page_title: Economic history of Somalia
section_title: The colonial economy
hierarchical_section_title: Economic history of Somalia / The colonial economy
caption_attribution_description: English: The territories assigned for grazing to the Darwiish in the Ilig treaty
context_page_description: Economic history of Somalia is related to the development of Somalia's economy in the last two centuries.
context_section_description: The colonial era did not spark foreign economic investment despite the competition of two major European powers in the area of present-day Somalia. Italy controlled southern Somalia; Britain northern Somalia, especially the coastal region. Italian parliamentary opposition restricted any government activity in Somalia for years after European treaties recognized Italian claims.
  The economy of Somalia italiana was initially based only on primitive agriculture, fishing, commerce  and pastoralism of subsistence with great infusion of money from Italy since the end of the 19th century. In the early twentieth century, projects aimed at using Somalia as a settlement for Italian citizens from the crowded homeland failed. Although in the early 1930s Benito Mussolini drew up ambitious plans for economic development, actual investment was modest in comparison to what was done in Italian Eritrea.
  There was still less investment in British Somaliland, which British India had administered. During the prime mininstership of William Ewart Gladstone in the 1880s, it was decided that the British Indian government should be responsible for administering the Somaliland protectorate because the Somali coast's strategic location on the Gulf of Aden was important to British India. Customs taxes helped pay for British India's patrol of Somalia's Red Sea Coast. The biggest investment by the British colonial government in its three-quarters of a century of rule was in putting down the rebellion of the dervishes. In 1947, long after the dervish war of the early 1900s, the entire budget for the administration of the British protectorate was only £213,139. If Italy's rhetoric concerning Somalia outpaced performance, Britain had no illusions about its protectorate in Somaliland. At best, the Somali protectorate had some strategic value to Britain's eastern trading empire in protecting the trade route to Aden and British India and helping assure a steady supply of food for Aden.
  The two major economic developments of the colonial era were the establishment of plantations in the interriverine area and the creation of a salaried official class. In the south, the Italians laid the basis for profitable export-oriented agriculture, primarily in bananas, through the creation of plantations and irrigation systems. In both the north and the south, a stable petty bourgeois class emerged. Somalis became civil servants, teachers, and soldiers, petty traders in coastal cities, and small-business proprietors.
  The plantation system began in 1919, with the arrival in Somalia of Prince Luigi Amedeo of Savoy, Duke of Abruzzi, and with the technical support of the fascist administration of Governor Cesare Maria de Vecchi de Val Cismon. The Shebelle Valley was chosen as the site of these plantations because for most of the year the Shebelle River had sufficient water for irrigation. The plantations produced cotton (the first Somali export crop after colonization), sugar, and bananas. Banana exports to Italy began in 1927, and gained primary importance in the colony after 1929, when the world cotton market collapsed. Somali bananas could not compete in price with those from the Canary Islands, but in 1927 and 1930 Italy passed laws imposing tariffs on all non-Somali bananas. These laws facilitated Somali agricultural development so that between 1929 and 1936 the area under banana cultivation increased seventeenfold to 39.75 km². By 1935 the Italian government had constituted a Royal Banana Plantation Monopoly (Regia Azienda Monopolio Banane—RAMB) to organize banana exports under state authority. Seven Italian ships were put at RAMB's disposal to encourage the Somali banana trade. After World War II, when the United Nations (UN) granted republican Italy jurisdiction over Somalia as a trust territory, RAMB was reconstituted as the Banana Plantation Monopoly (Azienda Monopolio Banane—AMB) to encourage the revival of a sector that had been nearly demolished by the war.
  Plantation agriculture under Italian tutelage had short-term success, but Somali products never became inte
caption: Territory designated for Darwiish grazing in the Ilig Treaty.
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