by SDB.