By Mohamed Dubo
The re-emergence of Somalia in investor calculations marks a notable change in sentiment. Capital is responding to reform signals, geopolitical alignment and untapped assets. But frontier optimism can fade as quickly as it forms. Sustaining the current trajectory will require institutional depth, transparency in resource management and a steady commitment to policy continuity — the less dramatic, but more decisive, ingredients of long-term growth.
For much of the past three decades, Somalia’s economy has been defined by resilience rather than expansion. After the collapse of the central government, capital fled, oil majors withdrew and infrastructure decayed. What endured were remittances, livestock exports and a formidable informal private sector. Foreign investment, where it existed, was cautious, fragmented and often short-term.
That pattern is now shifting. A cluster of recent agreements and projects—in hydrocarbons, strategic satellite infrastructure, ports and digital reform—suggest that Somalia is experiencing its most consequential investment inflow since the central state dissolved. The sums involved may still be modest by continental standards, but their strategic character marks a break with the long post-conflict norm.
A rising trend in FDI
According to the United Nations Conference on Trade and Development’s (UNCTAD) World Investment Report 2025, foreign direct investment (FDI) into Somalia has grown steadily over the past five years. Inward FDI flows in 2020 stood at about $534 million and rose to $765 million in 2024, an increase of more than 40%.
This steady upward trajectory is notable even as global investment trends have softened. While global FDI flows expanded modestly in aggregate, capital into developing economies remains fragile amid broader economic headwinds.
Inward FDI stock — the total value of foreign investment held in the country — also climbed from roughly $3.7 billion in 2020 to $6.4 billion in 2024, reflecting cumulative investor interest.
Preliminary economic projections from sector analysts anticipate that FDI could surpass $1 billion in 2025, supported by renewed investor confidence and expanding commercial ties.
Even as flows to developing countries soften, Somalia’s relative momentum stands out. Where earlier investment tended to be confined to trade and low-tech sectors, recent flows are concentrated in infrastructure, energy and technology — a structural shift with long-term implications.
Drilling for credibility
The most eye-catching development is energy exploration backed by Turkish Government. Agreements signed between Mogadishu and Ankara grant the rights to explore offshore and onshore blocks in Somali territory.
For decades Somalia’s hydrocarbon promise has been more geological rumour than economic fact. International oil firms that showed interest in the late 1980s retreated after state collapse and civil conflict. Subsequent administrations lacked the security, legal clarity and diplomatic backing to restart exploration on serious terms.
The Turkish entry changes that equation. Seismic surveys have begun offshore and shown commercially viable oil reserves, with drilling expected to follow shortly. This move signals a recalibration of risk. Exploration requires capital, technical capacity and long-term political commitment. It is not the sort of venture undertaken lightly.
If reserves prove more viable, the implications for Somalia’s fiscal future would be profound. Hydrocarbon revenues could strengthen public finances, underpin infrastructure spending and reduce dependence on aid. Yet even in the absence of a major discovery, the process itself builds institutions: petroleum regulation, contract management and environmental oversight.
More importantly, it represents the first sustained, large-scale energy push since the collapse of the central government. That alone marks a psychological shift. Somalia is no longer treated solely as a humanitarian theatre but as a prospective energy frontier.
A satellite partnership with strategic overtones
Alongside hydrocarbons, Somalia’s cooperation with Türkiyehas extended into satellite infrastructure. Turkish authorities, through institutions linked to Turkish Space Agency, are involved in the development of a satellite-related facility on the outskirts of Mogadishu. Though framed primarily as communications and space support infrastructure, its implications are broader.
For Somalia’s ICT sector, such infrastructure offers tangible benefits. Satellite ground facilities enhance data transmission capacity, improve redundancy in connectivity systems and support secure communications. In a country where terrestrial fibre networks remain limited and vulnerable, satellite infrastructure can strengthen national digital resilience.
Beyond technical gains, the symbolism matters. Hosting satellite infrastructure signals confidence in Somalia’s stability and long-term partnership potential. It embeds the country in higher-value technological cooperation rather than confining engagement to low-skill sectors.
Somalia will no longer merely be importing communications services; it is building and hosting strategic digital infrastructure with regional implications.
Ports and geography rediscovered
Somalia’s coastline stretches further than that of any other mainland African country. For years it was more associated with piracy than productivity. Now it is being repositioned as an economic asset.
The Port of Mogadishu has seen improvements in efficiency and container handling. Investments in port infrastructure aim to reduce congestion, enhance customs systems and integrate Somalia more closely with regional trade routes. Additional development plans along the coast indicate a broader maritime ambition. In a world where Red Sea shipping lanes are geopolitically sensitive and global supply chains are under strain, Somalia’s location on the Indian Ocean acquires renewed importance.
Ports do more than handle cargo. They anchor supply chains, stimulate warehousing and logistics services, and create the preconditions for light manufacturing and fisheries exports. For a country long dependent on imports financed by remittances, better ports lay the groundwork for productive growth.
Here too the contrast with the immediate post-collapse era is stark. Then, ports were fragmented and under-capitalised. Today they are part of formal, long-term concession agreements with international partners.
Reform as a signal
Investment rarely flows into legal vacuums. Somalia’s recent legislative efforts — covering petroleum regulation, investment protection and telecommunications oversight — have helped reassure external partners. Debt relief under the Heavily Indebted Poor Countries (HIPC) initiative improved macroeconomic credibility, enabling deeper engagement with multilateral lenders.
These reforms are not glamorous. But they shape investor perceptions. Clarity over contracts, dispute resolution and revenue-sharing reduces uncertainty premiums. In frontier markets, perception can be as important as fundamentals.
Foreign direct investment into Somalia remains small compared with that into larger African economies. Yet its composition is changing. Rather than concentrating narrowly in diaspora-funded real estate, new inflows are targeting energy, logistics and strategic infrastructure — sectors with multiplier effects.
Such sectors create linkages. An upgraded port supports exporters. Enhanced satellite capacity strengthens financial services and security coordination. Energy development fosters technical training and ancillary industries. Over time, these spillovers matter more than headline figures.
Geopolitics with commercial overtones
Somalia’s investment story is inseparable from geopolitics. The Horn of Africa has become an arena of strategic competition among regional and middle powers. Türkiye’s expanding footprint — spanning defence cooperation, infrastructure, satellite projects and hydrocarbons — illustrates how political alignment and commercial engagement intertwine.
For Somalia, this competition can be advantageous if managed carefully. Diversified partnerships provide bargaining power and reduce overdependence on any single external actor. They also embed Somalia more firmly in regional economic networks. Yet geopolitical interest can cut both ways. Managing rivalries requires diplomatic dexterity.
A break with survival economics
The most compelling argument that Somalia is experiencing a meaningful investment wave lies not only in the size of individual projects but in their simultaneity. Energy exploration, strategic satellite infrastructure and port modernisation are unfolding at once.
For decades Somalia’s economy was sustained by what might be called survival economics: remittances, informal trade and humanitarian flows. Those mechanisms remain vital. But they do not transform productive capacity. The current wave, by contrast, aims to build assets — subsoil exploration rights, digital and satellite infrastructure, maritime gateways. It signals a shift from coping to constructing.
Security challenges persist. Institutional capacity remains improving. The management of potential resource revenues will test political maturity.
Still, the trajectory is notable. For the first time since the collapse of the central government, Somalia is attracting capital that is strategic, long-term and globally integrated. The sums may seem small; the risks certainly remain of concern. But the direction of travel is unmistakable.
After decades at the margins of international finance, Somalia is edging — cautiously — back into the calculations of investors. Whether that re-entry becomes a sustained renaissance will depend less on geology or geography than on governance. But the opening act, at least, has begun.
Mohamed Dubo is the Director of SOMINVEST, with extensive experience in Strategic Communications, Investment Promotion & Diplomacy.