Somalia Facing Economic Pressure Due to Hormuz Strait Turmoil

Somalia is facing increasing economic pressure after the turmoil in the Hormuz Strait has affected the flow of trade and goods in the country, with President Hassan Sheikh Mohamud stating that the situation has contributed to an estimated 40 percent decline in Somalia's customs revenue .

The President mentioned this during a speech at the 81st session of the United Nations General Assembly, noting that Somalia heavily relies on imports from the Middle East, particularly food and fuel.

According to him, the turmoil in this crucial trade route has raised the prices of goods, inflation, and transportation and insurance costs.

The President stated that the decline in customs revenue could impact a vital source of funding for the government's economic recovery, growth, and efforts to reduce poverty.

Available information indicates that the President did not clarify the duration of the 40 percent decline or provide detailed data supporting that estimate.

This economic impact comes at a time when Somalia has previously relied on imported goods, with the Ministry of Commerce recently stating that the country imports nearly 9 billion dollars worth of goods annually, highlighting the extent to which Somalia's economy depends on foreign trade.

The crisis is also affecting Somali traders and ports, as Somali traders have begun seeking alternative routes for their goods after the turmoil in the region's key routes has increased costs and concerns about shipment delays.

The management of the Port of Mogadishu has stated that they are working with traders to find alternative routes for supplies to reach the country.

The Hormuz Strait is a vital route for energy transportation and global trade, and reports on the situation of vessels indicate a significant decline in the number of cargo ships passing through.

Reuters reported on September 22 that only two cargo ships passed through the strait that day, while the average before the conflict was estimated at 125 large ships per day.

On the other hand, Somalia is facing a severe humanitarian situation, with President Hassan Sheikh stating that more than six million people have been affected by drought related to climate change. The rise in food and fuel prices is thus coinciding with a time when many segments of the Somali population are already struggling with the effects of drought and humanitarian needs.

However, the Somali government is now facing two simultaneous pressures: a decline in domestic revenue and an increase in import costs , while millions of people need aid and support to overcome the effects of the drought.