Economic Impact of Regional Instability on the Horn of Africa

Economic Impact of

Regional Instability on the Horn of Africa

Heritage Institute’s Annual Forum of Ideas, December 14, 2021

Keynote Presentation by Dr. Ali Issa, The Executive Director of the National Economic Council (NEC) of Somalia,

Bismillah Rahmani Rahim,

Assalamu Alaykum Warahmatullahi Wa Barakatuhu,

Salutations all.

My few remarks at this meeting will focus on the economic impact of regional instability in the Horn of Africa (HoA)

First: I will mention some facts of global indicators that regard the HoA Africa Countries’ overall state of economic performance:

  • For about a decade and half there has been some modest growth in several of the HoA countries including Djibouti, Ethiopia, Kenya and Uganda; Sudan and Somalia also showed some modest recovery.
  • All 8 member countries of IGAD (except Kenya) are among the least developed 25 countries in the word according to the latest UN list of November 2021.
  • The health indicators are also among the lowest in the world.
  • For decades the region of the HoA has been marked as the weakest link in the development derby.  It has been the poster child of poverty and starvation.

 SECOND: the key challenges facing the regional economy in this critical period are a combination of unforeseen events, including:

  • The renewal of generalized insecurity in most of the countries.
  • The Global health pandemic on its fourth phase in most of the world, which has potential to further weaken the global economy.
  • Climate change impact which makes the HoA region one of the most affected after the SAHEL region in Africa and the small island nations at the oceanic regions. The global climate change is further leading to recurrence of famine –which is currently, as we speak, ravaging some regions of Somalia.
  • These current challenges and the prevalent weak institutional and human capacities and poor governance are combing to make life more difficult for the peoples of the HoA, and in particular the most vulnerable among them.
  • As a result, the economic gains of recent years are endangered and could be severely reversed.

THIRD: Conventional Wisdom among development experts is that for these multiple difficulties to be addressed effectively: Governments should create and encourage an enabling environment for growth and sustainable development; including:

  • Security and political instability.
  • A capable state that has the requisite implementation skills, accountability, transparency and integrity, and that also delivers needed economic and social services.
  • A committed leadership that delivers equity and justice in accordance with the rule of law.

FOURTH: to promote recovery and development of a HoA some required solutions are:

  • Effective Regional integration – this region is the least integrated in the African continent and the world.
  • The region needs more collective cooperation and efforts at the sub regional and Regional economic spaces
  • Knowledge based research to address these recurring problems – such as food insecurity and climate change.

FIFTH and finally: in Somalia and the other fragile states of the HoA, political maturity and stability is highly in demand; and the political elites should learn to turn the page from decades of insecurity and generalized poverty for their nations.

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