RISKY BUSINESS

[Jacaylbaro]

Risky business in Ethiopia’s Somali Region

 

 

The phone call came in just after Ali Farah Kadiin had finished breakfast in his house in the centre of Jijiga, the bustling capital of Ethiopia's Somali region.

 

It was his agent in the port of Mokha, Yemen, telling him that a boat carrying 300 cattle - 35 of them his - had hit a rock just outside the harbour and sank, drowning every animal on board.

 

It was a serious blow for the businessman who had paid just over 3,500 Ethiopian birr (around US$400) a head in the livestock markets around Jijiga. But he did not despair.

 

"There was no insurance. There was no compensation. We just lost them," said Ali, one of 15 legally-registered livestock exporters based in Jijiga making their living funneling thousands of cattle, sheep, camels and goats from across the vast expanse of the strife-torn Somali region, through Somaliland's Red Sea port of Berbera and out to the Middle East.

 

"In this business you have to learn that sometimes life makes you happy. Sometimes life makes you sad. Sometimes Allah gives you something. Sometimes Allah takes something away. You have to be patient. You have to be peaceful."

 

It was a philosophical reaction born out of more than 15 years in the Somali region's huge livestock rearing and trading industry, an industry where pastoralists and traders have spent centuries balancing enormous risks for often small but steady gains.

 

"Sometimes it is bad. But it is the only business we have," said Ali who stands out from the traditionally-attired agents and herders in Jijiga's open air livestock market in his sharp grey suit and shades. "Sometimes it is good. There was a time after the birth of my son when I couldn't borrow 10 birr. Now the earnings are good. I export 250 to 300 bulls a month."

 

His reaction is typical of hundreds of traders operating in the region said Abdi Umar, Pastoralist Livelihoods Researcher for UN OCHA's Pastoralist Communication Initiative (UN OCHA-PCI). "For these traders, risk-taking is part of the business. They live with risk so they learn to manage risk. Just look at what happened with his Mokha deal.

 

"He only had 35 of his bulls on the boat. All the traders would have split their stock, putting 30 bulls on this boat, 30 bulls on another. They share the risk so that when a boat goes down they only lose part of what they had." The risk-sharing arrangement amounted to a basic system of insurance, he said. In many cases the traders also get together later and quietly pay some compensation to the ones who lost out.

 

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Shipwrecks are only the most dramatic risk facing the Somali region's livestock traders – and the thousands of herders and pastoralists who sell them their animals.

 

Traders claim there have been times when coastguard officials in Yemen have fired on boats carrying livestock, thinking they are bringing in refugees or contraband. Other times they have made it over to the Middle East, only to find no one willing to trade with them.

 

Recent reports of Rift Valley Fever in Kenya have cast a shadow over the whole East African livestock trade. In the weeks after the news spread, traders say Yemeni and other Middle East middlemen refused to take Ethiopian animals, even though the disease has so far not appeared in the Horn of Africa nation. Other dealers agreed to take the animals, but at much lower prices.

 

The disruption came on top of a long running Saudi Arabian ban on the import of Ethiopian animals, again based on fears over livestock health. Ethiopian bulls, sheep and goats still regularly get through to Saudi Arabia, but via Yemeni traders who again use the ban as an excuse for keeping purchase prices down.

 

Working backwards from the Red Sea, another risk facing Somali region traders come from their own customs officials. Ali might be one of 15 legally registered exporters in Jijiga, filling in all the right papers with the right authorities. But there are scores of others who engage in what they call "informal trade", smuggling their livestock over the long, largely unguarded border with Somaliland.

 

"I export all my animals informally," said a trader who asked not to be named in *****shekh market, two hours drive southeast of Jijiga. "There are no banks to give letters of credit. No customs offices here. So that is all I can do."

 

Women were herding goats and other small animals into one side of the open air market at the centre of a maze of winding streets and huts. But the trader was more interested in the bulls and camels tethered behind a rough stone wall at the other end. Business is so brisk in the town that the market stays open for two hours on Fridays, a day of rest in the rest of the largely Islamic region.

 

"Most of the time it is no problem to get them out," said the trader, taking a break from the busy haggling to sip a cup of tea from a makeshift stall. "There has been less trouble since they opened the customs office in Jijiga. But there have been seizures. So you send some of your cattle on this path and some on another. And they get through."

 

Sometimes the animals do not get through so easily. Customs authorities have the power to impound all unregistered goods and regularly boast of the size of their hauls of contraband.

 

Before the Saudi ban, large scale 'shirkad' or companies from Somaliland or Yemen sent agents deep into Somali region to negotiate the purchase of livestock. Since the ban, the shirkad have moved on, leaving individual Somali Region traders to coordinate the movement of their livestock along the ancient trade routes, taking their profit where they can.

 

Livestock regularly make the 20 km trek across rough land out of *****shekh to the town of Alybaday, on the Somaliland border. From there, they are loaded onto trucks by trusted agents and driven to Berbera across the plains of Somaliland.

 

The risks do not stop there. There are the droughts and floods that hit the region on an increasingly regular basis, destroying livestock and pasture in their wake. Roaming sheep and goats can fall prey to hyenas and other predators. And there is always the possibility of getting caught up in inter-clan clashes, banditry and the growing conflict between Ethiopian government troops and the separatist forces of the ****** National Liberation Front (ONLF).

 

Prices can also fluctuate widely from market to market and week to week, according to the demand from the Middle East and local trading conditions, threatening thin profit margins. "We hope to make between US$15 and US$20 a bull. Sometimes you have to take a loss," said Arab Muhomed Guled, another *****shekh trader with 10 years experience under his belt. The price of cows in Jijiga market ranged from 1,470 Birr all the way up to 2,500 Birr in January 2007, according to figures gathered by the government's Livestock Crop and Natural Resource Development Bureau in the town.

 

The reason that traders persevere in the face of so many risks is simple. The risks may be high, but the scale of the potential trade is higher still.

 

The sheer size of the region's livestock trade is often masked by inaccurate Ethiopian government figures that only count the legally-registered movement of animals beyond the country's borders. According to official statistics, Ethiopia as a whole only exported 41,565 animals from 2003/4. But according to a soon-to-be-published report from UN OCHA-PCI, more than 400,000 animals were exported, mostly "informally", through just two Somali region markets in 2005.

 

UN OCHA-PCI researchers estimate that as many as 100,000 bulls may be leaving Ethiopia's Somali region every year, bringing in, on average, 3,750 birr (US$420) a head. Taking the same journey with them are up to 3 million sheep and goats, each worth around 360 Birr (US$40) to Yemeni traders.

 

UN OCHA-PCI's Abdi Umar does the sums. "That's about US$162m in revenue split between the 5 million people we estimate benefit from Somali Region’s livestock production. The traders are only taking a small margin but the pastoralists can make a lot on each animal.

 

Somali region traders also do all they can to minimise the daily risks they face. Large herds are split into smaller units as they move across borders to limit their exposure to customs officials and other natural disasters. Animals are handed over to well-trusted agents, bound to the seller by long years of friendship or clan allegiance.

 

Traders are also starting to minimise the risk of customs seizure by going legal, taking advantage of the first letters of credit schemes set up with local banks just three years ago. "Now I don't have to stay awake at night wondering if my animals are getting through," said exporter Mahamoud Gass Qalinle. Wherever possible, traders make use of the latest communications technology – either mobile phones or high-frequency radio sets known as fonios – to get a jump on changes on market conditions.

 

"I can stand in the middle of Jijiga market with my mobile phone and find out when there is a boat waiting in Berbera," said Basha Hassan Hussein another legally-registered exporter. "I can find out whether the demand is highest for cows or bulls or shoats [sheep and goats]."

 

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Mid-March, trading was slow in Jijiga market. Recent rains across Somali region had pushed up the prices of livestock – pastoralists like to keep hold of their animals when there is plenty of pasture around to fatten their animals. That coincided with a seasonal drop off in demand from Yemen.

 

At 10am on a hot Thursday morning, mother-of-five Osub Fahid walked into the open square trailing three camels behind her. They were the last of a 15-strong herd that she had brought from the small markets in Degahbur more than 120 km away, a whole 25 days earlier.

 

The camels had been brought into Degahbur in ones and twos by small scale herders from some of the most remote corners of the region including Gode and Fik. She had snapped them up and entrusted them to agents who trekked them across the region's flat plains for three days to Jijiga and nearby Babile markets.

 

It is a business she started 10 years ago when her husband was sent to prison and she was forced into the role of family breadwinner. "It is difficult for a woman. The camel business is not for women. But I am going to continue. I know how to handle camels now. The camel business is what I know.

 

"I started by selling one camel and now after 10 years, I sell 15. My business is not growing fast. But I have enough to feed my children."

 

 

here

[N.O.R.F]

Do i here 'start an insurance company'?

 

"In this business you have to learn that sometimes life makes you happy. Sometimes life makes you sad. Sometimes Allah gives you something. Sometimes Allah takes something away. You have to be patient. You have to be peaceful."