Daqane Posted May 31, 2013 By Richard Lough NAIROBI, May 29 (Reuters) - East African firms said on Wednesday Somalia was an increasingly enticing market as it strives to cement security gains against al Qaeda-linked insurgents and spur an economic recovery. The Horn of Africa country needs rebuilding from scratch. just 10 percent of its roads are paved while 95 percent of the country's 10 million people have no electricity. In the capital, Mogadishu, mushrooming construction sites, solar-powered street lamps and beach front cafes point to a delicate rebound, albeit one largely confined to the city. "Somalia is a fantastic prospect," Prasad Karey, head of sales and marketing at Kenya-based Athi River Steel Plant, said. Such a view would have been unthinkable barely two years ago when al Shabaab rebels still held bases across the capital and other major urban areas in southern and central Somalia. They have since been pushed back into rural areas and militarily weakened by a military offensive led by African peacekeepers and government forces. Athi River Steel Plant plans within half a year to export 300 tonnes a month - about 10 percent of its total monthly exports - to Somalia to capitalise on the building boom. The snag: there are no paved roads linking Kenya to its neighbour, meaning the steel manufacturer will have to ship by land and sea, lifting its prices above foreign competitors. The steel manufacturer's answer is to undercut rivals and sell at a loss in order to penetrate the market, banking on improved access to the Somali market in the longer term. "That could give us a big edge," Karey said at a regional investor conference for Somalia in the Kenyan capital, Nairobi. HIGH RISK, HIGH REWARD In a sign of how key the private sector is seen to driving Somalia's recovery, ministers from both the central government and the breakaway region of Somaliland attended the conference. That was in sharp contrast to a high profile meet on Somalia's political future in London boycotted by Somaliland. It is not just small firms with an appetite for risk eyeing Somalia. Kenya's largest bank by assets, Kenya Commercial Bank , said in April it was keen on expanding into Somalia. Kenya-based freight carrier Astral Aviation started flying into Mogadishu two years ago when African troops routed the al Shabaab rebel group from its capital redoubts. In that time, it has mostly carried relief food and medicines for aid agencies, but the market is shifting as diplomatic missions open up and Somalis abroad return to invest. Astral Aviation's Mustwafa Murad said flights there required extra paperwork and extra security checks, incurring added costs. Other operators complain of widespread corruption. "In terms of growth potential, I think Somalia is number one in the market right now," said Murad, forecasting business in coming from years from oil and gas firms eyeing Somalia. Civil war has starved Somalia's government of cash. It wants to attract investors willing to stump up hundreds of millions of dollars to fund large-scale energy and transport projects. With al Shabaab deprived of territory and funding, Nadifa Mohamed Osman, Somalia's deputy minister for public works and reconstruction, said now was the time to invest in Somalia. But the risks remain high. Al Shabaab suicide bombers have been able to attack sites in Mogadishu with alarming ease. Peacekeepers still patrol the streets in armoured vehicles. "Yes you have to be security savvy," said Mohamed Abdi of the Somali Chamber of Commerce and Industry. "Investment will mean employment and jobs mean fewer potential recruits for the insurgents. It's high risk, high reward." (Editing by George Obulutsa; editing by Ron Askew) Quote Share this post Link to post Share on other sites
Mintid Farayar Posted May 31, 2013 Insha'Allah Kheyr! But I would post one warning! Somalis should be careful re: the East African Indian community gaining a foothold within Somalia(I've noticed the majority of the Kenyan presenters hail from this community). Many have observed the negative aspects of their role in Kenya, Tanzania, Zambia, etc. Giving them a foothold in Somalia will allow them to enslave future Somali generations in a world increasingly dominated by those with the most capital..... The most dangerous thing about the Indian business class in Africa is their lack of any blood, social, or emotional ties with the local populations they're living with! Quote Share this post Link to post Share on other sites
burahadeer Posted May 31, 2013 Mintid Farayar;957272 wrote: Insha'Allah Kheyr! The most dangerous thing about the Indian business class in Africa is their lack of any blood, social, or emotional ties with the local populations they're living with! Very True... Quote Share this post Link to post Share on other sites
Chimera Posted May 31, 2013 That is just scare-mongering Mintid, the Indian community in East Africa works hard, hence their wealth. However Somalis are equally if not more entrepreneurial because they deploy the same family relationship/trust based business tactics. The Indians lost a lot of their hubs to Somali retailers and businesses in the region. Also, in prewar Somalia there were Indian businesses inside the country, and all was well, we should not project the same xenophobia that plagues Somali businessmen in parts of Africa due to their success, Quote Share this post Link to post Share on other sites
Mintid Farayar Posted May 31, 2013 Ok, Chimera, if you truly believe the Somali business community in E. Africa rivals the Indian business community. The Somalis simply replaced some of the lower to mid-tier players but those economies are still entirely controlled by the East African Asian community. From the Ismailis(Aga Khan's people), the Indian Shi'as, the Bokhari community, the Sikhs, etc., - they split up the pie of who gets to enter each 'mega-industry' through secretive annual conferences held in East African countries. They possess a further advantage by forming joint ventures with large-scale Indian industrial companies(based out of India proper), and then using African countries preferential export allowances(poor-country charity by the developed world) into the E.U. and U.S. markets. So they are no longer an Indian company but an African one. They're able to set up financing facilities worth in the $Billions with Barclays, Citibank, etc., and we're celebrating receiving $10 Million! Ask knowledgeable Somalis in the region and you'll get a more truer picture of the realities. We, Somalis, haven't even began to scratch the surface... Quote Share this post Link to post Share on other sites
Chimera Posted May 31, 2013 Your putting words in my mouth, Somalis replaced the Indian businesses that were directly affecting them. Somalis don't bank at Barclays, they use their Islamic compatible versions. Somalis don't shop at Nakumatt, they have their own malls. That is what I was highlighting. The Indian community is one which I admire, they are today where Somalis in Africa will be in a few decades, if the situation in Somalia were to remain the same. However, Somalia is recovering, and with that reality comes the return of a dozen different business groups and interests driven by the trillion dollar club that will make the East African Business community look like small players. Those are the ones I am more worried about, and the establishment of a 10 year-law that offers incentives for foreign companies to enter into Joint-ventures with local ones, would be a win/win scenario. Quote Share this post Link to post Share on other sites
nuune Posted May 31, 2013 Mintid, not sure if you have being to Kenya during 1992 to 1995when Somalis arrived there, they dominated the market of every sector there, the influence of Indian is gone in Kenya in the past 15-20 years, they all gone to Uganda and Tanzania moving like cattle, but Somalis chased them, and overtook them, comepetion wise, my question is, where did the Somalis got that assets to overtake businessmen like the mighty Indians who in business since more than half a century ago. The company who used to supply everything to the armed forced of Uganda was an Indian firm only few years back, now that is gone to the wilderness, it was replaced by a Somali firm that does everything not only supplies everything the military in Uganda needs but also supplies goods to those Ugandans and Burundians serving in Mogadishu. You will ask yourself, how did they got into this, they have seen a market, identified the need, the exposure, the weakness of the Indians, they have seen Indians were not only running business in the public but also in governmen level. The Indians are still on the move, South Africana waa lagu heestaa, and they are using proxy South Africans to dismantle what little Somalis own there, zambia is a story gone as well adoonba East Africa soo hadal qaadin, marka Soomaalida haduu habaar wax ka tarayo kii Hindida ayaa nagu dhici lahaa oo har iyo habeen kuch kuch guru guru hee ay ka dhigeen Soomaalida businesskeena ay dhahaan. Just to inform you, even the banks you mentioned, every major bank in Kenya has a managerial level of Somali origin, the people who are spearheading that Kenyan banks to be expported to Somalia are Somalis themselvies, they have already done that in Eastleigh's many retail banks managed by Somalis only, the story never ends and could only be told if you are based there or have visited the place of East Africa as a whole. Quote Share this post Link to post Share on other sites
Mintid Farayar Posted May 31, 2013 Chimera, Don't have much to disagree with your latest reply. However, it's not xenophobia, but rather vigilance that I expressed earlier (a point Nuune alludes to in the tension between the two business communities). While not minimizing your lofty goals for Somalis(like some others on this board), I believe we should first walk before running.... Nuune, No, I didn't get a chance to visit Kenya during 1992-1995. I have visited earlier and later than that time period. I was based out of the region only a couple years back(no longer there now). The Somalis have done very well for themselves in East Africa - that much I agree with you. However, the Indians simply moved up the value chain. Winning a military contract for supplying boots, clothes, and food is one thing(which a Somali-owned company holds in neighboring Tanzania as well), but to properly assess the difference in scale between the two communities, one must look at the key economic sectors in a country. We have yet to meaningfully penetrate those in Kenya. It's still Indian-dominated. However, we're rapidly moving up the 'value-chain' - which is quite amazing given we're a war-traumatized community with little initial financing in the early '90s. Having said that, I'm filled with nothing but pride in the accomplishments of my brothers and sisters in those countries. Quote Share this post Link to post Share on other sites
