North-south economic divide growing

The combined effects of the continuing livestock ban and high inflation are leading to a growing “north-south economic divide” in Somalia, said a joint report by the USAID Famine Early Warning System (FEWS NET) and the European Union funded FAO/Food Security Assessment Unit (FSAU). The north and central parts of the country continue to suffer the impact of lost livestock exports to the Gulf states, whereas the ban has had a “negligible impact” in the south, FSAU said in its April monthly food security report (www.unsomalia.org).

Internally displaced persons (IDPs) and the urban poor in Bosaso [commercial capital of the self-declared autonomous region of Puntland, northeastern Somalia] were “struggling to maintain a viable existence in the continuation of the ban and inflation”, FSAU/FEWS said. Urban markets throughout Puntland, were reportedly closed by mass demonstrations, after a steep fall in the value of the Somali currency pushed up food prices. The seasonal Gu rains are also late, and expensive water trucking has begun in many areas, further restricting the ability of families to buy food.

In the northwest, the price of imported rice has jumped as a result of the rapid currency depreciation. In Burao in the self-declared independent state of Somaliland, northwestern Somalia, FSAU/FEWS said that one day’s labour could buy nearly eight kilogrammes of rice 12 months ago, but only bought about two kilogrammes in April. In other parts of Somaliland, the high inflation rates had made it difficult for farmers to access credit, and they have been unable to prepare land for cultivation. Many agro-pastoralists in these areas had resorted to feeding their cattle on “dry stalks” in order to survive, the report said.

Southern regions had been able to partly offset the effects of high inflation and the livestock ban with good local harvests and access to the Kenyan livestock market. However, the inflation rate was in April at its highest point since the early 1990s, and markets and consumers were experiencing “extreme financial instability” as newly printed Somali shillings continue to enter the market, the report said. Reports from Mogadishu’s main Bakara market indicate that the Somali shilling depreciated from 14,000 shillings to the US dollar in March to 20,000 to the dollar in one month. In April, about 4 million dollars’ worth of Somali shillings had been imported into the country, FSAU/FEWS said.