Mogadishu: East Africa’s newest business destination?
Somalia’s capital Mogadishu is emerging as the newest business destination in east Africa. New businesses have sprung up in 2012 as investors’ confidence in the country improves. Some business people argue that Somalia’s 20 years of turmoil are coming to an end, opening up endless opportunities.
Though security has been a big issue in Somalia, the situation has improved. Since Kenyan forces launched an onslaught on al-Shabaab in retaliation to the kidnapping of tourists on Kenyan soil, the militant group has lost its stronghold in towns like Mogadishu and Afmadow. Reports indicate that Kenyan troops and the African Union force in Somalia, known as AMISOM, are also close to recapturing the strategic port of Kismayo.
Mogadishu is losing the dreaded “world’s most dangerous city” tag and embassies are reopening as countries mend diplomatic ties severed almost 20 years ago.
The Somali diaspora community has also began coming back home to rebuild the country. In May this year, First Somali Bank (FSB), a commercial bank championed by the diaspora community, opened its first branch in Mogadishu.
The bank estimates remittances to Somalia to be around US$2 billion every year.
“If you go to Somalia you will be surprised by the kind of construction going on in Mogadishu right now,” says Liban Egal, founder and chairman of FSB.
Stories such as that of Egal starting FSB and Mohamed Mahamoud Sheik, who recently returned from the diaspora to launch Mogadishu’s first dry cleaning business, have changed perceptions about ‘war-torn Somalia’.
Egal is grateful for the calm in Mogadishu as security improves.
“Our biggest risk is security. We hope the situation improves. If the country moves along the way it is, politically, even after the elections in August, that will be great,” says Egal.
The rebuilding of Somalia, he argues, presents enormous opportunities. He lists infrastructure, energy, agriculture, media, and retail as some of the sectors worth exploring.
“A country that is being rebuilt needs everything. Electricity for instance is very expensive … Basic infrastructure is also lacking,” he says.
Lino Carcoforo, an Italian-Somali entrepreneur behind Innovation for Africa, an early stage investment fund focused on mobile phone based technology startups in east Africa, marvels at the enterprising spirit of the Somali people.
The Somali populated Eastleigh area in Nairobi has become the commercial hub of Kenya’s capital. Somali entrepreneurs are credited for the transformation of the residential area to a mini-city nicknamed Mogadishu ndogo (Swahili for ‘small Mogadishu’).
“If Somalis can replicate what they have done in Eastleigh, imagine the impact it would have. They will create numerous jobs and build the economy. There is not a doubt that the Somali people are enterprising. In Mogadishu, it is demand that will drive businesses,” says Carcoforo.
Carcoforo’s fund is hoping to make investments in Somalia in the future.
He is optimistic that Somalia could develop faster than other markets in the continent. He points out that while other countries have been successful in mobile money transfer, Somalia is a step ahead with mobile payments for purchases of services and goods.
The greater the destruction, the better the boom
This May, Egal organised TEDx Mogadishu, an event themed ‘Rebirth’, bringing together the Somali diaspora community and local and foreign investors to share ideas on rebuilding the capital.
The event, he says, helped change the perceptions about Mogadishu and showed that the city is open for business.
“It is a once in lifetime opportunity to see a country being rebuilt. We have seen it in Rwanda and Sierra Leone. Every time that happens it brings great opportunities … When a country has the kind of destruction Somalia has had, a boom follows. The opportunities are limitless,” says Egal
Egal and Carcoforo reckon that the greater the destruction the better the boom, and that is why investors should be heading to Somalia.
It seems like Somalia has sunk so low, it can only go up from here.