At independence the Somali economy was at a near subsistence level, and the new state lacked the administrative capacity to collect taxes from subsistence herders and farmers. The state could rely on the customs taxes from international trade, which were easier to collect, but tariffs failed to meet the needs of a government with ambitious development goals. Somalia therefore relied on Italian and British subsidies, which funded about 31 percent of the new nation's current budget in the first three years of independence.

Somalia also received grants and loans from countries in the East and the West, which made possible the articulation of an ambitious development plan by 1963. A five-year plan with a budget of more than US$100 million in grants and loans, it focused on investment in infrastructure. The plan's thesis was that plantation crops and livestock exports would increase if there were better roads, transportation facilities, ports, and irrigation works. Another large investment was made in the creation of model farms to attract farmers from around the country, who would learn improved techniques to apply on their own farms. Model farms in Baidoa in the Bay Region, Afgooye near Mogadishu, and Tog Wajaale, west of Hargeysa, were established during this period.

In the pastoral sector, the Livestock Development Agency, formed in 1965-66, emphasized veterinary services, the provision of water and of holding grounds for cattle while they were undergoing inoculation, and transportation. Somali pastoralists responded with enthusiasm to the prospects for wealth by entering the international market for livestock. In the early 1960s, the value and number of exported livestock approximately doubled, and livestock soon surpassed bananas as Somalia's leading export.

There were therefore some notable successes among Somalia's early development projects. The nation became nearly selfsufficient in sugar, and banana exports grew, albeit haltingly. Livestock exports increased, and investments in roads and irrigation facilities resulted in some genuine improvements.

But the 1960s also yielded great disillusionment. The country could not overcome its dependence on foreign assistance, even to meet its current budget. Moreover, imports of foreign grains increased rapidly, indicating that the agricultural sector was not meeting the needs of the growing urban population. The modern agricultural techniques of state farms had little influence on traditional farming practices. Because of a boom in livestock export from Hargeysa, cows, goats, and camels were becoming concentrated in northern Somalia, much to the detriment of rangelands. The UN Food and Agriculture Organization (FAO) foresaw the dire effects of the 1974 drought in a 1967 report that noted the severe range deterioration. Finally, and perhaps most important, many Somalis were enervated by the feeling that political incumbents, through electoral manipulations, were squandering the nation's economic resources for their private benefit.

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Source: U.S. Library of Congress