Wednesday, December 29, 2010

Peaceful Somali Enclave Seeks New Business .

Southern Somalia is wrestling with virtual anarchy, but entrepreneurs and officials in this relatively stable, autonomous part of the north are touting their gains as a model for leading the region toward stability.

Somaliland has operated in relative peace since it declared independence in 1991, holding four democratic elections, fostering private businesses and building universities and hospitals—though the region still lacks official international recognition as an independent state.

In July, Somalilanders elected a new government of technocrats from educated diasporas in the U.S., Canada and the U.K. to run the dusty territory, which is home to about 3.5 million people, most of whom tend herds of cattle, goats and camels, or else have settled in the capital, Hargeisa.

Somaliland relies heavily on private businesses to employ its people, import equipment, invest in the economy and donate to the government.

The relative stability here has spurred new thinking from donors. "I'm impressed by what does go on in Somaliland," said Mark Bowden, the United Nations' resident and humanitarian coordinator. Mr. Bowden said international aid—currently about $100 million annually—could double next year.

The U.S. has boosted funding to $26 million from $7 million in 2009. The top U.S. diplomat on Africa, Johnnie Carson, recently said the U.S. would pursue a "second track" policy in Somalia that would include more engagement with Somaliland. The U.S. pledged about $40 million in aid to the Somali government in Mogadishu last year, but channels much of its support to the African Union peacekeeping force there, and to groups that provide food aid to the region.

"The U.S. for some time has been wasting taxpayers' dollars on a place called Mogadishu," said Hussein Abdi Dualeh, the newly appointed minister of mining, energy and water resources in Somaliland, who had been working until recently in California. Unlike the Somali capital, he says, "We're the part of Somalia that's functioning. The aid they give here won't be torn up by shrapnel."

Because Somaliland lacks recognition as an independent state, it can't secure loans from international banks, enter agreements with other governments, or provide the legal stability demanded by foreign investors.

The international community fears that recognition of Somaliland could lead to further border disputes in Africa. But as the Somali government to the south borders on collapse, that thinking has begun to change.

In the meantime, Somaliland officials have focused on luring back overseas Somali entrepreneurs with low taxes, light regulation and political stability. "There's a lot of opportunity in Somalia, we have to champion that," said Abdirashid Duale, the 36-year-old chief executive of Dahabshiil Group, and one of several members of the diaspora who have built booming businesses in agriculture, water bottling and telecommunications.

Mr. Duale went to high school in London, then joined the family business, a money-transfer service that sent funds in and out of Somalia. Dahabshiil has since become the largest money-transfer service in the Horn of Africa, handling much of the estimated $1.6 billion transferred home each year to Somalia, including Somaliland.

The company was started by his father in the early 1970s to help Somali workers in Gulf states get money home. When civil war broke out in Somalia in 1989, the business collapsed and the family fled to the U.K. The business was revived there, and now operates in 144 countries, including several U.S. states.

In a sign that Somaliland isn't beyond the reach of militants, the violent extremist group al Shabaab, which dominates much of southern Somalia, has said it will ban mobile-phone money transfer services as of Jan. 31. The services, a recent innovation here, have become a popular way to conduct business transactions in a mainly cash-based economy. In a statement in Arabic, Somali and English, tAl Shabaab said the mobile money-transfer services had been set up by the West to exploit Muslims.

The government in Mogadishu said the move was an effort by al Shabaab to undermine the private sector's hard-won economic gains. The Somali government, because it only controls part of Mogadishu and nothing else in the country, is largely powerless to stop it.

Al Shabaab militants, who control much of southern and central Somalia, govern by fear. In the past, they have beheaded those who defied them.

Al Shabaab has a presence in Somaliland, according to African Union and Somaliland government officials. The Somaliland government has been aggressive about monitoring the militants, with help from a largely cooperative population. But the group and other militants still manage at times to disrupt the region's calm.

Mr. Duale, whose company has a share in a mobile-transfer service, declined to comment on the al Shabaab decree, saying he was concerned he might antagonize the militants.

Mr. Duale divides his time between London, Dubai and Somaliland, and still runs the family business out of Hargeisa, with simple headquarters on a dusty street, where donkey carts compete with cars and women in colorful headscarves run small kiosks selling household goods.

Shortly after the new Somaliland president came to power this year, he called a meeting with several major businessmen, including Mr. Duale. The previous government had borrowed "tens of millions" of dollars from the private sector, according to one government official. Now it was asking for more.

Mr. Duale said the business owners agreed to help, as long as the government didn't try to impede their growth. In addition, Mr. Duale said he gives about $1 million each year to hospitals and universities in the community.

Source: The Wall Street Journal

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