Transnational-Capital-In-Somalia.Pdf
Total Page:16
File Type:pdf, Size:1020Kb
Transnational capital in Somalia Blue desert strategy Jos Meester CRU Report Ana Uzelac Claire Elder Transnational capital in Somalia Blue desert strategy Jos Meester Ana Uzelac Claire Elder CRU Report June 2019 June 2019 © Netherlands Institute of International Relations ‘Clingendael’. Cover photo: Containers sit on a ship waiting to be off loaded at Mogadishu’s port in Somalia on September 17, 2015. © AMISOM Photo / Tobin Jones Unauthorized use of any materials violates copyright, trademark and / or other laws. Should a user download material from the website or any other source related to the Netherlands Institute of International Relations ‘Clingendael’, or the Clingendael Institute, for personal or non-commercial use, the user must retain all copyright, trademark or other similar notices contained in the original material or on any copies of this material. Material on the website of the Clingendael Institute may be reproduced or publicly displayed, distributed or used for any public and non-commercial purposes, but only by mentioning the Clingendael Institute as its source. Permission is required to use the logo of the Clingendael Institute. This can be obtained by contacting the Communication desk of the Clingendael Institute ([email protected]). The following web link activities are prohibited by the Clingendael Institute and may present trademark and copyright infringement issues: links that involve unauthorized use of our logo, framing, inline links, or metatags, as well as hyperlinks or a form of link disguising the URL. About the authors Jos Meester – Research Fellow at the Clingendael Institute’s Conflict Research Unit Jos’ work focuses on the functioning of the private sector in conflict-affected environments. He is particularly interested in supply chains spanning across political divisions, as well as the close relationship of political and private-sector elites and its consequences for the stability of political power structures. Jos previously worked as a management consultant on supply-chain management and market assessments in developed and developing economies. Ana Uzelac – Former Senior Research Fellow at the Clingendael Institute’s Conflict Research Unit Both as a policy professional and as a researcher, Ana has maintained a lifelong interest in human mobility, and the ways in which it shapes the world we live in. She is particularly interested in the politics of forced displacement, demographic rearrangements at the root of – or caused by – violent conflicts, and the way in which economic, personal and political interact, resulting in migratory flows. Underlying all of this is Ana’s critical curiosity about state as a model for organising human societies and its challenges, advantages and limitations in the rapidly globalising world. Claire Elder - Doctoral candidate at the University of Oxford Claire is currently a doctoral candidate in Politics and International Relations at the University of Oxford. She is also a consulting political analyst, having previously worked for International Crisis Group (ICG) on Somaliland/Somalia. The Clingendael Institute P.O. Box 93080 2509 AB The Hague The Netherlands Follow us on social media @clingendaelorg The Clingendael Institute The Clingendael Institute Email: [email protected] Website: www.clingendael.org/cru Contents List of figures and boxes 1 Abstract 2 Acknowledgements 4 Executive summary 5 Abbreviations 7 1 Introduction 8 Background 8 Research objective 14 Structure of the report 15 2 The Somali transnational community 17 The dynamics of a transnational community 17 The emergence of transnational entrepreneurship 23 Social embeddedness of transnational entrepreneurship 26 3 Business without borders 29 Somali exceptionalism 30 The transnational business model 32 4 Transnational business and domestic governance 49 Governance and oligopoly 49 Differences and similarities between Somalia and Somaliland 53 Somalia 55 Somaliland 61 5 Implications for (diaspora-based) private sector development 65 The private sector’s development efforts 65 6 Conclusions and recommendations 71 Effective programming in Somalia or Somaliland must take into account and address the interests of the major transnational conglomerates 73 The development of a formal banking system increasing access to capital is a key step to ensuring more equitable economic development 74 Scaling up selected SMEs may function as a catalyst to create space for further economic development 75 References 76 Bibliography 76 Additional press, media and digital sources for background 84 Sources on business entities 84 Annex Research methodology 86 List of figures and boxes Figure 1: Map of Somalia and major port cities 3 Figure 2: Estimated annual employee budget of public and private actors in Somalia 13 Figure 3: The Somali diaspora across the world 20 Figure 4: The eight most influential transnational businesses in the Somali territories and their related entities across sectors 37 Figure 5: Overview of interviewees 87 Box 1: Somali migration in the 20th century 20 Box 2: A transnational powerbroker 26 Box 3: Prospects for small and medium enterprises 35 Box 4: Insuring a future position 40 Box 5: The Dahabshiil model 43 Box 6: The Hormuud model 45 Box 7: The telecommunications laws 56 Box 8: Banking sector and political alliances 58 Box 9: Property boom or bust 61 1 Abstract This report explores the impact of transnational businesses active in Somalia and Somaliland on socioeconomic development and governance within the territories. The economic resurgence in the country owes much to the sizeable and pioneering role played by these transnational entrepreneurs. Their willingness to invest at even the most difficult times has bridged the Somali population through a range of hard periods that saw other actors withdraw, and has pushed a degree of economic recovery and widened the availability of goods and services. Yet part of the reason that these companies fulfilled this role was that it allowed them to entrench a strong competitive position (mainly through liquidity constraints and clientelistic networks spanning the public and private sector) and allowed them to rapidly develop a range of new markets. Their positioning has hindered competition and entrenched a status quo that benefits certain sections of the political settlement over others. The peacebuilding paradigm employed by the international community, focusing on state institutions to rebuild and stabilise post-conflict states, is brought into question by these dynamics. The transnational businesses act as a stabilising force and manage to provide a degree of governance and public services where (legitimate) governance is lacking. Yet, these conglomerates also interfere with existing political institutions: they affect the outcomes of the representative process that is supposed to deliver credible leadership at national and local level and constrain the ability of existing executive branches to take and implement decisions. Donor engagement through the diaspora suffers from the underdevelopment of the regulatory infrastructure – especially financing – and the interest structure that ensures this situation endures. The challenge in Somali regions is therefore how to engage parts of its transnational community in the creation and stabilisation of the entrepreneurial middle class, in order to stimulate economic and political development. 2 Transnational capital in Somalia | CRU Report, June 2019 Figure 1 Map of Somalia and major port cities 3 Acknowledgements This report would not have been possible without the funding support of the Ministry of Foreign Affairs of the Netherlands. The authors are especially grateful to the Somali transnational community (especially in the Netherlands, UK, Dubai and Somalia) and all the people willing to share their views on this contentious topic, as well as Ahmed-Keyse Ali Roble and the International NGO Safety Organization in Somalia for their logistical support to our work. A special thanks goes to Fia van der Klugt, Marjolein Jongman, Roelof Haveman and Ismael Moalim (Dutch Ministry of Foreign Affairs) for their support. We would also like to thank the reviewers, among others Ladan Affi (Zayed University), Ali Hersi (Saferworld) and Mariska van Beijnum (Clingendael’s Conflict Research Unit), who have invested their time and efforts in providing comments and suggestions for this report. Additionally, we would like to thank Melissa Krassenstein, whose support and diligent work was invaluable for this report. Lastly, it should be noted that Dahabshiil refutes any suggestion that it has or has had links with the Somali National Movement at any point in time, or that it has opposed any banking related legislation in Somaliland. 4 Executive summary • Despite weak governance, the Somali economy has not fully collapsed and has proven remarkably resilient during even the harshest episodes in the last three decades. • Somali migrants have been noted for their ability to adapt their ‘nomadic’ heritage to life in displacement, maintaining a high degree of mobility and strong social networks. They are best approached as a transnational community spanning multiple countries, rather than a static diaspora settling into a new country while maintaining ties to Somalia. • The emergence of a transnational community went hand in hand with the emergence of transnational entrepreneurship: a form of entrepreneurship that includes border- crossing businesses that rely on the existence of dual cultural, institutional and