Popular enthusiasm for the revolution began to dissipate by the mid-1970s. Many officials had become corrupt, using their positions for personal gain, and a number of ideologues had been purged from the administration as potential threats to their military superiors. Perhaps most important, Siad Barre's regime was focusing its attention on the political goal of "liberating" the Ogaden (Ogaadeen) rather than on the economic goal of socialist transformation. The Somali economy was hurt as much by these factors and by the economic cost of creating a large modern army as it was by the concurrent drought. Two economic trends from this period were noteworthy: increasing debt and the collapse of the small industrial sector.

During the 1970s, foreign debt increased faster than export earnings. By the end of the decade, Somalia's debt of 4 billion shillings equaled the earnings from seventy-five years' worth of banana exports (based on 1978 data). About one-third was owed to centrally planned economies (mainly the Soviet Union, US$110 million; China, US$87.2 million; with small sums to Bulgaria and the German Democratic Republic East Germany). Another one-third of the debt was owed to countries in the Organisation for Economic Cooperation and Development (OECD). Finally, one-third was owed to members of the Organization of the Petroleum Exporting Countries (OPEC) (principally Saudi Arabia, US$81.9 million; Abu Dhabi, US$67.0 million; the Arab Fund for Economic and Social Development, US$34.7 million; Kuwait, US$27.1 million; and smaller amounts to Iraq, Qatar, the OPEC special account, Libya, and Algeria, in that order). Many loans, especially from the Soviet Union, were, in effect, written off. Later, many loan repayments to OECD states were rescheduled. But thanks to the accumulated debt burden, by the 1980s the economy could not attract foreign capital, and virtually all international funds made available to Somalia in rescheduling agreements came with the provision that international civil servants would monitor all expenditures. As a result of its international debt, therefore, Somalia lost control over its macroeconomic structure.

A second ominous trend in the 1975-81 period was the decline of the manufacturing sector. Exports of manufactured goods were negligible when the 1969 coup occurred; by the mid-1970s, manufactured goods constituted 20 percent of total exports. By 1978, as a consequence of the Ogaden War, such exports were almost nonexistent. Production likewise suffered. In 1969 Somalia refined 47,000 tons of sugar; by 1980 the figure was 29,100 tons (all figures are for fiscal year ( FY). In 1975 the country produced 14.4 million cans of meat and 2,220 tons of canned fish. In 1979 it produced 1.5 million cans of meat and a negligible amount of canned fish. Textile output rose over the period. The only material produced, however, was a coarse fabric sold to rural people (and worn by the president) at less than cost. In milk, pasta, packaging materials, cigarettes, and matches, the trend was downward in the second half of the 1970s.

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Source: U.S. Library of Congress