Why is Somalia poor? The numbers and the forces

How poor, in numbers

• Somalia's economy was about $13.2 billion in 2025 (Central Bank of Somalia, Annual Report 2025). Shared among about 19.7 million people (UNFPA), that is roughly $670 per person a year.
• In 2022, 54.4 percent of people lived below the national poverty line (Somali National Bureau of Statistics).
• About 3 in 4 nomadic people are poor (World Bank blog, April 2025).
• In 2026, 47 percent of households could not afford a minimum basket of food and essentials without help (CFSVA 2026).

Money from relatives abroad lifts what families can spend. Net transfers into the country, mostly remittances and grants, equalled about 27 percent of GDP in 2025 (Central Bank of Somalia, Annual Report 2025).

The forces behind it

1. The loss of state institutions in 1991

When the state collapsed in January 1991, the Central Bank, the national currency and the public banks stopped working (Central Bank of Somalia, History). The Central Bank still has not printed a shilling since 1991, so the economy runs on dollars (Central Bank of Somalia, Annual Report 2025).

2. Droughts and floods

Most rural families live from rain-fed farming and herding. In late 2025 the Deyr rains failed, and southern cereal output fell 83 percent below average, the lowest since 1995 (Central Bank of Somalia, Annual Report 2025). The World Bank finds that poorer districts are the most exposed to drought (World Bank blog).

3. A narrow export base

Somalia imported $7.3 billion of goods in 2025 and exported $1.26 billion. About 73 percent of goods exports were live animals sold to the Gulf (Central Bank of Somalia, Annual Report 2025). When one export dominates, a bad rainy season or one import ban hits the whole country. In 1983 a Saudi ban on Somali cattle opened a large budget gap (US Library of Congress).

4. Few jobs

Only about a quarter of adults were working or looking for work in 2022, and youth unemployment was 30.1 percent (SNBS, SIHBS 2022). About 500,000 young people enter the labour market each year, against about 80,000 new jobs (MENA Startup Digest).

5. A state that collects little

The federal government raised $404 million of its own revenue in 2025, about 3 percent of GDP, and depended on donors for most of its budget (Central Bank of Somalia, Annual Report 2025). Federal capital spending on roads and buildings was only $75 million that year (same source).

6. Old debts that blocked finance

Debts from before 1991, swollen by unpaid interest, reached $5.2 billion and kept Somalia from normal World Bank and IMF lending until debt relief in December 2023 (World Bank, 2020; IMF, 2023).

7. Insecurity

Insecurity disrupted planting and harvesting in 2025, according to the Central Bank (Central Bank of Somalia, Annual Report 2025). It also raises the cost of moving goods between towns.

What is changing

• Money from abroad reached a record $6.79 billion in 2025 (Central Bank of Somalia).
• Mobile money reaches most adults, and payments can now move instantly between banks (Central Bank of Somalia).
• Debt relief has reopened low-cost finance (IMF).
• Domestic revenue nearly doubled from 2020 to 2025, and bank lending grew 14 percent in 2025 (Central Bank of Somalia).
• Trade blocs: Somalia joined the East African Community in 2024 (EAC).

Somalia is poor, but it is not standing still. The country's people, firms and diaspora rebuilt payments, telecoms and trade when there was no state, and the state's institutions are now being rebuilt too. See Forces moving now.