WORLD BANK

Somalia flourished precisely because of the "world community’s" neglect.

In Somalia, "the very absence of a government may have helped nurture an African oddity — a lean and efficient business sector that does not feed at a public trough controlled by corrupt officials," wrote Peter Maas in the May 2001 issue of The Atlantic Monthly. Tele-communications, transportation, and shipping companies were organized up to provide services to the liberated private sector. Internet cafes have sprung up in Mogadishu. Private security firms helped businessmen protect their investments and property.

A recent World Bank study grudgingly admitted: "Somalia boasts lower rates of extreme poverty and, in some cases, better infrastructure than richer countries in Africa." This is almost certainly because it is not cursed with a World Bank-subsidized central government to siphon away the nation’s wealth.


Somali Businesses Stunted by Too-Free Enterprise

By Ian Fisher


There are five competing airlines here; three phone companies, which have some of the cheapest rates in the world; at least two pasta factories; 45 private hospitals; 55 providers of electricity; 1,500 wholesalers for imported goods; and an infinite number of guys with donkeys who will deliver 55 gallons of clean water to your house for 25 cents.

What Somalia does not have is a government, and in many ways, that makes it the world's purest laboratory for capitalism. No one collects taxes. Business is booming. Libertarians of the world, unite


It is striking that Somalia, unlike many parts of Africa, has achieved this thriving business climate on its own, without the usual aid and advice from rich nations. They have all but disengaged from Somalia since the failure of the United Nations operation here in the early 1990's. Somalis have learned that they are pretty good at making money.

"It's entrepreneurism that's doing it," said Ahmed Abdisalam Adan, director of programs for Horn Afrik, Somalia's first independent radio and television station, established last year. "It's who has more creativity. It's who is willing to take risks. Before it was the government. The government could make you rich one day and poor the next








Telecoms thriving in lawless Somalia







By Joseph Winter
BBC News, Mogadishu

Rising from the ruins of the Mogadishu skyline are signs of one of Somalia's few success stories in the anarchy of recent years.






Mobile phone masts are among the few new structures in MogadishuA host of mobile phone masts testifies to the telecommunications revolution which has taken place despite the absence of any functioning national government since 1991.
Three phone companies are engaged in fierce competition for both mobile and landline customers, while new internet cafes are being set up across the city and the entire country.
It takes just three days for a landline to be installed - compared with waiting-lists of many years in neighbouring Kenya, where there is a stable, democratic government.
And once installed, local calls are free for a monthly fee of just $10.
International calls cost 50 US cents a minute, while surfing the web is charged at 50 US cents an hour - "the cheapest rate in Africa" according to the manager of one internet cafe.
But how do you establish a phone company in a country where there is no government?
No monopoly
In some respects, it is actually easier.
There is no need to get a licence and there is no state-run monopoly which prevents new competitors being established.






Voices of Somali internet users

In pictures
And of course there is no-one to demand any taxes, which is one reason why prices are so low.
"The government post and telecoms company used to have a monopoly but after the regime was toppled, we were free to set up our own business," says Abdullahi Mohammed Hussein, products and services manager of Telcom Somalia, which was set up in 1994 when Mogadishu was still a war-zone.
"We saw a huge gap in the market, as all previous services had been destroyed. There was a massive demand."
The main airport and port were destroyed in the fighting but businessmen have built small airstrips and use natural harbours, so the phone companies are still able to import their equipment.
Despite the absence of law and order and a functional court system, bills are paid and contracts are enforced by relying on Somalia's traditional clan system, Mr Abdullahi says.
Mobile target
But in a country divided into hundreds of fiefdoms run by rival warlords, security is a major concern.
While Telcom Somalia has some 25,000 mobile customers - and a similar number have land lines - you very rarely see anyone walking along the streets of Mogadishu chatting on their phone, in case this attracts the attention of a hungry gunman.








We are very interested in paying taxes

Abdullahi Mohammed Hussein
Telcom Somalia



Life in Somalia: Have Your Say The phone companies themselves say they are not targeted by the militiamen, even if thieves occasionally steal some of their wires.
Mahdi Mohammed Elmi has been managing the Wireless African Broadband Telecoms internet cafe in the heart of Mogadishu, surrounded by the bustling and chaotic Bakara market, for almost two years.
"I have never had a problem with security," he says and points out that they have just a single security guard at the front door.
Mr Abdullahi says the warlords realise that if they cause trouble for the phone companies, the phones will stop working again, which nobody wants.
"We need good relations with all the faction leaders. We don't interfere with them and they don't interfere with us. They want political power and we leave them alone," he says.
Selling goats on the net
While the three phone companies - Telcom, Nationlink and Hormuud - are engaged in bitter competition for phone customers, they have co-operated to set up the Global Internet Company to provide the internet infrastructure.






Somali traders say if business is better without a government

In picturesManager Abdulkadir Hassan Ahmed says that within 1.5km of central Mogadishu, customers - mostly internet cafes - can enjoy service at 150Mb/second through a Long Reach Ethernet.
Elsewhere, they can have a wireless connection at 11Mb/s.
He says his company is able to work anywhere in Somalia, whichever faction is in charge locally.
"Even small, remote villages are connected to the internet, as long as they have a phone line," he says.
The internet sector in Somalia has two main advantages over many of its Africa neighbours.
There is a huge diaspora around the world - between one and three million people, compared with an estimated seven million people in Somalia - who remain in contact with their friends and relatives back home.






Somalis send e-mails in their own languageE-mail is the cheapest way of staying in touch and many Somalis can read and write their own language, instead of relying on English or French, which restricts internet users to a smaller number of well educated people.
Just two days after it was opened, the Orbit internet cafe in south Mogadishu's km5 was already pretty busy, with people checking their e-mail accounts, a livestock exporter sending out his invoices and two nurses doing medical research.
Video calling
And Somalia's telecoms revolution is far from over.
"We are planning to introduce 3G technology, including live video calling and mobile internet, next year," says Mr Abdullahi.
But despite their success, the telecoms companies say that like the population at large, they are desperate to have a government.






Mogadishu's phone engineers are going to be kept busy"We are very interested in paying taxes," says Mr Abdullahi - not a sentiment which often passes the lips of a high-flying businessman.
And Mr Abdulkadir at the Global Internet Company fully agrees.
"We badly need a government," he says. "Everything starts with security - the situation across the country.
"All the infrastructure of the country has collapsed - education, health and roads. We need to send our staff abroad for any training."
Another problem for companies engaged in the global telecoms business is paying their foreign partners.
At present, they use Somalia's traditional "Hawala" money transfer companies to get money to Dubai, the Middle East's trading and financial hub.
With a government would come a central bank, which would make such transactions far easier.
Taxes would mean higher prices but Mr Abdullahi says that Somalia's previous governments have kept taxes low and hopes this will continue under the regime due to start work in the coming months.
Somalia's telecoms companies are looking forward to an even brighter future with the support of a functioning government - as long as it does not impose punitive tax rates or state control in a sector which obviously needs very little help to thrive.



Tharwa Net-Watch

From the chaos, it's a business boom in somalia

Import and export is a booming business. Traders are doing whatever they can to get hold of useful stuff that can sell abroad. Neither traditional nor non-traditional commodities are spared. Even markets for scrap metals that litter all over the place are to be found, especially old military gear and other devices wrecked during the civil war.

The import sector is the most interesting. Town dwellers all over Somalia cannot complain of a shortage of commodities as adroit traders have managed to fill stores with all sorts of goods. Sugar from Brazil, toys from Thailand, trinkets from India and even shotguns from Ukraine all compete for buyers in Mogadishu and elsewhere.

Trade between Somalia and other countries has multiplied. Some people even estimate that the trade volume is so huge that it could be considered one of the biggest in the Horn of Africa, outdoing more politically stable countries such as Kenya and Ethiopia.

Sceptics say Somali traders have become so profit driven as to compromise all values. Environmental and public health concerns have been raised, especially due to deforestation. The prevalence of strange diseases is assumed to be due to consumption of substandard, imported foods and drugs.

In the absence of law enforcing institutions to safeguard investor rights, joint ventures have been founded based on trust. It seems unimaginable that as many as 600 investors could pool their capital in order to initiate and run a single or a chain of businesses. It is not unusual to hear radio announcements calling shareholders for a meeting or news of a company management declaring payment of dividends. But beneficiaries tend to hide their huge income, fearing kidnappers.

Minarets of mosques generally greet visitors to Somalia's urban areas, but in these days the sight of communication transmitters of the shape of Paris's Eiffel Tower is becoming quite common. They are the product of intense competition among telecommunications and media companies who want to send and receive signals through the airwaves.

The recent opening of a Coca Cola plant in Mogadishu is an indication of how multinationals are beginning to expand their franchises to previously risky areas. It is a sign that more investors will follow suit, creating jobs and generating more locally made products.

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