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How the real-time tracking of market prices in Somalia helps us respond to drought

Utz Pape's picture

Over half of the 12 million people living in Somalia are acutely food insecure. This adds to the development challenge for Somalia after more than two decades of civil war and political instability. In particular, the urgent need for humanitarian assistance bears the risk of fostering aid dependency. To embark on a sustainable pathway toward development instead, intervention should rely on markets (whenever possible), and react dynamically to changes in market equilibria.

Therefore, we started to monitor 14 Somali markets and publish the data in near real-time using something similar to what we use for South Sudan, the innovative survey and analysis methodologies.

The real-time dashboard tracks weekly market prices and currency exchange rates across the 14 urban locations. The dashboard presents a dynamic and rich set of up-to-date prices for a wide range of different types of products and services. The items include livestock, food (cereals, milk), non-food items (clothing, cosmetics), utilities (electricity), and services (such as motor vehicle repair), from both the tradable and non-tradable sectors.

It can be filtered interactively or downloaded for analysis in standard programs like Excel.

The dashboard provides useful insights into the dynamics of the severe drought that’s affected Somalia this year. In the “Town Prices” tab, prices aggregated to an index using CPI-like weights can be tracked back to early 2016. These prices were surprisingly stable, despite the onset of the crisis, with no shortages of products in markets. Thus, urban markets are functioning and products available while most of the acute food insecurity is in rural areas. Hence, interventions should utilize the existence and functioning of those markets.

The “Product Prices” tab adds an additional nuance: select the product “Cattle meat” and focus on the markets in Mogadishu by selecting (while pressing the Ctrl key) “Bakara,” “Hamarweyne,” “Madina,” “Siinay,” and “Suuq Bucaad.” The market prices for meat steadily declined in those markets from an average of around US$ 4.65 in March 2016, to just over US$3.00 in May 2017. Two factors contributed to the decline in prices: livestock is now in poor condition and, thus, attracts lower prices. More importantly though, pastoralists offer their livestock for sale at lower prices as they need cash for basic goods.

Adding to supply by importing those products through food assistance programs is dangerous. Prices will drop further, potentially forcing local producers out of business. To avoid stepping into this vicious circle of aid dependency, food assistance programs should carefully and continuously assess whether products need to be imported or can be sourced from local food producers, for example by distributing food vouchers.

Hence, the monitoring of markets and their price dynamics is essential for designing and implementing life-saving interventions. The dashboard provides this information in a timely and ready-to-use manner. The data collection is funded by the Somali Multi-Partner Fund (MPF).

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