(CNN) -- Somalia's new president has named a prime minister as the nation sets up an effective central government following decades of civil war.
Abdi Farah Shirdon, an economist who ran an import business in neighboring Kenya, was named prime minister Saturday.
President Hassan Sheikh Mohamud, a political newcomer who has worked for several international organizations, assumed leadership last month.
"The appointment of a new prime minister is another important step forward in the country's peace building process," said Augustine P. Mahiga, the top U.N. envoy to the nation.
If approved by parliament, as expected, the prime minister will proceed to form a Cabinet.
It is the latest in a series of political transitions in the nation after decades of civil war.
In addition to picking a president, Somalia has adopted a provisional constitution, selected members of parliament and appointed that body's speaker -- all in recent months.
Both leaders face the daunting task of propping up Somalia's first effective central government since 1991.
Somalia plunged into chaos after dictator Mohamed Siad Barre was overthrown 21 years ago. Following his ouster, clan warlords and militants battled for control, sparking a civil war and mayhem nationwide.
The nation has not had an effective central government since then and has mostly remained under a shaky transitional federal government.
Even though insurgents have fled the capital and guns have fallen silent, portions of the nation remain lawless.
African Union and Somali troops are battling militants from Al-Shabaab, an al Qaeda-linked group that controls part of the nation's south.
The troops have driven the militants out of various areas, including the lucrative port city of Kismayo and the capital of Mogadishu. Life is slowly trickling back to normal as coalition forces exert control in more regions.