The economy of Somalia is based primarily on farm animal raising. Crop farming was of importance only in the south. Efforts to diversify and modernize the economy were directed by the government through a series of development plans, considerablely assisted by foreign grants and loans. In the late 1980s the gross national product (GNP) was around at only $290 per capita. In the early 1990s, with the Somalian economy in a state of collapse because of the civil war, the GNP had fallen to $36 per capita.

Somalia's economy is based on agriculture; the main economic activity is not crop farming but farm animal raising. Between 1969 and the early 1980s, the military government imposed a system of “Scientific Socialism,” which featured the nationalization of banks, insurance firms, oil companies, and all large industrial firms, the setting up of state-owned enterprises, farms, and trading companies, and the organizing of state-controlled cooperatives. In the end, this experiment weakened the Somalian economy considerably, and since the collapse of the military regime the economy has suffered even more as a result of civil war. Generally speaking, the Somalian economy cannot survive without foreign aid.

One of the world's poorest and least developed countries, Somalia has few resources. Moreover, much of the economy has been devastated by the civil war. Agriculture is the most valuable sector, with farm animal accounting for about 40% of GDP and about 65% of export earnings. Nomads and semi-nomads, who are dependent upon farm animal for their livelihood, make up a large portion of the population. farm animal and bananas are the principal exports; sugar, sorghum, corn, fish, and qat are products for the domestic market. The small industrial sector, based on the processing of agricultural products, accounts for 10% of GDP; most facilities have been shut down because of the civil strife. Moreover, ongoing civil disturbances in Mogadishu and outlying areas have interfered with any substantial economic advance and with international aid arrangements. Due to the civil strife, economic data is susceptible to an exceptionally wide margin of error.