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FDI in Figures

According to UNCTAD’s World Investment Report 2023, FDI inflows to Somalia reached USD 636 million in 2022, up by 5.8% year on year. At the end of the same period, the total stock of FDI was estimated at USD 4.9 billion, representing around 60.3% of the country’s GDP. The capital Mogadishu is currently experiencing a construction boom mostly fueled by Turkish investment, signaling a certain optimism that Somalia is improving. The sector that attracts the most FDI is food processing (bananas and fish) and, more recently, the telecommunications sector. Germany and the United States are the main investors in Somalia. The country launched a new investment promotion strategy in 2020 that outlined 10 priority areas for foreign investment, including livestock, fisheries, energy, and manufacturing. However, strong instability in the country remains a major concern.

Somalia has substantial potential in natural resources: agriculture, livestock, fishing, and hydrocarbons. If the stabilization of the country takes place, this wealth as well as the telecommunications sector could attract many investors. Moreover, Somalia has a young population, a diaspora willing to invest in the country, and, with the longest coastline in Africa, is strategically located to become a potential regional economic hub. However, Somalia is the most corrupted country in the world according to Transparency International (ranking 180th out of 180 economies in the 2023 Corruption Perception Index). The numerous factors that impede FDI include ongoing violence and political unrest, a largely informal economy, high corruption levels and lack of transparency, a lack of central authority jeopardizing rule of law, and lack of basic infrastructure. Moving money into and out of Somalia, enforcing protection of intellectual property, and maintaining access to inexpensive and reliable electricity is also challenging (U.S. Department of State). Foreign firms have shown some interest in investing in the hydrocarbons sector and ports infrastructure, and recently the government has strengthened its regulatory framework to boost hydrocarbons exploration. Recent studies suggest potentially important offshore reserves. In 2023, Somalia implemented a new Investments and Investors Protection Law, aimed at drawing foreign investment. The law eliminates various investment screening measures that previously restricted capital deployment, allowing foreigners complete ownership of their investments, repatriation of capital, and full protection within the country.

 

Country Comparison For the Protection of Investors

  Somalia Estados Unidos Alemanha
 
Foreign Direct Investment 202020212022
FDI Inward Flow (million USD) 534601636
FDI Stock (million USD) 3,685.54,286.54,922.5
Number of Greenfield Investments* 1.00.02.0
Value of Greenfield Investments (million USD) 1090135

Source: UNCTAD - Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

 

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Tax Rates

Sales Tax
10% (standard rate).
Company Tax
35%
Withholding Taxes
Dividend: 5%/15%/35% Interest: 10/35% Royalties: 10%/35% (Reduced rates apply under a double tax treaty)
Social Security Contributions Paid By Employers
No mandatory regime
Other Domestic Resources
Somalian Ministry of Finance
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 
 

Individual Taxes

Tax on individuals Progressive rates from 0 to 10%
 
 

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Investment Opportunities

Tenders, Projects and Public Procurement
Fontier Market Network, Tenders in Africa
African Tenders
DgMarket, Tenders Worldwide
 
 
 

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Latest Update: May 2024