The ongoing famine in the Horn of Africa has contributed to the development of a humanitarian crisis on a scale not witnessed in the region in 60 years.⁽²⁾ The OCHA estimates that more than twelve million residents of southeastern Ethiopia, southwestern Somalia, and northern Kenya are in need of food aid, clean water, and medical attention,⁽³⁾ and the UNHCR claims that one million persons have been displaced as of July 2011.⁽⁴⁾

The acute humanitarian effects of the drought are largely based in Somalia, and due to worsening conflict between the Somali militant group, al-Shabab, and the Somali Transitional Federal Government. Exacerbating the effects of a civil war which has seen active fighting in most of the country for almost two years now (and which in turn is a continuation of a violent political conflict which has characterized the region since the collapse of the Somali federal government in 1991) al-Shabab have refused the entry of humanitarian organizations since early 2010, denying much-needed direct aid to inhabitants of the region and precipitating a regional refugee crisis.⁽⁵⁾

The current famine is not unanticipated: as various international monitoring bodies have noted over the past year ⁽⁶⁾, the extreme nature of the current situation is caused by an intersection of various external and internal trends and patterns. The foundations for the current state of distress can be found in an intricate mixture of political and socio-economic factors; the aim of this piece will be to outline some of the contributing issues and to describe some of the likely short- and long-term effects for business and industry in the region.

Meteorological Roots

The EU JRC identifies areas in northern Kenya, southern Somalia, and southeastern Ethiopia as undergoing 'extreme drought;' current conditions are the culmination of a year-long trend of worsening rainfall in the region.⁽⁷⁾

The Horn of Africa is certainly no stranger to drought: the central Horn is predominately arid or semi-arid, and the areas between Lake Turkana and Mogadishu experience relatively large annual variation in rainfall levels. ⁽⁸⁾ That said, current precipitation shortages are unprecedented: by some accounts the region is experiencing its worst drought in 60 years. Furthermore, the 2011 drought is following another water scarcity crisis which hit the region in 2009. On July 20 the UN declared the first famine in the Horn in 30 years, centered most severely in southern Somalia and northern Kenya.⁽⁹⁾

Livestock and Bananas: Internal Causes

Productive activity in Somalia is remarkably tolerant of drought, for a number of reasons. First and foremost, animal husbandry (which comprises nearly 65% of the country's GDP and employs a similar proportion of its labour force) is an extremely efficient use of water, especially in arid climates. ⁽¹⁰⁾ Furthermore, pastoralist tribes in the region have developed sophisticated coping mechanisms in order to mitigate the risks associated with both acute and sustained water shortages: Somali pastoralists, for instance, practice herd-specific social, migratory and feeding/watering techniques which have evolved over centuries to maximize the value of available water resources.⁽¹¹⁾

However, these techniques would seem to have a breaking point: according to Oxfam, up to 60% of the livestock populations in the region have perished during the past year.⁽¹²⁾ Given that pastoralism (along with the harvest and export of bananas, another water-dependent activity) comprises two thirds of the nation's GDP and more than half of its exports,⁽¹³⁾ exceeding the limits of water scarcity has led to a state of disaster as all reserves are tapped in the effort to sustain the substantial investment which Somalian camels, cattle, sheep, and goats represent. Livestock prices (for both animal products and animals on the hoof) have dropped through the floor thanks to a glut in the market as the risk of widespread animal death has grown.⁽¹⁴⁾ As nomadic herders are forced to sell at rock-bottom prices, they lose their most important investment and their most reliable source of income.

Second, despite recent growth in some high-tech and services sectors,⁽¹⁵⁾ the nation's industrial and services sectors generate a meager 10-20% of the country's export revenues, and provide employment for only 20-30% of Somalians. In addition, linkages between the agricultural and industrial sectors are strong,⁽¹⁶⁾ meaning that industrial operations are heavily affected by disruption in the primary sector. For this reason the drought has only harmed prospects for industrial development in the region, and the secondary and tertiary sectors form too small a component of the Somalian economy to serve as a stabilizing force.

Underlying issues of sector-specific performance, the by now decades-old conflict in Somalia has been a major hindrance to industrialization and economic development: a resurgence of traditional tribal values caused by the predominance of violence and corruption in the 1990's,⁽¹⁷⁾ poor institutional support and skills development, as well as general risk and insecurity, have made it very difficult for advanced economic activity to take root widely. Thus, the nomadic (and, crucially, poorly-urbanized) nature of the Somalian traditional lifestyle has made it difficult for the benefits derived from the services sector to diffuse into large portions of the economy.

Global Food Prices

Both a cause and an effect of current food scarcity, inflation in food prices has hit Somalia particularly hard over the past two years.⁽¹⁸⁾ As a net importer of foodstuffs (up to 60% of Somalia's food requirements are imported, including cereals as well as basic ancillary commodities like oil and sugar) the country has been subjected to an estimated 450-780% rise in the price of cereals since 2007.⁽¹⁹⁾ This price hike is only partially due to global spikes: in addition to the weakening of purchasing power caused by the failures of pastoral and agricultural activities, the Somali shilling (SoSh) has also undergone massive devaluation since 2007, when the TFG began printing cash to finance its military efforts. As of August 2011, average food prices in Somalia are still substantially higher than comparable prices for basic commodities in international markets at similar levels of developments.⁽²⁰⁾

Long-term Effects

Given current projections, the dismal situation in Somalia and resulting overflow issues caused by mass flight into Kenya and Ethiopia are unlikely to change except for the worse over the next few months.⁽²¹⁾ Depending on the ability of humanitarian groups to access the worst-affected in central southwestern Somalia, it is unclear how many will continue to be affected or displaced by the country's ongoing conflict and food shortage.

In economic terms, the nation is likely to continue to falter, as livestock populations will have to be imported from other areas or rebuilt from severely weakened herds. And, as much of what little industrial capital Somalia did have at one time has been disassembled and sold as scrap metal, the secondary sector will be forced to start from scratch.⁽²²⁾ Its remaining services sector holds promise for future development, but not in the short-term, as devalued currency and the simple but devastating lack of basic commodities will conspire against all but the satisfaction of basic needs for a majority of the Somalians.

Drought or Famine?

The causes and effects of famine must be dissociated from those of drought. ⁽²³⁾ The latter reflects general scarcity of water for human consumption and productive activity, and its direct causes lie in a combination of meteorological and social patterns. The former, however, derives from a systemic political and economic inability to cope with conditions of drought, transmitting a technical deficiency into a structural one, with grave humanitarian repercussions.⁽²⁴⁾ Somalia's drought is a direct result of its recent meteorological and geographic deficiencies, but famine has been caused by the fact that the traditional and dominant Somali livelihood – pastoralism – has been destabilized.

A 1998 ODI/World Bank report on the economic determinants and effects of drought ⁽²⁵⁾ found an inverted U-shaped relationship between economic development and vulnerability to the effects of drought. The study's logic asserts that primarily agricultural economies utilize coping mechanisms to mitigate the effects of water scarcity, while industrialized economies are able to avoid the effects of drought via reliance on other sectors. Thus, depending on the level of development, drought-prone countries employ either preventative or diversificatory strategies in order to combat the effects of drought and prevent escalation to famine.

Countries in the midst of development – characterized by fledgling industry with prevalent linkages to a dominant agricultural sector and undergoing the gradual process of commodification of basic goods – tend to be most prone to the effects of drought. Somalia falls into this category: unable to build a diversified, industrial economic base due to political unrest and persistent conflict, it has staved off true famine in recent years thanks only to the virtues of the pastoral tradition. Now past the breaking point of water scarcity for the pastoral and agricultural sector, unable to rely on an infant industry and facing a truly massive humanitarian crisis, Somalia's development in future years depends on its ability to open to outside aid, re-establish the pastoral livelihood, and, later, to encourage the development of a productive industrial sector.

NOTES:

(1) Contact Andrew Cheesman through Consultancy Africa Intelligence’s Industry and Business Unit (industry.business@consultancyafrica.com).
(2) 'Horn of Africa drought: Kenya row over Somali refugees', BBC, 13 July 2011, http://www.bbc.co.uk.
(3) 'Somalia - Famine & Drought' , Situation Report No.6, OCHA, 3 August 2011, http://reliefweb.int.
(4) Ibid.
(5) Ibid.
(6) Michael Evans, 'Predicted long-term drought in the Horn of Africa', Earth Times, 15 February 2011, http://www.earthtimes.org.
(7) 'Drought Bulletin for the Greater Horn of Africa: Situation in June 2011', JRC and IES, 2011, http://www.disasterriskreduction.net.
(8) Beltrando, G. and Camberlin, P. 2006. Interannual variability of rainfall in the eastern horn of Africa and indicators of atmospheric circulation. International Journal of Climatology, 13(5).
(9) 'UN declaration on Somalia famine: An urgent wake up call to rest of the world', OXFAM, 20 July 2011, http://www.oxfam.ca.
(10)Lewis, I.M, 1993. Understanding Somalia. London: HAAN Associates.
(11) Ibid.
(12) 'Livestock Prices Go Down As Drought Ravages Southern Regions', Shabelle Media Network, 17 July 2011, http://allafrica.com.
(13) See CIA's World Factbook, https://www.cia.gov.
(14)'Massive livestock deaths in drought-ravaged Horn of Africa increase conflicts and close schools', ILRI Clippings, 5 July 2011,
http://ilriclippings.wordpress.com.
(15) See CIA's World Factbook, https://www.cia.gov.
(16) Benson, C and Clay, E, 1998. The Impact of Drought on Sub-Saharan Economies: A Preliminary Examination. World Bankd Technical Paper No. 401. Washington, D.C.: The World Bank.
(17)Lewis, I.M, 1993. Understanding Somalia. London: HAAN Associates.
(18) Cindy Holleman and Grainne Moloney, 'Somalia’s growing urban food security crisis', FSAU, March 2009, http://www.odihpn.org.
(19) Ibid.
(20) Ibid.
(21) Michael Evans, 'Predicted long-term drought in the Horn of Africa', Earth Times, 15 February 2011, http://www.earthtimes.org.
(22) See CIA's World Factbook, https://www.cia.gov.
(23) Benson, C and Clay, E, 1998. The Impact of Drought on Sub-Saharan Economies: A Preliminary Examination. World Bankd Technical Paper No. 401. Washington, D.C.: The World Bank.
(24) Ibid.
(25) Ibid.

Written by Andrew Cheesman ⁽¹⁾