A Blueprint for an Industrialised Somalia

[Haatu]

The current coronavirus pandemic has exposed many so-called develop regions of the world. It has also exposed the fallacy of neo-liberalism. Trump's America essentially begging S Korea to send them medical protective clothing and testing kits was the icing on the cake. In short, the countries (Europe and America) that sacrificed that sacrificed their industrial base on the altars of neo-liberalism and free markets are struggling, and the countries (S Korea, Taiwan, China, even Turkey) that maintained their industrial bases are doing just fine.

This crisis should make it clear to all the urgent need for nations to industrialise rapidly so that they possess the industrial and technical capacities to manufacture at the very least essential goods (in particular medical goods). This is as vital as food security. Many countries without an industrial base are really in a pickle in the East Asian countries refuse/are unable to export PPE and testing kits. Korea said they received orders and requests from over 100 countries. They simply can't meet that demand. Turkey has said it will only export any surplus after the domestic need is met.

[Haatu]

Part 3

With China currently moving up the technological ladder, it is leaving low-tech industries such as textiles and garment making. Due to the size of China and it's mammoth industrial capacity, no single country can fill the void on its own. There's more than enough demand to go round even with Vietnam, Cambodia, Bangladesh etc taking some of it. This is why the next few years are a Golden opportunity for any country wanting to industrialise to enter the textile industry. It is vitally important that Somalia does not lose out on this opportunity even if the security situation is still not optimum.

Why did I choose the outskirts of Mogadishu for this industrial complex? For two reasons. Firstly, there is a large population of unemployed and predominantly IDPs in Xamar of predominantly farming heritage. This serves two benefits. Firstly, desperate IDPs are more than willing to work for the low wages textile firms can afford and there are thousands of them providing a steady pool of labour. Also, the farmers, unlike the nomads, are hard workers and disciplined, essential qualities for factory workers. Secondly, when countries start industrialising, their only competitive edge is low cost. By having the industrial complex on the coast near a port, logistic costs are reduced to a minimum, helping with cost effectiveness (this is why Ethiopia will struggle). That's why all successful Asian countries built their first industrial complexes on the coast: Shenzhen in China, Ulsan in South Korea etc. The port in Mogadishu is the biggest and most developed of the ports under government control so it makes sense to base the complex near here. As industrialisation picks up pace, further industrial complexes will be needed in other coastal cities and even inland to achieved balanced development but that is at a later stage.

Once the country gets a foothold in the textile industry and the billions start to come in, the country must not rest on its laurels. This is actually when the hard work begins and where many countries such as Bangladesh have failed. You see, in initial industrialisation countries can only compete based on cost. However, as wages rise and other entrants enter the market, you lose your low-cost competitive advantage. To escape this, you must climb the technological ladder. This means entering newer, more technologically sophisticated markets. This means entering the electronics, paper, steel, petrochemical, and cement industries. This requires a lot of capital and expertise but it can be done. If the 5% development tax is levied on the textile industry and all agricultural exports, and foreign exchange controls are in place and national development bank financing is used, it is possible. Also, the technology for these industries are available for sale from leading companies, especially those in financial difficulties. For example, a Pakistani company that makes car batteries last year bought the technology to make tyres from one of Korea's leading tyre manufacturers Kumho for just $5 million initially and 2.5% of the turnover for a 10 year period. In return, Kumho will provide the Pakistani company with all the machinery, process engineering, engineers, technicians, training of Pakistani workers, and marketing. You can imagine after the 10 year period, this Pakistani company will be ready to go it alone.

Once you master one industry, you simply keep going up the ladder. So once you start making tyres, the next step might be manufacturing some of the fibres that go into the tyres. This sequential step-wise import substitution industrialisation coupled with export promotion is how to build up an industrial base, and use the proceeds from that base to develop the country's infrastructure and amenities, and give citizens high salaries in high tech companies. I'm sure many of us would love to live back home. But unfortunately the high paying jobs and the amenities we have in the West simply don't exist back home. Rapid industrialisation is the quickest and most sustainable way to achieve those goals (unlike the unsustainable economies of resource driven countries).

[galbeedi]

3 hours ago, Haatu said:

As for the time it takes to develop, you are right it is increasing. It took England roughly 150 years, Japan 70 years, Taiwan and S Korea 40 years, and China just under 30 years, and Turkey will probably beat that record. As you can see, with modern technology and as the world market grows, the pace of development is increasing, but only with the right policies. 

 

2 hours ago, Haatu said:

You see, in initial industrialisation countries can only compete based on cost. However, as wages rise and other entrants enter the market, you lose your low-cost competitive advantage. To escape this, you must climb the technological ladder. This means entering newer, more technologically sophisticated markets. This means entering the electronics, paper, steel, petrochemical, and cement industries

 

Haatu,

This is educational for any Somali leader who want to industrialize quickly within a decade. It is a nice peace . Please keep writing. 

We rarely see people discussing industry, technology and construction. Somalis are best equipped to write political essays, polemics and tribal narratives. The world had changed. Anyone who got his degree in economics or international trade before 1990 doesn't have a clue in the new brave world.

If you worked in the old banking system of old world , you will not be able to re-invent new wheels. You need people who want to think outside the box.

IF you are the next leader of Somalia, you must hire people like Haatu and his generation. Do not waste your time with old world dinosaurs like OOdweyne who is not only paranoid but preoccupied  his whole life about the Russians who might come to Burco one day and distinguish the false flame.

I have seen manny over educated Somalis who can not change a light bulb but would try to write poems in kings English. 

When I was in the middle school in Borama, the power station was managed by one man and his assistant. the light was usually on few hours a  night in certain area of the city.  He used to drink alcohol , and the God fearing towns people were willing to let him drink and do his thing as long as he keep the light on. Anyone else found drinking was arrested , but not Cali, because without him, it was dark with no way out.

I could swear that in that town , you couldn't find anyone who would fix a bicycle or a light bulb, yet there were men who spoke and wrote things like OOdweyne, and kept boasting about their adventures in the towns shops.

 

 

[Haatu]

16 hours ago, Oodweyne said:

Haatu,

One thing I agree with you is that Neo-Liberalism economical experiments has been tried and tested to destruction. And it had failed wherever it had been tried on, from West to East. More to the point, those countries that retained their industrial capacity will fare better in this current crisis. As well as fare better indeed in terms of the new crisis that are coming down the lines, like Climate Change, which in turn will bring forth all manner of first and secondary order issues. Such as scarcity of food and the changing of the weather pattern, along with various and number of deadly plagues as well as previously unknown virulent forms of mass pandemics.

And these countries will stand a better chance than those who already did send their manufacturing sectors to the various corners of the world where labor-cost was cheapest and therefore the Return on Investment (ROI) was the highest, if all other things that go into the industrial economy was made equal.

All of that I agree with you.

However where I still find it a tad difficulty to wrap my head around it is the fact that you are deliberately overlooking the social condition you need to kick start this kind of industrial "transformative route". And such route actually requires not only any kind of rule of law and settled social stability (in which currently Somalia genuinely lack) to be there already in place in the ground. But rather it calls for a "regimentalized society", where ordered, hierarchical top-down elite-driven system, and a pyramid-like political structure should be there already in the country.

And I believe even Mr Zenawi of Ethiopia would have hit the buffers soon enough in few years time if he had lived long enough to see if he could implement this kind of "economical and industrial model", as he was trying to imposed on Ethiopia this sort of "industrialization model" from the top. Which was what he was trying to do before he passed away.

Moreover, remember you need at least 25 to 30 years of that kind of clean, corrupt-free and strict political strictures for that society to achieve such rapid transformation, as Taiwan and South-Korea did in their respective days.

Hence in here I can categorically say that really the only country in the whole of freaking Africa, who in turn could actually come close to implement any of that sort of industrialization process, and do so from bottom-up, is I believe the likes of Rwanda. Provided, of course, the likes of Mr Kagame do not became as just another one of those African's strongman (like those before him) who solely were in it for their own pockets. As opposed to them being in it for the long term interest of their countries. Like the manner in which the late Mr Lee of Singapore was in it for his tiny State. 

Finally, I really think this is not readily applicable lesson to Somalis where each man is his own "Emir" who takes no hassle or any kind of orders from anyone else (as the Brits did found out about us long time). So we need a different "economical and industrial model", than this one. And it should be a "industrialization model" that is more aptly suitable to the social, to the communal, and to the political imagination of your average Somali's Farah back in the Somali peninsula. Not one that snugly suits the "regimental societies" of South East Asia with their thousands of years of being governed by the sort of the given hierarchical top-down social structure of the kind this "industrialization model" in which you are rhapsodizing about fervently in here would call for.   

Oodweyne,

You have raised three separate points here. The first is the cultural argument which I have addressed previously. The literature is quite clear on this topic. All unindustrialised societies share traits that are deemed to be not conducive for industrialisation. The same was said about the Confucian states of East Asia as traditionally engineers, technicians, and crafts people were looked down upon. You can imagine how that cultural perception has changed. You presented the example of Rwanda. Let me counter by asking you to ponder how a population in the depths of depravity killed 3 million of its own in cold blood is capable today of economic development in your estimation? What has changed? The people are the same, the values and beliefs are the same. What has changed is they have an authoritarian leader who wants to develop his country. That is the only required factor to kickstart industrialisation.

I'm sure you also remember how back in the day the nomads refused to have pit latrines in their compounds and how they preferred to defecate in the open. Those same nomads all have musqullo today. I'm sure you also remember how those very nomads also used to turn their noses to farming and yet thousands of them today do the gun's work. Culture can change.

The second point is efficient and corrupt free institutions. This likewise is not a prerequisite requirement for industrialisation as the experience of Korea has shown. After the Korean war, S Korea was totally decimated and what state institutions were left were highly inefficient and corrupt. A USAID report at the time essentially described the country as a bottomless pit that would never amount to anything. The civil service was so weak that they used to send teams to Pakistan of all countries to be trained. However, this weak and highly corrupt civil service was able to deliver Park Chung Hee's economic miracle. How? The dictator overlooked corruption in other sectors of the state and economy but he did not tolerate a single won being misplaced in his pet industrialisation projects. The weak civil service with not much experience made mistakes initially, but the process is such that the close cooperation between government and big business means lessons can be learned in real time and rectifying steps be taken. Corruption is still a big problem in Korea to this day but that has not impeded economic development. I'm sure you remember the former president being impeached and currently serving a 25 year sentence due to corruption. 

Contrast this with India which received a highly trained and efficient civil service from the British. Despite that, the Indians have been unable to replicate S Korea's economic success.

As for the third point of political stability and legitimacy, here I fully agree with you. The proposals I am suggesting will not be welcomed by some sections of society, in particular private capital, so strong political leadership with a will and vision is required. This in essence is what differentiates the countries that have been successful and those that haven't. It is why you rightly suggest that Rwanda today stands a good chance of industrialising. But I say, even our Ismaaciil Cumar Geelle of Jabuuti can easily implement these policies and develop his country as he has the political power to do so. All that is required is the will.

Now, I agree that Somalia is currently not there yet, but I fully believe that some aspects of my proposal can easily be implemented today if their is the political will in Villa Somalia. Opening one small industrial complex on the outskirts of Xamar and linking it with a road to the port is not rocket science. And there are countless businessmen in Bakaaraha who I am sure are more than willing to invest if the support package is in place.

I highly recommend you read Ha-Joon Chang's Bad Samaritans. He is a Cambridge economics professor and he explains all I have said and much more in a light-hearted manner for the non-economist. It can be found on Amazon and now that you're in lockdown I'm sure you don't have much else to do.

[Haatu]

31 minutes ago, Oodweyne said:

After all, who in their right mind will invest that heavy investment in to the garment industry (which is the lowest rang of the ladder of the industrialization process) without having the government of that country actually guaranteeing the security of the investment, the rule of law in terms of who these investors will pay their tax to (and not most certainly to the likes of Al-Shabaab). None of that basic stuff is readily available in Somalia. Let alone being allowed to use as a cheap labor from the IDPs (as he seems to be suggesting in here). Which in turn is not what any international investor will wish to be accused of even if the government of the country were to say to that investing outfit we have for you a teeming cheap labor from our IDPs camps.

You seem to misunderstand. Under this plan, all investment will be by local Somali companies. Also their is no international law banner the use of IDP labour (as long as they're paid free workers). If anything, it will be viewed as job creation for vulnerable people. In short, re-read the whole proposal and take off the FDI/aid dependence syndrome most Africans seem to suffer from. This is something radically different.

[Old_Observer]

On 3/28/2020 at 6:04 PM, Haatu said:

The cultural arguments against development have already been debunked. You can read the literature on the subject.

 

Wrong.

Culture is the determining factor in technological/Industrial development.

Take the threee basic groups of Somali. Nomad, Farmer and hunter gatherer.

Nomad is 24 hours on duty, but not at work. Nomad takes too many breaks. Nomad is prepared to give his life ONLY for his creator and his family. Nomad will never be Kamikaze for any governor or king.

Hunter gatherer is limited by geography, season and landscape all things very hard or impossible to influence or control

Farmer is the laziest. He works maybe 3 months a year and the rest of the year he goes house to house of relatives, neighbors for all kinds of festivities including spending week on a weedding and two weeks on Wake.

Among Somali these are classes. Only Nomad can be commander.

 

Find me a Nomad that will committ suicide like Japanese or Chinese for making a mistake and not to be embarrassed or not to embarrass his boss.

If you think dictatorship is more effective, which I agree, then you have the number one enemy, Nomad. Nomad by environment, upbringing and work, is against dictatorship. Nomad is autonomous even inside his small susb-sub-..clan.

Look at the Xabeshi. The whole world for one reason or another is on their side. Yet since they are farmers, they never take advantage of it. They are still most technologically backward and poorest even on Food and other necessities.

 

Any thought of Industrialization should take into account CULTURE. South Koreans did not allow Japanese to supervise even in Japanese companies. That is because of culture and culture that grew from war experience.

I do not have a link now, but I would point you intervies done with Herman Gref and a Turkish Big executive in explaining how even big corporations in Turkey and Western Europe function very differently.

 

 

 

 

[Haatu]

Oodweyne, Xabashi,

The problem with you two is that qumanahiinaa qoorta idiin suran as they say. So despite all the evidence I present you will not change your beliefs despite what the research may say. It's probably because you are both from the same generation that failed Africans throughout the continent. So let's just agree to disagree and move on, illaa qalbidhagax lalama dooddi karee.

[Old_Observer]

9 hours ago, Haatu said:

Oodweyne, Xabashi,

The problem with you two is that qumanahiinaa qoorta idiin suran as they say. So despite all the evidence I present you will not change your beliefs despite what the research may say. It's probably because you are both from the same generation that failed Africans throughout the continent. So let's just agree to disagree and move on, illaa qalbidhagax lalama dooddi karee.

 

You are unconsciously displaying the main problem. Pointing out issues from what has been tried, what worked and what did not work.

Xabeshi had chosen at least for a decade, the South Korean model. All they achieved was more than 10 percent GDP growth for that decade. They sent each year hundreds of students, trainees, and also brought in Korean businesses and educators. Even the Chinese did not mind this. The Americans did not mind this. The Europeans were not happy about it, but did not at least openly work against it. Year 2000 to 2010.

Then Politics took over. The accusation that ONLY Tigray were benefiting from this development found ground and and off to the races to get rid of them. People in Ethiopia are cursing them for tying the country in knots with Djibouti. Knots that are almost impossible to undo.

This decade Ethiopia will spend all its energy and time to go a different direction. Any direction except what the Tigray attempted to do.

Not to pile up negativity, but you are also ignoring background.

Japan was a highly developed country in the 1900s. Around 1905 when Russians were doing their revolutions, there were Xabeshi (intellectuals of the time) who advised the King to follow Japanese model and Japanese Technology not Western.

Cohesion is also one of the factors that is common with all Eastern Religions.

Division is the main factor in both Islam and Christianity. War between different branches of both Muslim and Christian is common occurrence that wasted centuries.

 

My point is only to say that you need to consider where you are at the moment, since that is all the energy you have to attempt at any task/project. Othersise you can have the Xabeshi experience where they burned Turkish investment in Amxara just because the Amxara assumed that Turkish are friends only with Tigray. Now they do not have Tigray and Investment.

 

 

 

 

[Old_Observer]

Haatu,

 

What is common among all the societies that have achieved fast Industrial development?

THEY ALL HAD SECRET SOCIETIES/GROUP.

Individuals in these societies are so convinced or indoctrinated they will work 24/7 for the objective, kill and be killed without fanfares and announcements, be pirates, steal technology from anywhere they can, be soldier, be Imam, be Beggar....ready to do anything and everything for the objective.

The Turkish, Koreans, Japanese, Germans, English...are all known for this.

You cannot steal a Camel milk processing technology from somewhere over FACEBOOK.