The election of President Mohamed Abdullahi Farmaajo got off to a great start with a jubilant reception from the Somali people. Indeed, many in the business community in Somalia welcomed the change given Farmaajo’s focus on economic development. However, foreign investors remain cautious.
Somalia’s potential is truly untapped and unmatched. Somalia is a prime strategic investment destination with untapped and explored resources which can easily be a world leader in the blue economy, livestock, agriculture and regional and international transportation. In the long-term Somalia can also be a major outsourcing station for Middle Eastern companies which are seeing labour costs rising because of a youthful population which is now more educated and skilled. However, Somalia’s problem was never resources but political leadership and stability.
Tragically, Somalia is only now emerging from the traumatising nearly two-decade disastrous civil war which has seen it reach the bottom of every international legal table, including, corruption and development. The resilient Somali people, the nation’s greatest asset and saviours, have struggled without functioning state institutions for the best part of two decades. Only now are these institutions taking shape, understanding their mandates and starting operations effectively.
Somalia is not short of public institutions but almost all are weak and need strengthening with human capacity. From 2012 to date, capacity building is being undertaken to strengthen Somali state institutions in partnership with key international partners. While this is welcome news the most immediate assurance the Somali government will need to offer national and international investors is political stability.
Somali politics is still in transition as the key governance matters such as the completion of the ongoing consitutional review process. The Fiscal Federalism dialogue which is itself dependent on the constitutional arrangements is also ongoing and led by the Ministry of Finance. Moreover, new governance structures such as the Upper House’s inclusion into Somali polity will most certainly create further challenges that can delay this process. However, while all these can affect political stability, the major relationship that has always worried most investors is that between the President and his Prime Minister.
The last government of President Hassan Sheikh Mohamud saw three Prime Ministers take office in four years. Whatever the disagreements between the two principles, it always destroyed the fabric of Somali politics by delaying the political process and halting policy progress. More disastrously for economic development, this political rollercoaster impacted heavily on investor confidence.
Ironically, this was a period when the crucial and very liberal investment law was endorsed by cabinet and the government was genuinely seeking business partners desperately to engage in public private partnership activities in all key industries.
The Government of President Farmaajo has a historic opportunity to match the administrations commitment to economic and human development with concrete policy actions. There has never been a greater need to prioritise security, investment and development than now because of the encroaching donor fatigue and cyclical drought and famine crisis. More importantly, at the heart of the Farmaajo campaign promise was the commitment to self-sufficiency which the proud people of Somalia welcomed and yearn for.
Self-sufficiency and economic independence is not a far-off dream in Somalia. The advantages for wealth generation are all within the nation’s borders and the goods and services the nation needs and can also offer the world are vast. Therefore, investors will never give up hope on Somalia but we need to translate this hope into hard cash, skills, jobs and infrastructure on the ground. How do we do this? Reduce the political risks and uncertainities alongside strengthening investor protection while gaining the benefits of investment for the Somali people.
Existing investment and trade laws need to be reviewed to create the right legal environment. This will take time and all investors should be consulted but more immediately, high-level public-private dialogue must increase between relevant government ministries and agencies. The President and Prime Minister must lend the full weight of their support to this process in the hope of communicating and convincing the private sector to invest, grow and generate more revenue to spearhead the great reforms the government has committed itself to.
The creation of the cabinet economic committee by the Prime Minister, which includes all the relevant Ministries, is a step in the right direction. This committee meets weekly and discusses key economic opportunities and challenges such as Procurement and legal and economic reforms to spur investment. This initiative must now be institutionalised to become the joint government committee to direct economic policy including investment, skills, education and trade.
This organisation and cross government coordination will increase current and potential investors confidence in the Somali investment environment and the policies that guide it. Perhaps then, the large Somali and international corporation funds that sit idle in the national and regional banks can be repatriated or utilised for common public-private profit in Somalia.
So far, both President Farmaajo and Prime Minister, Kheyre, have demonstrated their joint commitment to business investment as a vehicle for economic development. Both, alongside the Minister of Finance, H.E. Abdirahman Dualeh Beileh, have rightly reiterated the centrality of revenue generation through the expansion of the national tax base and much needed fiscal reforms. This should keep the two-principal’s partnership strong and provide hope to both the public and private sector that Somalia is serious about its economic progress and hence, its overall future. Nabad and Nolol can and must be more than a slogan; The Somali Federal Government must not miss this historic golden opportunity.
Liban Obsiye is the Chief Policy Coordinator at the Ministry of Finance.
Be First to Comment