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.
