Somalia is a country that is rising like a Phoenix from the ashes. The country’s capital, Mogadishu, once a centre of chaos and destructions is coming to life – major shopping centres have pop up on every major street. The constructions sounds have replaced bullet sounds.
Somali diasporas have returned en masse to the city to invest. They have brought with them modern ways of doing business and other critical skills the country needs to rebuild.
According to the International Monetary Fund (IMF) report in February, “Somalia’s economy is recovering, but further efforts are needed to secure economic resilience and reduce poverty. Since 2017, growth has rebounded, inflation has slowed, and the trade deficit has narrowed. For 2018, real GDP growth is projected at 3.1 per cent and end-year inflation at 3.5 per cent.
“The exchange rate has remained stable. But further efforts are needed to improve economic conditions, increase employment and make a significant reduction in poverty. Development and humanitarian partners are working with the authorities on enhancing the country’s resilience.”
However, the economy will still face a risk of retrogressing.
Centuries-old custom of entrepreneurial skills
Somalis entrepreneurial culture is centuries old dating back to Pharaonic Egypt.
They have applied the same business ingenuity to develop other countries because of the lack of peace and stability in Somalia for decades.
They have taken risks in building mega businesses in neighbouring countries like Kenya, Tanzania and Uganda. The same “can do it attitude” should be transferred back to their home. Somalia needs its talents and resources more than ever.
Abundant natural resources
Somalia is blessed with one of the longest coastlines in Africa stretching 3,330 kilometres. The untapped oil and gas reserves in the ocean are sufficient to take Somalia to the middle-class economy once it is exploited.
Already, the fishing sector has attracted some foreign investors though Somalis questioned the throwaway price that Chinese fishing firms were given licenses to fish along Somalia’s coastlines.
The other unexploited resources are youth. They are 75 per cent of the population. The federal government has to invest in the training and development of the youth so that they can steer the country to the next level of progress.
Returns of foreign direct investments
The sign of the country’s economic recovery is that major global and regional airlines from countries like Qatar (expected to start its flight this year), Turkey, Ethiopia and Kenya have returned to Somalia as their destinations. This will boost the tourism and hospitality industry.
Obstacles encountered by Somali entrepreneurs
The significant barriers faced by the local entrepreneurs unusually small business owners include lack of training in basic accounting, marketing, technology applications, and how to access funding for their businesses. And of course competition from returning Somali diasporas.
The local banking industry should support the sector by scaling up microfinance loans based on Islamic principles to small business owners.
However, the government needs to support the growth of SMEs by fighting corruption, support women-led SMEs through women entrepreneurship funds, rebuilding governance institutions, initiating proper taxing mechanism, adopting appropriate policy reforms, establishing long-term public-private partnership and providing incentives for SME sector to alleviate poverty.
Over a decade now the country has been hit by al-Qaeda affiliated militant group which impedes the economic development. Somali businesses were unable to pick up because of them: they either extort money from them, destroy their business premises by random explosions and killing them.
Federal government support
The Somali government has made great paces in developing “a solid foundation” in the country’s economic recovery.
The government has to do the following to help Somali entrepreneurs; first, it ought to take security as paramount importance for the survival of entrepreneurial ventures in the country.
In the environment where terrorists exhort money from businesses, destroying their properties and killing them it is infinitely uncertain that Somali diasporas, foreign investors or even local entrepreneurs will start a business in the country.
Protections of their properties and lives should be a priority for the government: through robust security measures.
Second, the regime must create an adequate environment for businesses to flourish. They can do this by easing the business registrations and licensing fees, developing and executing better policies and regulations that govern commercial activities in the country.
Third, it should cooperate with private sectors to start business incubators in every federal member states to nurture entrepreneurial skills among youth and women especially those who operate small businesses. This will also create jobs for unemployed youth.
Finally, the most important thing is that the government should avoid a toxic political environment. Healthy political environment will breed robust economic policies that will drive society to prosperity. The unhealthy political environment where entropy ensues will lead to stagnation in economic development.
Abdi Moalim, Political Analyst