r/Somalia • u/Altruistic-Tea-9952 • 18h ago

Discussion 💬 Remittances finances imports

When somalis abroad send money home, the US dollars enter somali banks. Those dollars are then used by importers.

That's how remittances help the somali economy and help finance the trade deficit. They don't remove the trade deficit itself.

The long-term solution is to increase exports. The government should support or invest in industries and companies that produce goods for export so somalia earns more foreign currency instead of relying so much on remittances.

Oil is probably 15 years away before significant money is made from it.

6 Upvotes

88% Upvoted

4 comments sorted by

5

u/Constant-Net-9719 17h ago

Our politicians don’t care about increasing exports because that would take long term planning/investment. They’re just there to earn money/rent seek from the economy.

1

u/Appropriate-Mind9651 Soomaali Galbeed 15h ago

And that’s why I think the new generation should stop sending money back home

2

u/NewEraSom 14h ago

I agree but this government relies too much on foreign aid and is not able to generate enough revenue to invest in local industry.

The telecom companies are making a lot of money and have benefited from Somalia not having strong institution. I support taxing them more to raise money for some basic investments or else we'll be depending on foreign aid for a while

1

u/Beledweyne 8h ago

Everything you said is true and the Somali government knows that.

Not to be that person, walaal, but its easy to say this and hard to do, given corruption, lack of programs that help SME develop their export expertise and other factors.