Three promising business opportunities in Somalia
Solar energy, fishing, and the local manufacturing of imported consumer goods identified as three promising areas for investment.
For many people, Somalia is synonymous with war and political instability. However, Jon Bellish, the executive director of Shuraako Capital – a firm that finances Somali companies says the country offers several business opportunities. In a recent interview with How we made it in Africa, he identified solar energy, fishing, and the local manufacturing of imported consumer goods as three promising areas for investment.
According to Bellish, solar energy is one of the region’s biggest investment opportunities. “Somalis pay more for electricity than anybody in the world,” he says. “They pay between 70 cents and one dollar per kilowatt hour, which is like 10 times what we pay in the United States.”
He also points to fishing as a promising sector. Somalia has the longest coastline in mainland Africa, but its waters remain underfished. Bellish attributes this to insecurity and fragmented governance, which have affected fishing licensing.
“There is an opportunity for companies to come in and to process fish, particularly tuna, onshore. Or even better, to catch it, flash freeze it, kind of sashimi grade, and export to East Asia and Europe,” he says. “We need to up our game in terms of the health and safety certification. We have some companies that have the technical ability to do this, but because the certification regimes aren’t there, they’re kind of stuck selling to these Omani cartels who are … slapping a Made in Oman sticker on it and then re-exporting at 10 or sometimes even 15x what the Somali companies are selling it for. And that gap, that 10 to 15x margin, sort of illustrates the potential in the fishing sector.”
Manufacturing items locally to replace foreign imports represents another investment option. “The country imports 90-something percent [...] of the goods that are there,” Bellish notes.
One company already pursuing this is Al-Hayaat Personal Care, which Shuraako has backed. It manufactures and sells shampoos and laundry detergents in the Somaliland market, offering a lower-cost, locally manufactured alternative to imported products. Its founder launched the company after moving back from Canada.
For domestic manufacturing to really take off, Bellish says there needs to be regulatory reform in terms of industrial policy. “They have a regulatory system that is by traders and for traders,” he says. “And traders want the opposite from government that domestic manufacturers want.”
Watch/read our full interview with Jon Bellish – Doing business in Somalia: unpacking the realities on the ground