Somalia's president has named economist Abdiweli Sheikh Ahmed as his new prime minister, ending weeks of political paralysis as the country strives to secure fragile security gains against Islamist militants.

Ahmed previously worked at the Islamic Development Bank in Saudi Arabia. He replaces Abdi Farah Shirdon who was forced out by lawmakers in a vote of no confidence after falling out with President Hassan Sheikh Mohamud.

"We have found Abdiweli Sheikh is the most suitable man to become Somalia's prime minister," Mohamud told a crowd of ministers, lawmakers and military officials at the heavily fortified presidential palace.

"We hope he will move Somalia forward."

Western donors had worried a prolonged vacuum at the head of government would disrupt efforts to rebuild state institutions and defeat al Qaeda-linked militants who control swathes of the rural south and centre of the Horn of Africa country.

Ahmed was born in the southern Gedo region and is a newcomer to Somali politics, just as Mohamud was when he was elected by lawmakers 15 months ago.

Foreign allies saw Mohamud and his new government as Somalia's best chance in two decades to shake off the tag of "failed state". But he struggled to overcome divisive clan politics, corruption and a stubborn Islamist insurgency.

Relations between Mohamud and Shirdon broke down over the composition of a new cabinet. Sharing power among Somalia's clans is crucial to any government's survival, analysts say.

Ahmed left Somalia when civil war began in 1991. Most recently he has been an economist at the Islamic Development Bank in Jeddah, Saudi Arabia, and before that he was an adviser to the Common Market for Eastern and Southern Africa.

Paul Gabriel, a Control Risks analyst, said Ahmed's economic credentials were likely to appease donors eager for Somalia to build a functioning financial system from scratch.

However, Gabriel added that Ahmed's technocratic background and relatively few domestic political ties "mean that president Mahmoud is likely to be able to more easily exert influence over him."-Reuters