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Why business is vital to the Somali economy by Prof. Isse Halane
Africa

Why business is vital to the Somali economy by Prof. Isse Halane

At the end of March, the International Monetary Fund and the World Bank praised Somalia’s efforts at economic reform. It was thanks to those efforts that we qualified for the debt relief programme that will allow us to reintegrate into the global economy in 30 years’ time. And in the end, despite the introduction of various strategies designed to reduce poverty and improve our national debt management, it was the private sector that was the engine of our achievement. It now looks more and more likely that a more prosperous future awaits us. Such a thought would have been impossible just 20 years ago. Our country was a swirling vortex of savage internecine fighting, famine, disease and crushing poverty. Our institutions and infrastructure were crippled, and our economy lay in ruins. And it was out of this, against all odds, that a determined and energetic private sector emerged. Entrepreneurs created jobs that the countless unemployed were eager to take. Some of the most vulnerable and marginalised people in Somali society were given the means to empower themselves through work. Today the private sector continues to improve the lives of the Somali people and create the conditions in which future generations of entrepreneurs, as well as politicians and intellectuals, can flourish. Somalia’s economic spine has traditionally been the agricultural and marine resources sectors. But now it’s the services companies and the financial sector that are booming: Somalis rely heavily on money transfer companies because the diaspora sends billions to the country in remittances. Manufacturing in Somalia remains underdeveloped because the country is emerging from a long and bloody civil war. But in the Chamber, what we call business encompasses almost every area of society. This is to say that, due to the collapse of the central government in the 1990s, there is only a very small public sector. Almost all Somalis, therefore, are in some way involved in the business ecosystem. Driving the evolution of this business ecosystem has been the move towards mobile money. Even in rural parts of the country, and even among the homeless and those in extreme poverty, mobile money has become the currency of choice: a 2018 World Bank report found that almost three-quarters of the Somali population aged 16 and over use it. In the revival of a working financial system and banking infrastructure led by the Government of Somalia, and with the loss of faith in the Somali shilling due to counterfeit currency printing, an unlikely and silent revolution rapidly took place. For example, the economy largely become digitalized due the adoption of mobile money. This has brought with it the financial confidence and renewed trust which underpin the work of private enterprise. Somalia’s private sector offers young people bereft of opportunities – an alternative to joining the terrorist groups hoping to take advantage of their desperation. These groups will traffic, kidnap or forcibly recruit Somali youth, but they also appeal to the young person’s need for a group identity, economic stability, respect and community—all of which are now provided by the meaningful work created by Somali businesses. In this way the Somali private sector has played a major role in protecting young people and making the country more secure for all. The world has watched as Somali society has dusted itself off after years of conflict, taken charge of its destiny and set out on the road towards an economic recovery that at times has seemed impossible. But the road is long, and the challenges will continue. Businesses will work alongside the Somali Government to continue to develop our post-conflict economy and society. And in time, if we show the same determination and self-belief that we have shown in recent years, we will enter a safer, happier, more prosperous era in our history.