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Issue 549/ 4th - 10th Aug 2012
How Much Money Will It Cost To Rebuild Somalia?
By Dissident Nation
When the regime of former Somali president Siyad Barre fell in 1991 the ensuing conflict damaged or destroyed hundreds of millions of dollars worth of infrastructure. Before the collapse of the last Somali regime, the Americans, Soviets, Italians, Iraqis, Emiratis, Chinese, Saudis, and a number of smaller partners took turns financing and constructing various parts of Somalia’s civil infrastructure and developing its manufacturing capacity.
Today, Somalia’s wide-eyed former partners no longer have any interest in the country. But Somalia is not left out in the cold since it still has possessions worthy of desire. The only reason why the Chinese built the roads and the Soviets built the ports and the Arabs built the refineries in Somalia was for a pragmatic ulterior motive.
To no one’s surprise, newcomers like Turkey, the United Kingdom, and even India are focusing on Somalia and offering to pick up where others left off. Even during war, Somalia still attracts old partners–China, the United States, the United Arab Emirates, and a handful of former assistance-providing states are refocused on Somalia and wanting a piece of the pie they once lusted after.
To understand how much money Somalia’s reconstruction will demand, you must first assess individual costs, and the first clues are in the past. The Italians spent $250 Million constructing a road between Garowe and Bosaso. And in 1989 contracts were signed with Romania to construct a $500 million oil refinery with a 200,000 barrel per day capacity, though the project never materialized due to the conflict that erupted two years into planning.
Somali ports, chiefly Berbera and Kismayo, were built and improved both jointly and separately by the Soviets and Americans, and are said to have cost in the league of over $100 million. Somalia’s only major agricultural undertaking, the Baardheere Dam Project, was estimated to cost $600 million by the world bank, though it never came to fruition.
A 120,000 barrel per day refinery in Lamu, Kenya is expected to cost $2.5 billion, meaning that the same refinery that was planned in Somalia back in ’89 would cost roughly $4.2 billion if built today. When considering Somalia’s odd though advantageous shape and abundance of ports and possible harbors, any pipeline from the oil or gas source to the nearest shores would cost under a billion dollars.
Similarly, roads and railroads can be easily and cheaply built in Somalia, costing altogether no more than $5 billion to serve the entire country. Somalia’s flat landscape and narrow rivers also leaves demand for expensive bridges virtually nonexistent. Networks of bridges over land and rivers across Somalia would cost no more than a billion dollars in the effort to ease travel.
Somalia’s petroleum and natural gas potential also eases the demand for energy-producing hydroelectric dams. Any dams in Somalia would be to the effect of supporting agriculture. Somalia’s aridity can be alleviated through canal networks and a system of boreholes in the driest regions. In the near future, Somalia will not need desalination and thus we can avoid worrying about those costs. For all agricultural infrastructure let’s say $2 billion would be needed in the near future.
Somalia currently has four major ports, three of which are meeting their current demands. While Mogadishu, Kismayo, and Berbera will only need technological upgrades, Bosaso seaport will need a major reconstruction to meet future demands. As is already happening, the business and production needs and exports of Somalia’s inland communities can be diverted to any of the major ports; Somalia’s port infrastructure is in no need of further development at the moment. The total funding needed for seaport renovation and reconstruction would not float much more than a billion dollars initially, if even that.
Since the outbreak of civil war in 1991, Somalia has only had one new airport/airstrip built, and it’s the Bandar Qassim International Airport in Bosaso. The airport comfortably handles its current demands, though it is in dire need of a technology and services upgrade. Only Aden Adde International Airport in Mogadishu is currently equipped with the tools to qualify even as semi-modernized.
Somalia will need at least one new airport to meet future aviation demands going in and out of the country, and a modest $1 billion upgrade to Aden Adde International would do the trick. From Mogadishu, passengers can take further flights to other locations across the country. Smaller airports like those in Bosaso, Hargeisa, Kismayo, and elsewhere will need only minor technological upgrades.
Thus far we are floating around $15-20 billion total needed to rebuild Somalia’s most key infrastructure for the decade coming.
After the roads, sea and air ports, dams, and refineries are patched up Somalia will need to rebuild its manufacturing infrastructure. Textile factories, tobacco processing plants, fisheries, and mineral processing plants will need to be reintroduced to meet Somalia’s domestic demand if it is to be reintegrated into the international community as a modern nation.
The costs of these factories prewar are hard to find, and negligible as well since the Somalia of 1980 was not expected to be a strong performer. But today there is immense pressure on Somalia to produce and to compete on a higher level, from both its neighbors and a demanding global community. To meet major demands, Somalia will need to invest at least $5 billion to construct factories and train its people in the capacity to meet expected demands.
Health, education, and other types of social infrastructure will have to take a backseat to Somalia’s economic needs. Taking a page out of Asia’s growth trends, the first decade should be focused primarily on getting everyone into work so the current generation can afford to put their children in school.
How will this be financed?
Abound are plenty of outlets to seek financing. Loans from international organizations are plenty, though dangerous. Another way to go about this is to use leverage. Somalia has to entice investors with its goods; minerals, oil, natural gas, agricultural property, and whatever else it can potentially sell to interested parties. And considering the level of interest nations like Turkey and the UK have taken, Somalia must have already pitched a hell of a campaign.