Somalia on the verge of economic collapse

Somalia is on the verge of an economic collapse unparalleled in modern history, the United Nations Humanitarian Coordinator for Somalia said on Monday. Addressing a press conference in New York, Mr. Randolph Kent said that although there were "obvious and doable" solutions to the deepening crisis in the country, "we now find Somalia on the precipice of potential and total economic collapse." Kent said that even though there was a growing appreciation within the international community concerning the real dangers of ongoing instability and so-called "failed state syndrome" as evidenced by Afghanistan's recent experience, Somalia now stands on the threshold of ruin. Kent said that over the course of the last few years he had seen a pattern of stability emerging in Somalia with peace spreading slowly through the country. There had also been significant development of the local economy which in some cases has thrived in the particular economic climate of Somalia. But following the ban imposed by Gulf States last year on the export of Somali livestock and the more recent closure by the American authorities of the Somali owned Al-Barakaat banking and telecommunications systems following charges of aiding and abetting terrorism, the always fragile economy now lies in tatters. Speaking from Mogadishu a leading Somali economist told IRIN on Tuesday that the economic situation was worsening by the day. "There are lots of problems here - people are really suffering. The problem should not be underestimated," he told IRIN. Prices of staple goods were rising exponentially he said, with a one kilogramme bag of rice, which three months ago could be bought for 2,500 Somali shillings, now costing 8,000 shillings. "All food prices have risen by a minimum of 50 percent," the economist said. The closure of Al-Barakaat had, he said, not only had a devastating impact on the money transfer pipeline on which so many Somali's depend, but the closure of its telecommunications wing was severely hampering business' ability to operate as other smaller telecom companies are unable to shoulder the burden of increased traffic. Moreover, Al-Barakaat which used to employ more than a thousand people now employs a skeleton staff of less than one hundred. But, most of all said the economist, people are angry. "They do not understand why America is saying these things about Somalia. They think they are being treated unfairly and believe that they are the victims of a grave misconception - that Somalia is rife with terrorists and Islamic fundamentalism. For years the world forgot about Somalia but now they are paying attention again it is entirely in a negative light. People are not happy."