by ABDIRAH MAN YUSUF
The current Somali landscape screams for one thing. Co-operatives. Somalia’s fledgling economy buoyed by its thriving agricultural sector, coupled with its desire to foster lasting peace and improve the livelihoods of its citizens, should be anchored in the formation of co-operatives.
In India dairy co-operatives generate employment of 13 million rural households. In a country where unemployment stands sky high, this movement would be a major boost in job creation while at the same time improving the living conditions of the masses. Co-operatives help farmers expand market access and capture more of the value chain mainly through getting involved in processing activities. With this kind of upward movement it is possible for farmers to move out of poverty.
Through co-operatives small scale farmers can access fair trade certification that guarantees maximum prices for their goods as well as access fund for investment.
Somalia is working towards rolling back the effects of over two decades of conflict. Co-operatives come out as a panacea for acrimony that has simmered over time. Co-operatives bring together people of different ethnic and political groupings hence building trust and solidarity leading to greater social responsibility. Countries previously afflicted by conflicts such as Rwanda, Mozambique, Bosnia and East Timor have successfully used co-operatives to foster positive relations amongst people of different backgrounds hence fueling solidarity and economic recovery. Co-operatives are a pro-poor movement that involves the poor. Involvement of the poor in economic growth is the best way to get people out of poverty and also represents an exit strategy from cyclic aid.
Co-operatives can form part of the major private sector players with the potential to drive national growth. Cooperatives can be efficient in the provision of utilities such as electricity and water, which are essential to growth. To this end members are assured of major economic gains.
Somalia needs a sound economic strategy as a fundamental requirement for human development because in the post-conflict context, broad-based economic recovery is critical for avoiding the recurrence of violence.
A key micro economic recovery engine the country can deploy is the use of simple microfinance models that aims at pooling the meager resources. There may not be necessarily established macroeconomic policies in postconflict countries in pursuit of recovery. However African societies have always, as a matter of tradition herded together for the purpose of accomplishing certain tasks that would otherwise be hard to achieve as a solo endeavor. This is the same concept that is being advocated in modern day Somali to bridge the country from ruins to prosperity. The model needed simply involves a united economic front that basically starts from families and villages then sprouts to regional and sometimes to national investment groups.
Dr Esther Macharia, a banker from Kenya who also consults for an aid organization in Mogadishu observes that co-operatives’ co-guarantee set up normally attracts financiers after the cooperative’s saving structure and lending models prove beyond doubt that they are serious with their financing.
“In a country that has been through conflict like Somali, women can form simple groups with affordable contributions with the aim of raising capital to provide crucial services or goods needed in the community. The group model is very viable,” Dr Macharia told The Somalia Investor.
“One outstanding model is where the money is collected and then members take soft loans until all the money is used up. During the next meeting, each member pays back her loan with an interest varying from 10 to 20 per cent, depending on what the group agrees on. This way, the money keeps growing and more money is available for members to borrow every time,” says Dr Macharia.
The loans create a rapid growth for the pooled money as the group model continues to draw benefits like training and access to formal financial services. The model is also meant to foster harmony amongst once antagonistic communities which is crucial in a post conflict scenario.
The United Nations Development Programme (UNDP) estimates that countries emerging out of wars are more likely to relapse if no economic intervention is made than those that embrace economic recovery models.
UNDP advocates for self-realization. Communities must take charge of their economic destiny despite the disruptions caused by the conflicts. “Post-conflict recovery policy must begin with a robust understanding of the indigenous drivers of recovery. People who live in post-conflict settings don’t, in general, wait passively for external agents to finance and direct their activities. Rather, they take charge of their lives with determination and show hard work and ingenuity in resuming or developing new economic activities.” UNDP notes in one of its post conflict economic advisories seen by TSI .
Recovery is likely to be sustainable if it is grounded in the full understanding of these social dynamics and institutional processes, and if it fosters local capacities and initiatives.
The need for such a model in a post conflict situation is backed by the fact that when war ends, countries face serious macroeconomic problems including massive unemployment, high inflation, chronic fiscal deficits and high levels of external and domestic debt that weakens a country’s economy, leaving citizens to fend for their own growth formulas. The table-banking model acts like a small seed that grows to become a huge tree with economic benefits that cut across the masses.
In South Sudan, the cooperative concept started growing in a small way but has since attracted the government’s attention.
By 2012, the country’s minister for co-operatives and rural development, Michael Tongun Martin had begun seeking Kenya’s advice on how to advance co-operatives in the new nation.
More than 200 agricultural and consumer co-operatives in South Sudan emerged when the war receded and the government began plans to form an umbrella body that will support them with marketing, management, packaging, storage and mechanisation.
Once the Government structures begin working well, the state will definitely step in to scale up these co-operatives through enterprise funding.
“Banks will not wait to be invited once they realize there is substantial amount of money circulating somewhere. They will have to reach out to these groups and this is where financial literacy comes in,” Dr Macharia said.
However the struggle to have the people become independent determinants of their economic destinies should be supplemented, humanitarian and aids organizations are still crucial in providing the necessary support to push these economic scale ups. In agricultural areas, livelihood programmes normally distribute seeds, pesticides, fertilizers and tools.
In North Kivu, eastern Democratic Republic of the Congo, where cattle were looted or killed and cheese making and abattoirs were no longer productive; a local NGO purchased goats and started a rotation programme. This macroeconomic model is considered by many financial experts as one of the best models prescribed for a post conflict nation like Somalia.