This time round, Somalia’s rebound gets donors talking

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The tone of language from leaders of influential countries and international institutions indicates an increased belief that there are signs of real and sustained recovery

Somalia’s development partners and influential donor caucuses are increasingly expressing confidence about the future of the country. They see recent progress in the economic and political fronts as reasons to believe that the country is slowly turning the corner.

Still, this confidence from the donors can at best be described as cautious optimism. This is because of past experiences where the country seemed to have taken a path towards recovery only to fall back to internecine conflicts.

However, the current tone about Somalia from leaders of influential countries and international institutions indicates an increased belief that there are signs of real and sustained recovery this time round.

“We are seeing signs of recovery… The economy is showing signs of improvement and this is evident in real estate developments and construction projects,” Mr Brian Phipps, the Deputy Special Representative for Somalia at the US Department of State noted during a Somali Investment Forum in March in Nairobi.

“We need a sound
business environment
in Somalia to see large
institutional investors
knock on the door. We
also need a robust public
sector that will create an
enabling environment
for private sector to
thrive through protective
property legislation and
other measures”
Ms Shari Bareback,

Signs of Somalia recovery have been evident for the last few years, partly fuelled by an enterprising local population and increased contribution from Somali’s in the Diaspora, whose investment into the country has exponentially grown and is estimated at US$1.2 billion a year.

The recent opening of a new and modern terminal at the Adden Adde International Airport in Mogadishu, construction of multi-million dollar residential and office blocks in the city, revamping of the education sector and increased activity in the financial sector, all point to signs of recovery of an economy that had been battered by years of conflict.

At the political front, a new leaner government was formed this year, and most Somali’s hope that the government will this time round hold together and implement policies and programmes that will drive the social and economic sectors.

In fact, a number of business persons and economic analysts see the international financial groups as merely playing catch-up, especially in seeing Somalia as a country that provides opportunities for investment and not just as an aide recipient.

There is still an understandable reluctance to fully engage with Somalia, particularly by Western Countries, on trade and business front. Nonetheless, it is apparent that there is serious rethinking, considering the level of discussions and enthusiasm shown at the Nairobi Conference hosted by Shuraako, a trade and investment facilitator.

The “cautious policy” adopted by the World Bank and the International Monetary Fund in dealing with Somalia is not viewed favourably by many Somali business people, even though there are historical disputes that must first be addressed, including a longstanding debt that Somalia owes the International lenders.

In fact, a critical factor highlighted by some potential international financial groups is the lack of investments guarantee in Somalia, to encourage ventures capitalists and other private financial institutions to fund business investments in a more sustainable manner.

“Some form of investment guarantee from the government or the World Bank is needed for us to gain substantial fund ventures in Somalia. That is not forthcoming and it presents a problem,” noted, Mr Anders Haunch, the Investment Director and Partner, Frontier Investment Management.

Somalia, it is evident, wants to see tangible engagements backed by action in the form of serious business partnerships and financial support.

The international financial institutions, on the other hand, prefer a wait and see attitude as they undertake a partial engagement with the government.

Part of the cold reception has to do with the government’s institutional weaknesses and political instability as a result of past feuding among different political actors.

Mr Manuel Moses, the Head of World Bank East Africa, categorically said during his remarks at the Nairobi conference that “the World Bank was behind Somalia”. The comment was happily received by the over 200 Somali business leaders and investors attending the conference.

Phipps of the American State Department also outlined the different engagements that his country was involved in, in the country, including efforts to shore-up an effective Central Bank and various institutional building measures. “The US is the largest Somalia Bilateral partner,” he declared.

Somalis, it is apparent, want more constructive and robust engagement with developed countries and international financial institutions.

When one talks to influential Somali business groups, one gets this sense of urgency to recover lost time and the frustration with the bureaucratic nature of international bilateral negotiations.

There is also this pervasive fear that the country might lose an opportunity to quickly recover and join the rest of the progressive international community, now that a clear opportunity for change has presented itself in the country.

This sense of urgency as expressed by the business community in Somalia is however not visible in government.
This is evident in the poor business environment, especially the lack of supportive legislations.

“We need a sound business environment in Somalia to see large institutional investors knock on the door. We also need a robust public sector that will create an enabling environment for private sector to thrive, through protective property legislation and other measures,” noted Ms Shari Bareback, President and Chief Executive Officer of US Africa Development Foundation.

Berenbach, a strong admirer of the Somali’s enterprise spirit, was still categorical that the desired big change in development will not be triggered by outsiders but by the Somali people actively participating in the rebuilding efforts.

Mr Liban Egal, the articulate and eloquent founder and Chairman of First Bank Somalia, sees strong enthusiasm by the Somali’s, both local and those in the Diaspora, to rebuild their country through investments and social contribution.

Eqal has been at the centre of the mobilisation of millions of US dollars from Somalis in the Diaspora for investments, with about US$ 1 million being raised since the beginning of the year, for various projects.

Over time, he has realised that Somali’s, both those living outside and inside the country, are to an extent risk averse and not merely motivated by profit.

“The main driving force for those investing in Somalia, particularly those from the Diaspora, is not all about making money. They are mostly motivated by sentimental and emotional attachment to the country and see the rebuilding of Somalia as their responsibility,” he observes.

It’s obvious that Somalia is at the heart of most people. Peace and sustainable development of Somalia is a matter of both local and international concern.

The responsibility and contribution of the citizens and the international community is the balance that needs to be worked out, especially as the country desires to move away from donor reliance to commerce driven development.