Business Thrives in Sea of Poverty--Nation Tv

BN · September 20, 2003

Business Thrives in Sea of Poverty

Special Report - Nation TV

Tuesday, September 17, 2003

Nation TV’s FARIDA KARONEY goes into Mogadishu’s unconventional but lucrative business world , and wades through the destruction of the civil war to witness the heroic efforts to put children back in the classrooms.

Bakhaara Market is a maze of streets and stalls.

Photo by Nation TV

Somalia is home to some of the world’s poorest people. It was ranked last in the UN Human Development Index in 1998 and 70 per cent of its population live below the poverty. Warlords and freelance gunmen roam the country war-torn country with reckless abandon.

Yet, amidst all the anarchy of a country reduced to ruins by civil war and over 12 years of protracted power struggles between warlords, some things still shine bright: Somalia has one of the best and cheapest telecommunications systems in Africa.

The industry's growth is interwoven with the story of the close to two million Somalis in the Diaspora, who repatriate millions of dollars to Somalia. It is this cash that spurs business.

Traditionally, Somalis maintain close family ties, and in this way have managed to stay in touch throughout the crisis in their homeland.

Before the war in 1990, Somalia had about 17,000 telephone landlines, which ground to a halt during the civil war between 1991 and 1994. Private telephone operators sprang up after the civil war in 1994. At the time, an international call from Somalia to America and Europe cost $4 (Sh300) a minute and $7 (Sh525) to the rest of the world.

The cost is now down to $0.5 (Sh37) a minute. This is a remarkable achievement compared to the cost of telecommunications among her more prosperous neighbours like Kenya, where an international call costs between $1.4 (Sh105) to $2.05 (Sh154) a minute depending on the destination.

Telephone service providers in Somalia attribute the prices to stiff competition. The managing director of Nationlink Telecom , Mr Ahmed Abdi Dini, told the Nation that the operators have taken advantage of the close family ties between Somalis living abroad and those back home in Somalia. "Somalis talk to each other a lot. Our challenge is to provide service at prices that are affordable,’’ he said. The fact that there is no central authority to levy taxes also helps to bring down prices.

There are three main telephone service providers: Telcom Somalia , Nationlink Telecom and Hormud, which was trading as Al-Barakaat before the US government shut it down, following the September 11 terrorist bombings in New York and Washington. The Americans suspected that the firm was being used as a conduit for the Al-Qaeda terrorist network’s money.

Risky as it is to do business in Mogadishu, there is a lot more of it than just mobile phone companies. Bakhaara Market is a maze of streets and stalls with a diverse range of merchandise.

In one street corner is a group of men with wads of cash and heavy metal safes. The street corner serves as a forex bureau - where every currency in the world is traded. The Transitional National Government’s (TNG) Central Bank is powerless to regulate the market. The 1,000 (Somali) shilling note is recognised as legal tender. It’s the only Somali currency in circulation. The 50, 100, 200 and 500 shillings notes went out of circulation after the civil war.

Occasionally, the warlords ship in billions of shillings printed on the black market in Malaysia. It is legal tender and you can get by using it in Somalia. One Kenya shilling exchanges for 2,000 Somali shillings, while one US dollar exchanges for 18,000 Somali shillings. Trading in cash is mostly based on one’s trading partner’s word of honour, since one cannot really be sure whether the cash is genuine or fake.

There are also some "banks" and money transfer institutions which mostly remit cash from Somalis living abroad. According to the United Nations, Somalis living abroad repatriate almost US$500 million home every year.

Seeing all this, one wonders what future the young Somalis have. Education was one of the first casualties of the Somali civil war. An entire generation of young people, who were six years old at the time the civil war broke out in 1991 and are now 18, have lost out on education.

In reality though, the civil war was just the final blow to an education system that was already falling apart. During the Ogaden War of 1977-78, the Somali government diverted resources from social services to finance the military. Many schools were forced to close and enrolment rates dropped drastically.

By 1990, Unicef reports that just 600 schools remained operational and only about 150,000 children were enrolled in what was left of Somalia’s formal education system. The civil war was simply the last straw.

Today, communities across Somalia are coming together with the help of organisations such Unicef to start an education system from scratch. According to Unicef, about 90 per cent of all school buildings have been destroyed by 12 years of war.

Hawa Taako Primary and Intermediate School in Mogadishu was one of the largest schools in the capital before the war. It boasted 1,800 enrolled pupils and a large teaching force. Today the school has only 500 pupils, and the 18 volunteer teachers teach in shifts.

Sheikh Nur, who teaches English, says a group of teachers just got together and began classes, "because we were so tired of seeing our children just wasting away." Sometimes, the teachers are paid by aid agencies for their trouble.

Schools have few, if any, textbooks. The country also has no national education curriculum. And, although the number of children returning to school has grown since the dark days at the beginning of the civil war, formal learning opportunities are almost non-existent in Somalia. A Unicef report says there are 1,105 operational schools in Somalia with a total enrolment of over 261,000 children, representing a 17 per cent gross enrolment ratio - among the lowest in the world.

By: The Nation Posted: 16th/September/2003

http://www.somaliuk.com/Indepth1/Fullarticle.php?IndepthID=173