SOMALISOMALI BUSINESSBUSINESS A PUBLICATION OF VOLUME 9, ISSUE 1, SIMAD UNIVERSITY JANUARY-MARCH 2016 REVIEWREVIEW NURTURING TALENTS FOR A GREATER SOMALIA Tel: (+2525) 699-924646 Fax: +2521 85851 Mailing Address: P.O Box 630 Mogadishu, Somalia Email: [email protected] Web:simad.edu.so SOMALI BUSINESS REVIEW | VOLUME 9, ISSUE 1, JANUARY-MARCH 2016 EDITORIAL There had been a growing number of services in the Somali business industries, especially banking industry. Since the collapse of the central government, Somalia had informal banks that provide only deposit and remittance services. For the last six years, a formal banking industry emerged with huge investment and financing potential. Most of het operations of the emerging formal banks are based on the principles of Islamic Banking System. Yet, there are a lot of good opportunities under many in Islamic Banking industry. Along getting these done, the future of Somali banking industry will unfold. In addition, the country is in the process of restructuring its financial system and rebuilding its economic infrastructure. Another growing segment in the service industry is that of food industry. New restaurants and cafes offering foods ranging from Somali foods, Turkey foods, and other different foods with a high hushed, gentle locations conducive for ingestion are recently appearing in places including Maka Al Mukarama street, Banadir, Zobe areas and others. Restaurant managers in Somalia have to push creativity and innovation in ways that are geared towards freshness, uniqueness and indulgence, bigger and bolder flavors, and service elements, hichw are interactive and convenient within the consumer lifestyle. In this issue covers articles that address business opportunities that exist in Somalia like ICT Opportunities which are probably needed by educational institutions such as universities, colleges, high schools, urban and rural communities in order to keep their records accurate. Since there’s a growing and contributions in the banking industry, this issue mainly focused on banking industry. Also, technology has radically changed the lives of the individuals, institutions and the way people are conducting marketing to their business. More about this is addressed here. TABLE OF CONTENTS EDITORIAL TEAM Privatization in Somalia .........................Pg 2 Chief Editor The (Old) Stereotypes of Nasra Ahmed Mohamed Accounting Profession is Over.............Pg 4 Production Manager ICT Business Opportunities in Somalia...............................................................Pg 6 Abdikarim Muhudiin Operation Editor Email Marketing Strategy for Small Businesses..............................................Pg 8 Mohamed Muse Hassan Islamic Banking Industry in Lul Farah Abdullahi Somalia: Good Opportunities Editorial Board under Many............................................................Pg 11 Dr. Mohamed Ibrahim Online Digital Library System: Dr. Bashir Abdisamed Hared A Total Reading Convenience .............Pg 13 Dr. Amina Omar Mohamud The opening of new restaurants Design and Layout & Printing is booming.............................................................Pg 15 Somprint Ltd. Somali Banking Industry: Mogadishu, Somalia From Idealism to Realism..........................Pg 16 +252 1 850555 | +252 617217770 The Contribution of [email protected] | www.somprint.so Islamic Banks to Economic Development of Somalia:..........................Pg 17 PUBLICATION OF SIMAD UNIVERSITY • 2016 1 SOMALI BUSINESS REVIEW | VOLUME 9, ISSUE 1, JANUARY-MARCH 2016 Privatization in Somalia ABDIRIZAK MOHAMED AHMED Introduction productivity, privatization may improve Privatization means the transfer of the efficiency, provide fiscal relief, encourage ownership of state property into the hands of wider ownership, and increase the availability private investors. The government ceases to of credit for the private sector. be the owner of the entity or business. Privatization is considered to bring more Key Deliverables for Privatization efficiency and objectivity to the company,• To market the economy as being globally something that a government company is not competitive. concerned about. One of the main points for • To increase productivity and reduce the privatization of publicly owned operations inefficiency of state-owned enterprises. is the estimated increases in efficiency that can • Private enterprises tend to equip the result from private ownership. enterprises in a better condition than that of public enterprises. Privatization, a method of reallocating assets • Private sector will constantly seek new and functions from the public sector to the services in order to give citizen’s private sector, appears to be a factor that could competitive edge, while government is play a serious role in the quest for growth. In noted as slowly. recent history, privatization has been adopted • Private sector utilizes the practice of by many different political systems and has capital renewal, where private firms spread to every region of the world. The ensure they are kept abreast for the latest process of privatization can be an effective technologies or production process. way to bring about fundamental structural • Privatization attracts foreign direct change by formalizing and establishing investment; countries with strong property rights, which directly create strongprivatization programs typically individual incentives. experience a rapid increase in FDI inflows. It also has indirect effect by attracting A free market economy largely depends on additional investment through signaling well-defined property rights in which people effects. make individual decisions in their own interests. The importance of property rights is Privatization in Somali captured by economist Hernando De Soto as Somali communities had let to deal with a he states, “Modern market economies period of statelessness for longer than any generate growth because widespread, formal other society in the contemporary world. It property rights permit massive, low-cost might seem reasonable to view Somalia as exchange, thus fostering specialization country left out the loop of new global markets, and greater productivity”(1996). technologies, politics, and culture. Somalia is Along with creating strong now struggling to accommodate peace, and incentives that induce security. The government has many functions 2 PUBLICATION OF SIMAD UNIVERSITY • 2016 SOMALI BUSINESS REVIEW | VOLUME 9, ISSUE 1, JANUARY-MARCH 2016 port. that they are grappling on it, so it cannot be Then the Turkish company Albayrak moved in, held responsible or produce efficiently for signed a 20- year contract with the government every function. Therefore, the governments and set about creating order at the port. “A lot should privatize some of its publicly owned has changed since we took over the assets to private investors, since themanagement,” observes the company’s performance of state-owned enterprises have immediate former general manager, Mustafa1975 been far from satisfactory which brings Adali. economic inefficiency; and inability to innovate During this year, and costly delays. Also Somalia’s Federal government has given a a firm from Italy Turkish firm a long-term contract to run and known as Impregilo Currently, there are two basic economic upgrade the Mogadishu international airport. completed sources that have been in low performance for Turkish construction Albayrak Group and the building the past years.But currently, the government Somali government officials signed a 20 - ofyear Mogadishu privatized and transferred its ownership to a agreement to upgrade and run the operation port and at Turkish company called, Albeyrak. Mogadishu of the airport by the firm. And such kind of that moment, port and Mogadishu International airport are upgrading is part of privatization. Now, The Mogadishu port the two economic sources in Mogadishu. In Albayrak Group Company is charged with was known as a 1975, a firm from Italy known as Impregilobringing in new technology to modernize the working port. completed the building of Mogadishu port at cargo hub to international standards and its first time and that moment, Mogadishu portreliable services. were known as a working port. At the end of 2014, a Turkish firm was transferred to the Conclusion operations of Mogadishu port in order to made Privatization is not a blanket solution for the renovation about it. It was renovated at a cost problems of poorly performing country like $10 Million as the manager of Albeyrak, Somalia, it cannot in and of itself make up Mustafa Levant Adali, said. totally, lack of competition for week capital markets or absence of an appropriate Nearly two years ago, Mogadishu ocean Port regulatory frame work, but when a medium of was a government port. It worked, though not regulatory capacity is present, privatization to its full capacity. Individuals and companies yields some substances benefit. moved cargo through it. There were no proper structures for monitoring port activity, no The future of Somali for privatization is so proper revenue collection structures, no important, the infrastructure of Somalia will proper cargo handling equipment, and most of high and growth so we need some privet all, no will to turn the port into a revenue companies those who take parte the crating venture. Not surprisingly, the development for prosper. government received no revenue from the PUBLICATION OF SIMAD UNIVERSITY • 2016 3 SOMALI BUSINESS REVIEW | VOLUME 9, ISSUE 1, JANUARY-MARCH 2016 The (Old)