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Somalia: Commerce amid chaos



Sunday 13 February 2011 SMC


SEVEN dhows and three freighters float in the sunlit port of Mogadishu. White dinghies bob out on the petrol-blue waters. Fisherboys wade to the beach shouldering sharks and swordfish. Sandbagged machinegun nests protect peacekeepers from the African Union (AU). Together with Somali soldiers, the AU has pushed the Shabab (an Islamist militia linked to al-Qaeda) deep into the city, so there has not been a mortar strike on the port since October. “We’re open for business again,” beams a trader.

In 1331 a Muslim traveller, Ibn Battuta, described “Maqdashu” as one of best cities in the world in which to do business.  Somalia’s capital has lost that distinction. On the upside, there is no taxation system to speak of. On the downside, there is no government to speak of either. (A “transitional government” more or less controls part of the capital.) No government means no irksome regulations. But it also means that contracts are hard to enforce, and that firms must spend 10% or more of their earnings on security measures such as gunmen.

Still, there are ways for canny traders to get by. Sales of imported electronics are brisk. Nine mobile-phone operators in Mogadishu offer cheap calls. It is hard to connect between networks, but that is beginning to change. Some operators, including Golis, HorTel and Telesom, have banded together to launch a mobile banking service allowing traders to send and receive payments on their phones.

The port is Mogadishu’s biggest employer. Ancient cranes lift cement and oil drums. The rest is done by hand. The 4,000 or so stevedores are paid in cash and employed along clan lines. The transitional government’s entire revenue, says its finance minister, Hussain Abdi Halane, is the $1m a month it gets in customs revenues from the port. It makes a hash of collecting even that. “They should be getting $6m a month,” says a logistics manager who has examined the port’s accounts. “Most goods do not get near the customs.”

“Hunger is the first priority,” says Mohamoud Ahmed Nur, the mayor of Mogadishu. The dhows are stacked with pasta, rice, sugar, flour and cooking oil. One of the freighters has been chartered by the UN World Food Programme to bring in food aid, which is the biggest earner for local transport contractors. Some 3m of Somalia’s 8m people need aid to subsist.

The most lucrative import is qat, a stimulating leaf chewed by Somali men. It arrives on small planes from Kenya and Ethiopia. There is a madcap drive from the airstrip to the city: those who reach the market first receive the best price.

Mogadishu’s marketplaces, Bakara and Hamarweyne, bustle with enterprise. Many deals are done in Somali shillings, a currency without a central bank to support it. Local businessmen guess the shilling is kept afloat by “common assent”. Remittances in hard currency funnelled through hawala (Islamic word-of-mouth banks) may have more to do with it. The biggest of the banks, Dahabshiil, has offices in 40 countries. It moves a “large share” of the $1 billion or more that Somalis abroad send to relatives back home each year. “We now operate under full banking licences,” says Dahabshiil’s boss, Abdirashid Duale, who spends much of his time in London.

Manufacturing in Mogadishu is not what it was. There are bottling plants for water and Coca-Cola, plus tanneries, garages and a cannery. But that is about it. Other factories have rusted. Banana and tomato exports collapsed long ago. Cattle and camels still earn money, as do goats shipped to Saudi Arabia for slaughter by pilgrims to Mecca. The fishery is promising, especially since pirates have scared off illegal tuna boats. But Somalia’s lawlessness is visible in the booming charcoal trade, which is annihilating what’s left of the country’s trees. Dhows docking at Shabab-controlled ports pay $5 a sack and sell it in Dubai for $15.

Source: The Economist



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