Somalia's brave new world.

[burahadeer]

Somalia’s brave new world

African Review

Business & Technology

 

 

 

Somalia is a land of rich untapped resources, growing businesses and potential

 

Somalia is a land of many stories. There are those that make the headlines, revolving around famine, political strife, debt and piracy. And then there are those that go largely unnoticed – stories waiting to be told - like those of Somalia’s rich untapped natural resources, brimming with minerals and oil. Or those of its universities which rank among the top 100 in Africa. Or those of its telecom companies which offer some of the most technologically advanced services in the world.

 

 

These stories portray a Somalia that is fast demonstrating the potential to be a major global player. Observes , an award-winning Somali entrepreneur and CEO of Dahabshiil, an African money transfer business, “Every time I go back to Somalia, I notice a lot of positive changes. Things are getting better.”

 

 

Abdirashid would know. He’s seen the worst of it. In the late 1980s, the remittance company that he had helped his father, Duale, manage in Somalia collapsed in the face of the civil war. Abdirashid and his family were forced to flee to the neighbouring country of Ethiopia where they rebuilt the company from scratch, drawing on Duale’s extensive network of international contacts.

 

 

Today, Dahabshiil is the largest African money transfer company with 24,000 agent locations and branches in 144 countries worldwide. The company serves communities, businesses, development organizations and humanitarian agencies across East Africa by enabling quick and reliable money transfers to and from Europe, North America and Asia. But just how important are its services to Somalia?

 

 

A lifeline in troubled times

 

 

Remittances have always played a significant role in Africa’s growth; but in Somalia, they are one of the main drivers of the economy. Most of the remittances come from Somalia’s diaspora who left the country decades ago to either build a better life or escape the civil war. Despite settling down in other parts of the world, the diaspora – at least one million strong - continues to support family, friends and other people back in Somalia.

 

 

For a country which, for many years, lacked a central bank and any other kind of financial infrastructure, remittances from the diaspora represent an invaluable lifeline. Estimated at up to $1 billion, they offer a primary source of income for relatives and families. Much of the money is used for household expenses. Large sums are also used to finance commercial projects across Information Communication and Technology (ICT), trade, education, health and humanitarian activities in both urban and rural areas. In fact, 80% of the start-up capital for small and medium enterprises was provided by the diaspora.

 

 

Initially, Money Transfer Operators were hard to come by. The country’s volatile economy and political instability caused many of the major MTOs to stay away. But determined and innovative Somali entrepreneurs stepped in, and began establishing private money transfer operations which, through a well-developed network of agents, flourished and sustained the economy for many years. One of them was Dahabshiil.

 

 

Today Somalia’s remittance network is so well-developed that it is often considered to be more efficient and reliable than other ‘advanced’ African banking systems where bureaucracy and cumbersome regulatory frameworks make transactions much more complex.

 

 

Bolstering the economy

 

 

Over the last few years, Somalia’s financial landscape has witnessed a series of exciting developments. Foremost among them is the re-establishment of the Central Bank of Somalia after more than 15 long years. Located in Mogadishu, the bank is expected to promote much-needed financial stability in the country by developing monetary policies, enhancing the value of the local currency, and facilitating profitable credit and exchange conditions.

 

 

Encouraged by the bank’s restoration, many of the existing money transfer operators have begun to develop into full-fledged commercial banks. In 2009, Dahabshiil introduced Somalia’s first-ever debit card service, ‘Dahabshiil eCash’ while continuing to upgrade its existing payment systems. Remittances conducted through its network are known to clear in a matter of minutes – regardless of which part of the world they are being sent from, or to. In addition, its Web-based facility and SMS notifications enable customers to track their money transfers in an easy, convenient manner.

 

 

Like Dahabshiil, many companies are integrating finance and technology in exciting new ways that bode well for the Somali economy. And nowhere is this more evident than in the telecom industry.

 

 

Riding the telecommunications wave

 

 

The telecommunications revolution in Somalia is a story of survival and success despite the odds of political instability, crumbling infrastructure, and civil war. Today, Somalia’s telecom industry is one of the best in the world. Calls are cheap, lines are crystal-clear, and services are provided to almost every nook and corner in the country.

Over thirty private telecom companies operate in the country, compared to just one, two decades ago. Many of these companies offer the latest 3G technology in voice and data services, as well as wireless Internet connections.

 

 

In August this year, Telesom Company, Somaliland’s largest national telecommunications operator, unveiled a 3G mobile network service with facilities for video and audio streaming, video chat and high-speed Internet access. Two years ago, the company had launched a mobile banking service – ‘ZAAD’, followed by a solar-powered mobile phone system. Many of these kinds of facilities are still not available in Africa’s more advanced countries. And it isn’t just the private telecom companies who are making it happen.

 

 

In April 2011, the Somaliland government passed the historic Telecommunications Act which introduces a new regulatory body and framework for the telecommunications industry, while also encouraging competition, enhancing security, expanding networks and lowering prices. Also on the cards is the installation of a fibre optic marine cable which will offer much greater bandwidth, and open up many new exciting opportunities for enhancing communication.

 

 

Making the best of this telecom revolution are entrepreneurs like Abdirashid. In 2008, he acquired a major stake for Dahabshiil in SomTel, a leading Somali telecom and mobile internet firm. SomTel launched its 3G services in July, thus paving the way for a full-scale launch of Dahabshiil’s mobile banking services across the country. ‘E-Dahab’ will enable Somalis in remote locations to have better access to finance and banking facilities. The service will also help sustain isolated local economies, and build on the success of eCash by reducing the transaction costs of handling large bundles of paper money.

 

 

Developments like these mean many things for Somalia - greater investment opportunities, more financial inclusion, larger numbers of jobs and increased private sector growth. With the government stabilizing, it will only be a matter of time before Somalia becomes a fertile region for major foreign investments.

 

 

It’s already happening in the manufacturing industry. Coca -Cola Co. has reportedly invested $10mn in setting up a bottling plant in Somaliland. The factory represents the second license issued by Coca-Cola in Somalia.

 

 

Unleashing the shackles of the past

 

 

For decades, Somalia has been perceived as one of the poorest and most violent nations in the world. Much of what we see and know about the country is limited to the famine that is sweeping across its landscape. No doubt such stories are extremely important – we cannot and must not forget them. But what’s also important is that Somalia is not defeated and hopeless. Somalia is healing and hopeful. It is a country that is gradually letting go of the shackles of the past, and coming into its own.

 

 

“Somalis just want to have a normal life - to educate their children and enjoy better services –like anyone anywhere else in the world,” says Abdirashid. As for Somalia’s businesses, he believes that there are many challenges, but that stability and good governance will come in time. “What we need are greater investments and economic independence.”

 

 

Both are gradually occurring as telecom and technology becomes more advanced, political stability improves, and entrepreneurship grows. A brave new Somalia is emerging. And the world is watching.

 

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African Review is published by Alan Charles Publishing Ltd.

[burahadeer]

positive..

[burahadeer]

How do you solve a problem like Somalia?

 

 

FEBRUARY 23rd has been the biggest day in Somalia’s recent history. There is an expectation that today’s London conference on Somalia, organised by the British government and backed by almost all interested parties, will give the benighted country a chance to move forward. That does not mean that it will necessarily pull together. Asour story in this week’s paper makes clear, the plan is to give up on a centralised state, for now, and to concentrate instead strengthening local rule. But in order for Somalia to have any chance of making a cantonal arrangement of six or seven regions work, it must first get some important things right. Donors can play their part by coughing up cash and trying to make sure it is spent correctly, but Somalis have to do much better than they have done so far (though the country has not been without heroes; many courageous and tolerant Somalis have been killed by jihadists and warlords, often dying without any recognition from the outside world). For Baobab, the main challenges can be broken down into security, food and business.

 

Security: The London conference has to come up with ways to hammer Shabab bomber and sniper units, while creating opportunities to draw moderate Islamists into local administrations. The announcement, on February 10th, that the Shabab have officially joined al-Qaeda is unlikely to result in much of an operational surge. Indeed, it may present an opportunity to get on side those fighters who are more interested in Somalia than in waging global jihad. The Shabab are on the back foot. It is having to defend its territory from Kenyan forces in the south, Ethiopia and its proxies in the west, and from African Union troops in Mogadishu. The Kenyans have succeeded in repelling the Shabab from their border (although Shabab fighters still slip through to kidnap or kill Kenyans). The group has so far deterred an assault on their stronghold of Kismayo by threatening a bombing campaign in Kenya, which would wreck tourism and scare off foreign investment there.

 

Those conferring today need to address two immediate security challenges. The first is to limit the influence of Eritrea, which has often acted against the interests of ordinary Somalis by assisting the jihadists. The second is to help local Somalis and Kenyan forces to secure the buffer state of “Jubaland” along the Kenyan border, about 100km inland. Investment in education, health and jobs in Jubaland would encourage Somali refugees in the Dadaab refugee camp, just inside Kenya, to return home. It would also make northern Kenya safer and enable work to start planned oil drilling, a new super-port at Lamu, and a new city for 1m people.

 

Food: The second area the conference has to get right is food production. Somalia is a hungry country, reliant on food aid and commercial imports of wheat, pasta and oil. Its old Italian banana and tomato plantations are in ruins. The situation is further complicated by the fact that the Shabab still control most of the country’s breadbasket. The United Nations says 80,000 Somalis may have perished in last year’s famine. Conditions have improved considerably, but 2.3m people are still in need of assistance. The UN humanitarian chief for Somalia, Mark Bowden, says the priority is getting displaced people to return home from tented camps around Somalia, as well as from Dadaab: the World Food Programme claims to feed 400,000 people in and around Mogadishu alone. The Shabab have tentatively supported the idea of returns; they emphasise self-reliance. However, many displaced people were driven from their farms by the Shabab and fear runs deep.

 

Business: The third and most important area to address is business. Here there is plenty of reason to hope, not least because of the acumen of its traders, bankers and entrepreneurs. Donors need to build on this money-making instinct by supplying capital for loans to medium-sized Somali companies. “I want to see more carrots and less sticks,” says a Somali businessman. Investments would need to be varied, including industrial equipment for fishing companies and frankincense exporters, and an overhaul of the country’s destructive charcoal business to make it more sustainable. Somalis are also surprisingly nerdy. The country is one of the most advanced in Africa in terms of mobile phone and internet usage. That can be further encouraged by subsidising the cost of data uploads on mobile phones as well as paying for fibre-optic cables to be laid down.

 

The foremost investments, though, will have to be in livestock. Trade in cattle, camels, sheep and goats account for about half of Somalia’s exports. The country exported record numbers of animals last year, despite the famine. According to the United Nations Food and Agricultural Organisation, $250m worth went to Saudi Arabia during the haj. The Saudis say they want to double that figure by 2013. A $50m investment to establish a national system of watering and veterinary points for animals being marched through the desert looks like a bargain, if it helps win over pastoralists.

 

Many Somali businesses can prosper without a helping hand. Take Somali money-transfer firms. The biggest of these is Dahabshiil. The Anglo-Somali outfit says its 5000 employees move most of the $1.6 billion in remittances to Somalia each year. The company’s boss, Abdirashi Duale, reckons the future of his company—and of Somalia itself—lies in the growing trade between African countries. He is expanding across Africa and hoping for a bigger share of the continent’s $40 billion in remittances. Similarly, connections abroad give Somali import and export companies an edge in selling electronics and household goods across Africa. That will probably continue even as they move to “regularise” their companies.

 

The cantonal arrangement does, however, look shaky in another way: taxes. How will they be paid? To whom? Direct taxes look to be a non-starter. Indirect taxes will be hard to administer. What happens if oil drilling goes ahead in Puntland? What kind of revenues should it send to Mogadishu? Does the oil, in fact, belong to Somalia at all, or only to the Puntlanders? Everyone agrees that the services provided by the new republic should be minimal, but how minimal? That raises a host of other questions. Should the revived republic have a navy? Who will run the central bank? Who will decide how many Somali shillings to print? Those in Mogadishu close to the transitional federal government argue for the trappings of state—but the argument seems to have moved decisively beyond that.

 

Source: http://www.economist.com

 

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[xiimaaya]

Why do you care about somalia? arent you the one who wished to prolong this war so that your enclave would gain recognition?

supporting Alshbab and such..

[burahadeer]

^^^^^ troll

[Mario B]

xiimaaya;814024 wrote:

Why do you care about somalia? arent you the one who wished to prolong this war so that your enclave would gain recognition?

supporting Alshbab and such..

[burahadeer]

^ polluting everywhere with your lil khatumite rubbish.The article talks both somalia & somaliland.

Don't they both share the word "somali".

[Mario B]

xiimaaya;814024 wrote:

Why do you care about somalia? arent you the one who wished to prolong this war so that your enclave would gain recognition?

supporting Alshbab and such..

:D:D

[burahadeer]

keep crying baby & keep hijacking threads.

all is left with you is try get into people's under skin.Clutch your straws tight.

[Mario B]

xiimaaya;814024 wrote:

Why do you care about somalia? arent you the one who wished to prolong this war so that your enclave would gain recognition?

supporting Alshbab and such..

:cool::cool::cool:

[Xaaji Xunjuf]

To many scripts on sol beryahan.

[Che -Guevara]

For moment, two of you were in agreement though be it about something you both hate. How about you make up and be nice to each other for day:D

[Mario B]

Xaaji Xunjuf;814536 wrote:

To many scripts on sol beryahan.

XX, the father of all scripts. LOL calling other clan enclave when he himself comes from one.