Somalia-Export of Livestock

As the macroeconomic data made clear, Somalia was primarily an exporter of livestock to the Arab states. The macroeconomic data did not make clear the proportions in which the foreign exchange earnings from livestock exports went to the government, based on the official exchange rate of those recorded sales, and to the traders and herders themselves, based on the difference between the official and informal exchange rates plus all revenues from unofficially recorded sales. A system known as franco valuta (see Glossary) enabled livestock middlemen to hoard a considerable foreign exchange surplus. In the livestock export sector, traders had to give the government only 40 percent of their foreign exchange earnings; the traders could import anything they wished with the remaining foreign exchange. Thus, imports were substantial amid data of collapse. One needed only to be connected to a trading family to enjoy massive increases in consumption during the 1980s. In the livestock export system, franco valuta was officially discontinued as a result of the IMF structural adjustment program, but in practice franco valuta continued to be observed.

In the 1970s, northern trading families used their profits to buy real estate, much of it in Mogadishu. In the 1980s, they helped subsidize the rebels fighting the government of Siad Barre.