The Pace and the Pattern of Somalia’s Trade Relations with Turkey
Introduction
Geography plays a crucial role in international trade and so that
the distance between trading partner countries matters a lot. Meaning that the
bigger the distance between countries, the lesser the trade between them (David, H., Dorn,
D., & Hanson, G. H. 2013). Turkey
and Somalia are not geographically close to each other and the fact that
Somalia has never been stable for a long period of time resulted in that the
two nations to had almost zero or relatively too small trade relations in the
past. But, ironically, for the last decade, the two nations have become trading
partners and close allies, in some regards.
The relations started when Turkey responded to the devastating
droughts in Somalia with the necessary humanitarian assistance[1] in
2011 (Slim, H. 2012). The prime minister
of Turkey then, but now the president, paid a historic visit to Mogadishu, at
that time of humanitarian crises in Somalia. That was not just a provision of humanitarian
assistance to the needy Somalis but turned to be a breakthrough of a charming
relationship between two potential partners (Sucuoglu,
G., & Stearns, J. 2016).
The relations have begun to grow faster and also have had an effect
on multiple areas such as trade, development, and security. Turkish private
business companies started collaborating with their Somali counterparts. The
bilateral agreements between the two countries ranged from education and health
to security and peacebuilding (Achilles, et al 2015).
In 2012 Turkish Airlines started regular flights to Aden Adde
International Airport and that has surely helped the isolated country to
reconnect to the rest of the world once again. Favori LLC[2]
increased the capacity of the airport from 15 to 60 aircraft after a bilateral
agreement between the company and the Somali government allowing the company to
run the airport. Mogadishu port was also leased to Albayrak[3] Group
in 2013 with an agreement that enables the company to claim almost 45 percent
of the whole shares of the port in a 20-year deal. In turn, the company is to provide
training for the Somali staff and the company also rehabilitated and built the
necessary infrastructure required for the port (Bilkay,
S., & Yilmaz, M. K. 2017).
The direct flights of Turkish airlines to Mogadishu and the
rehabilitation of the Mogadishu port have become the building block for a
faster-growing trade relationship between the two countries. 2010 has been a
threshold for the beginning of an immensely increasing trade between Somalia
and Turkey. Because 2011 was the year Turkey first landed on Somali soil
with the much-needed humanitarian assistance. That was not a year of only
humanitarian assistance but also that was the year in which the trade between
the two nations started to rapidly grow (Gullo, M. T. (2012).
The relations between the two nations have been much deeper than
trade but a pervasive one and have had an effect on much broader areas such as
health, education, and security. But in here, this article, we are only
concerned about the trade relations between the two countries. To do so, we
will evaluate, quantitatively, the amount of which each country imports from and,
at the same time, how much one exports to the other.
First, we looked at the overall trade volume without any
specifications or separating the values between exports and imports. But we did
the specifications in the next section. Then, we examined the balance of payments
and how deep is the deficit. Next, some suggestions regarding the causes of
such deficits and the possible solutions are discussed. After that, we
evaluated the log levels of each import from and exports to Turkey in order to
assess their trend or if there are any relations between them.
The Overall Trade Volume
The trade relations between Somalia and Turkey have been growing
exponentially in recent years which is remarkable and amusing in some aspects
as the geographic distance between the two nations is significant. The trade
relations between the two countries became tangible only before a decade. Before
then, roughly, there were hardly any trade relations between them. That is what
makes the subject matter very fascinating.
The trade volume drastically increased from less than half a million
in the early 2000s to more than 250 million in 2020 as illustrated in figure 1.
Figure 1
Figure 1 shows the overall trade volume between Somalia and Turkey. As in the figure, the graph illustrates an exponential increase in the amount of trade between the two countries which has been hugely experienced since 2011[4].
Exports to Turkey
Somalia’s export to Somalia is too small compared to the imports it
does from Turkey on a large scale. It should have been vice versa because
Turkey is the bigger economy with a larger population and a larger purchasing
power. But the situation is not what it should have been and the reason, as it
is obvious, is that Somalia lacks the necessary institutions needed to plan and
carry out the national economic missions and goals for the good of the people
and the country.
Figure 2
Apart from the small scale, there is also inconsistency in the
exports that Somalia does to turkey as figure 2 illustrates. For example, in
2006, the export to Turkey was more than 2.5 million but
decreased drastically up to almost nonexistence in 2009. Same as in 2011 the
amount increased to almost 2.4 million and declined in the next years to less
than 1 million in 2017. But, again, the volume of the exports to Turkey
explosively grew to more than 6 million in 2018 and expected to grow further in
the future. But that is not guaranteed because the inconsistency is there as we
have already witnessed in the previous years and that is, again, due to the
absence of the necessary economic institution which would plan and set economic
goals for more economic growth, development, and prosperity.
Imports from Turkey
Unlike the exports to Turkey, there is a profound consistency and
explosive increase in the volume of Turkish exports to Somalia. Since 2010, the
volume of imports has been increasing exponentially. In 2010, the number of
imports from Turkey rose from less than 5 million to more than 150 million USD
in 2020 as illustrated in figure 3 and that is an impressive achievement for
Turkey in such a short span of time.
Figure 3
Apparently, that is not a big surprise for those who can understand
the main reason why is the big gap between Somalia’s imports from Turkey
and its exports to Turkey. In fact, the economic policies of each country
matter more than the technological capabilities of a country.
Some big and technologically advanced nations, sometimes, could be
in a trade deficit with some economically smaller countries, America for
example, the largest economy and the most technologically advanced nations in
the world have a negative trade balance and in a trade deficit with some technologically
underdeveloped and economically small countries in the world. Therefore,
smaller nations are supposed to be in a better place when it comes to trade.
But that is when the economically smaller country has a policy and a plan on
hand before expecting any gains from trade. Otherwise poorer countries turn to
be poorer and in a worse position than wherever they were before, and that is
exactly what Somalia is facing now.
The Balance of the Payments
Since 2010, Somalia has been in a deep trade deficit with Turkey every year as the trade relations between the countries started to grow and
flourish. In 2010 for example, the trade deficit was less than half a million
but as the graph below shows, the more the trade grows the greater the deficit
gets, and eventually, in less than ten years the deficit balance went from less
than half a million to 240 million USD annually. In 2019, the deficit was 240
million USD and expected to grow to more than 250 million annually in 2021 as
the projections show.
Figure 4
The above figure explains how deep Somalia’s trade deficit with
Turkey is, and that is due to Turkey’s model towards trade with Africa which is
a kind of “export-led growth” model, and, on the other hand, Somalia’s lack of
any kind of a model. Both these contributed or, actually, are the primary root
cause of the deepness of the deficit. This does not mean that Somalia’s trade
with Turkeys worsened the situation of its previously existed trade deficit
with the rest of the world. Because Somali merchants who used to do their
exportations from other countries turned their attentions towards Turkey in
recent years as Somalia have found closer ties with Turkey. Somalia used to do
its main exportations from Gulf countries, India and China. But, nowadays, there
is a big shift where a large portion of what had been exported from elsewhere
is now coming from Turkey.
Contrasting
The log levels of both values[5]
tell us that import from Turkey seems more consistent than the exportations to
Turkey as figure 5 explains.
Figure 5
From 2011 to date, imports from Turkey kept increasing smoothly
which means that Turkey had a clear plan to accelerate its trade ties with not
only Somalia but with the entire African continent as their trade with the
continent went from 5,4 billion in 2003 to more than 25,3 billion USD in 2020 (Sharif, S. M. 2020). On the other side, Somalia’s
exportation to Turkey is not as consistent as the imports it does from Turkey.
The main reason, again, is that the responsible governmental institutions have
no clear vision or policies regarding the trading, modeling, and finding
opportunities by bridging the gap, cutting the ropes of isolation, and reaching
out to the world.
In addition to that, Somalia’s current situation, instability, and widespread corruption ruined the nation. All these
challenges are what kept the means of production of the country to remain
underdeveloped. Also, corruption is what caused the unskilled personnel to end
up in major policy-making positions in government jobs which in turn bring
about ineffective or, sometimes, disastrous policies to be made.
Conclusion
Turkey’s aid response to Somalia’s 2011 droughts was the beginning
of the charming relationship between two potential partners. Turkey's presence in
Somalia did not remain just a humanitarian operation but also started to aim at broader areas of relationship between the two countries. The relations have begun to grow faster and
also have had an effect on multiple areas such as trade, development, and
security. Turkish private business companies started collaborating with their
Somali counterparts. The bilateral agreements between the two countries varied
from education and health to security and peacebuilding.
The trade volume between the two countries significantly increased
from less than half a million in the early 2000s to more than 250 million in
2019. Somalia’s export to Turkey is relatively small compared to the imports it
does from Turkey on a large scale. For example in 2010, the number of imports
from Turkey rose from less than 5 million to more than 150 million USD in 2020
while the exports to Turkey remained 6 million in 2020. The reason, as it is
obvious, is that Somalia lacks the necessary institutions needed to plan
and carry out the national economic missions and goals for the good of the
people and the country.
The problem is not that Somalia does not export but, actually, is
the importation of what can domestically be produced. Somalia does not have the
problem or the fear of scarcity in natural resources as some countries in the
world do. However, the problem Somalia does have is the fact that, at least
right now, there is no stable environment[6] in
which policymakers can formulate plans regarding the extraction and the
management of those resources on hand to satisfy the basic needs of the people
instead of importing those basic necessities from elsewhere.
The argument that says ‘’there is no peace in Somalia’’ is
irrelevant as some parts of the country are stable but still depend on imports
from abroad. Therefore the problem is more complicated than we can imagine. The
culture of Somalis is a huge part of the problem but the most horrific thing
which hinders the country from any kind of development is the widespread
corruption in Somalia’s system of governance. Corruption is the source of all
evil, mismanagement, and disastrous policies as corruption allow the wrong
person to get assigned in the wrong position.
References
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A. E. (2015). Turkish aid agencies in Somalia:
Risks and opportunities for building peace.
Bilkay, S., & Yilmaz, M. K. (2017). The Place
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a Soft Power: Sample of Turkish Airlines. Current Debates in
International Relations &
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David, H., Dorn,
D., & Hanson, G. H. (2013). The geography of trade and technology shocks in the United States. American
Economic Review, 103(3), 220-25.
Greenwood, C., Leifer, M., Light, M., Nish, I.,
Stephenson, D., Walter, A., ... & Watt, D. (1996). The
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Cambridge University Press.
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The quest for soft power and regional recognition. Research
Turkey, 1-13.
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humanitarian response to the horn of Africa
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reliefweb. int/sites/reliefweb.
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Sucuoglu, G., & Stearns, J. (2016). Turkey in
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[1] The humanitarian assistance from Turkey in
2011 was worth more than $ 201 million according to the reports of TIKA.
[2] Favori LLC is a Turkish Company which involves
in airport management and ground handling.
[3] A group of Turkish companies established in
1952 and involved in construction, industry, services, and logistics with close
to 50 companies and brands in the broadcast and media industry with more than
15,000 employees.
[4] The year Somalia experienced humanitarian crises and the Turkish humanitarian response.
[5] The values of the trade with Turkey
[6] As most people argue the same, insecurity and the political instability in the country is the source of all problems.
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