Somaliland: Forgotten Country that Fought its Way to Economic Prosperity

Few years ago, millions of Somalilanders were unable to access basic financial services – such as opening a bank account due to political constraints they also could not transfer money nor get microcredit. Today, one of the world’s most ambitious experiments in mobile money is underway in Somaliland, writes Said Sahardeed.
Middle East Online
After the break-up of the war-ravaged Somalia, Somaliland has become one of the most stable countries in the Horn of Africa. Somalilanders have been using the most innovative ways to develop their country despite the turmoil in the Horn of Africa. There are13(1)* universities across the country which prides itself in creating young creative talent to meet the market’s changing demands as technology evolves.

For instance, the Abaarso boarding school, which was established in 2009 by Jonathan Starr, a former U.S. hedge fund, houses 216 predominantly underprivileged students in grades 7 to 12.Within 7 years of hard work, perseverance and commitment, Abaarso Tech has become a threshold to elite universities with 60 students on the Ivry league. This year, 14 students (2) were admitted to the most prestigious American universities, like Yale, the Massachusetts Institute of Technology, Harvard; Carnegie Mellon and Georgetown. For some students, the dream comes true while others, who cannot access US universities, usually carry on their studies in China, Malaysia, India and Turkey.

Peace and stability; a lesson for the rest of Africa: “Where there is a will, there is a way.”

Somaliland gives interesting case study of haven of peace, stability and prosperity.Ian Birrell, who is the foreign correspondent of The Mailon Sunday published an article about the former British colony “that shows

Africa doesn’t need their millions to flourish.” Birrell said that Somalilandhad fair elections including one that left two presidential candidates just 80 (3)votes apart but was resolved by courts, not conflict and elected 3 presidents for the last 27 years(3). The nation has its own president, parliament, passports and currency, but is being denied international help.

Nima Elmi, Senior Adviser, Ministry of Foreign Affairs and International Cooperation of Somaliland and an Oxford and Harvard graduate noted that “the reason why Somaliland works as a state is because it has built its own internal peace from the bottom up”. The country’s constitution provides a separation of powers and ensures guaranteed political opposition protection, civil rights and liberties, with more than 20 (4) independent newspapers.

Elmi stressed that “thegovernment has been able to encourage private sector development by creating an investment climate through technological innovations and foreign direct investment such as Coca Cola, a Somaliland-based franchise, which opened a $17 million (5) production facility to supply soft drink, water and juice products to the region. DP World signed an agreement to co-invest $442 million(6) in the Port of Berbera. Canada’s Nubian Resources Ltd. is currently prospecting for minerals, General Energy, Somecable and other infrastructure projects are also high priorities.

Necessity: The mother of invention

The current population of Africa is 1, 2 billion people (7) as the continent has the highest proportion of youth with 70% of the population aged under 30(8).

If given the right education and jobs, this staggering wealth of youth could be a driving force for huge business opportunities in a fast growing African economy. However, governments are urged to enact sound policies and healthy reforms in order to help their youth improve their skills and meet the market needs.

Naadiya Moosajee,Co-Founder of WomHub and WomEng stressed that the highest rates of urbanization are now a catalyst for innovation. To sustain its current level of development, the World Bank estimates that Africa needs to spend $38bn more each year on infrastructure and a further $37bn on operations and maintenance – just to sustain its current level of development Moosajee noted that the use of mobile phones in Africa has become a game-changer. By 2019 there will be 930 million (9) mobile phones in Africa, almost one for every person on the continent. This digital revolution will increase entrepreneurship opportunities among the youth as they will be able to access information on smartphones and increase their innovation prospects. For instance, one of the biggest innovations that were born in Africa is the “flying donkeys” drones which are supported by IBM. These drones, which are still being developed, will convey 10kg of cargo each over distances of up to 120km (10) to supply medicine to remote communities or food to refugees. The drones are tested for major retailers like Amazon.

For innovation to really succeed and get the level of recognition it deserves, it’s important to change mentalities and implement a culture of innovation and shared value creation (CSV),

We need to turn obstacles into opportunities by instilling a culture of adaptability and innovation, overcoming the lack of prototyping equipment and providing training opportunities. For some entrepreneurs, the dream comes true like Haweya Ismail, a talented entrepreneur that won $20,000 (11) for her skin care brand “Mud & Musk” in Australia while others have to refer to Europe or China to create their innovated products, making the process costly and cumbersome.

Entrepreneurship, Somaliland’s best characteristic

Few years ago, millions of Somalilanders were unable to access basic financial services – such as opening a bank account due to political constraints they also could not transfer money nor get microcredit. Today, one of the world’s most ambitious experiments in mobile money is underway in Somaliland. Kurt Davis, Assistant Vice President of Global Natural Resources with Barclays, wrote a series of articles looking at investing in Somaliland, he stated that Somaliland’s economy was characterized by its informality, and entrepreneurship. Davis likened it to Dubai’s economy in 20 years ago(12) as the Gulf emirate has now become a financial hub in the region.

Somaliland into the knowledge-based economy

The telecom sector in Somaliland continues to be at the catalyst of the country’s growth. Disruptive innovation facilitates the use of mobile money called “Zaad or e-Dahab” which is a solution that allows users to send money, receive funds instantly and shop with confidence using e-wallets. This service is free compared to other mobile money systems. Ahmed Osman, the CEO of Coca-Cola’s bottling plant in Somaliland has mentioned that Hargeisa is the only branch that operates entirely on the use of mobile money and online transfers.

He stressed that there was no need to handle a single dollar in cash with this method.

The Somaliland internet sector is one of the cheapest and fastest in the Horn of Africa. Somaliland’s biggest telecom supplier chose Bluwan, a a wireless network solutions company to supply rapid broadband access to one million subscribers according to Bluwan’s website. It also stated that Somcable is providing a high speed internet, VoIP, IPTV, Video on demand services, a game changing solution that enables a whole new lifestyle experience for Somaliland. THis premium broadband service is set to revolutionise Somalilanders’ life. Similarly, with hub capacity of up to 8 gigabits (13) per second, business users will benefit from the broadband services by being able to work from home, use cloud applications, and exploit ecommerce/video conferencing opportunities.

Somcable also leverages the SomCloud wireless access points, by creating shared, public WiFi hotspots, providing low cost broadband access for additional consumer that are located in strategic areas, free wifi at airports and universities, a rare commodity in African countries.

Michael Cothill, Chief Executive Officer of Somcable, said that they have invested heavily in deploying thousands of kilometres of fibre in the region and are looking to extend this powerful new service to land locked countries such as Djibouti, Ethiopia, Rwanda, Uganda, and South Sudan

Healthcare and Innovation: Strengthening the health system

Van Houten, CEO of Royal Phillips, said that “healthcare is an exciting area where Africa is facing 28% of the global disease burden with only 3% (14)of the world’s healthcare workforce and Africa is adopting new operating models and technologies.”

In response, Somaliland has implemented a strategy to increase the chances of mother and child survival rate during pregnancy, labour and delivery by training midwives. Around, 400 midwives(15) have been trained at the Edna Adan University Hospital which was named after a human rights activist.

Adan says her determination to reach her goal of training 1,000 midwives(15) and return them to their communities where they will be able to save the lives of mothers and infants in the future. To fulfil her goal in the long term, Edna has invested her pension and other personal assets to the Maternity Hospital, which is ranked 13th out of the top 50 hospitals(17) in Africa according to Webometrics.

Cycle of Growth: Overcoming the lack of Discouragement

In the cycle of growth, less attention has been paid to university students in order to enhance their potential. Lack of opportunities and low rate of young entrepreneurs is discouraging them to achieve their hopes and aspirations.

Since the beginning of the year, 33,907 (18)Somalis have arrived in Italy by sea and 11,300 refugees have died since 2012(19), attempting to cross the Mediterranean.

Among them: Samia Yusuf Omar, a 21-year-old runner who took part in the 2008 Olympics in Beijing(20). Omar undertook the voyage en route to Italy where she found a coach to make it to the London Olympics.

To avoid life causalities and overcome barriers to youth entrepreneurship, families are convincing their youth not to emigrate to Europe by providing the initial capital investment. Some entrepreneurs (i.e. taxi, restaurants, shops) are successful while others are facing more challenges turning their ideas into businesses.

Africa has witnessed a significant economic growth in the last few years. Gross national income per capita in many African countries is already greater than in China or India.

Gross domestic product (GDP) is comparable to Brazil and, at 16% (21)compound per annum, consumer spending is rising rapidly, according to Ernest young’s report.

The reality is western countries look Africa as a place to give aid and not make money. Despite the consumer spending rising rapidly in Africa, majority of consumed products are developed by western start up, it’s time to develop the African entrepreneurial eco-system

We all agree that traditional donation can only give an apple but entrepreneur initiative could give substantial apple. Unfortunately the majority of the products that are aimed at the African market are developed by a western start up. African Solution to African Problems, I believe that you can only solve a problem that you understand, with a perspective of Silicon Valley; it’s difficult to visualize the need of your customers.

New frontiers in Partnership and collaboration

I am conscious that entrepreneurship alone cannot tackle youth employment challenge but it helps to encourage the exchange of ideas and innovative thinking, transform communities, create jobs, and incites economic growth.

Knowledge cooperation with local universities could strengthen dialogue between cultures and bring peoples closer, to promote understanding and improve their perception of each other. It could also foster a culture of innovation, support the rise of a new talented generation, creative-thinking innovators and entrepreneurs, constantly inventing and developing new ways that improve their communities’ standard of life. These people deserve a closer look and more attention. It’s time to support them both financially and morally.

Rising from the Darkness, The way forward

During my time in Somaliland’s capital of Hargeisa, I have witnessed the transformation of this city, which was destroyed by the civil war few years ago, in many areas such as fibre optics and newly built infrastructure.

Somaliland had many similarities with Rwanda. Rwandans understand what it means to have everything you worked for destroyed and to startfrom zero. Four years later (22)after the genocide that left close toone million people dead, Rwanda opened its first computer science program, and in the aftermath created co-working and accelerator space called kLab,

Some entrepreneurs are returning from years abroad in the West to use their expertise in Somaliland. Khadra Ali, a very talented Canadian who created an incubation, innovation and co-creation space called D(H)² in Hargeisa. It is dedicated to creating sustainable change in Somaliland.

Until the world’s best and brightest decide to stay in Africa like Khatra,instead of migrating, there will be a little headway in creating a tech ecosystem that confronts the opportunities and challenges of the continent because no one understands them.

Her D(H)² (www.digitalhargeisa.com)fosters a culture of business openness and innovation by providing a space to share ideas, collaborate and explore the opportunities created by the social and technological changes which are transforming our continent.

In addition to providing a stimulating working environment she provides her members with an access to a network of skilled young workforce, global innovators, inspirational events, business leaders and activities. Somalilanders are set to have a brighter future thanks to local initiatives like Ali’s which could bring a priceless added value to the country.

Investment and Startups

Such initiatives need to be supported by various stakeholders such as the government, investors and the sectors concerned. Foreign companies willing to invest in Somaliland ought to sponsor universities and engineering schools which will in turn provide them with skilled graduates. It’s a win-win partnership.

The next big innovation for the African market should come from a Silicon Savannah. SAP has recently announced it will invest $500 million through 2020(23) to introduce some of its newest technologies to the continent while IBM opened its first Africa research center in Kenya–a $100 million (24) facility creating an African version of its Watson supercomputer,. And finally there’s a surge in VC Venture capitalist funding and African start-ups, nearly 3,500 new tech-related ventures.(25)

East Africa’s Next Big Commercial Hub

With Ethiopian Airlines,Fly Dubai, Daallo Airline, Djibouti Airline and Turkish Airline currently operating in Somaliland, the country is aiming to revitalize its economy by positioning Berbera and Hargeisa airport a hub for passenger and cargo traffic for the Africa-Middle East region. Air Arabia, Kenyan Airway and South African Airways are interested in creating a hub at Berbera Airport, which has the longest runway in Africa(26) that it used to serve as an alternative airfield for the Russian space shuttle.

Out with the old, In with the new

Djibouti is facing intense competition from Somaliland. Between Port Sudan to the north of the Horn of Africa, and Mombasa to the south – a total of 6,000km(27) of coastline – Berbera and Djibouti ports are the only trading hub, with a potential trade of 17 landlocked countries(27).

The country is also a transit route for Ethiopia’s imports and exports. The Port of Berbera presents a strategic and potentially attractive alternative to the Djibouti corridor to the Horn of Africa with storage capacity of one million tons and can accommodate more than 1,000 ships per year (27). It has generated $125 million in port fees.(28) Transit congestion in Djibouti port means 3 to 6 month delay for the Ethiopian commerce, which makes Berbera the undisputed Solution for Ethiopia’s trade.

According to James Jeffrey, Ethiopia has long been looking to assuage its dependence on Djibouti, which scoops at least $300m (6) in port fees from it every year. Ethiopia has strengthened bilateral relations with Somaliland signing various memoranda of understanding (MOUs) including one stipulating about 30% of its imports shifting to Berbera.

13-Somalilandeconomy

Somaliland is a haven of free-market policies andentrepreneurship. With a per capita GDP of $350 (29), it ranks ahead of Tanzania, Eritrea and Ethiopia. Somaliland’s economy has a precious natural resource: the black gold which is under-explored. The total size of the blocks

is approximately equivalent to the entire Kurdistan Region of Iraq and Genel iscurrently targeting resources of over two billion barrels of oil.(30)

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Citations, Quotes & Annotations

Agence Ecofin (2015) Le top 50 des centreshospitaliers en Afrique. Available at:

http://www.agenceecofin.com/gestion-publique/2712-34781-le-top-50-des-centres-hospitaliers-en-afrique

(Accessed: 21 August 2016).

L’étudeWebometrics

(AgenceEcofin, 2015)

Airports-Worldwide

(2010) Berbera airport. Available at:

http://www.airports-worldwide.com/somalia/berbera_somalia.php (Accessed: 21August 2016).

26

(Airports-Worldwide, 2010)

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Parents in Somaliland are going to great lengths to stop their children from migrating to Europe

(Accessed: 21 August 2016).

(Aliand SOAS., 2016)

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(Barinka,2014)

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(2012) Somalia Olympic runner ‘drowns trying to reach Europe’. Availableat: http://www.bbc.com/news/world-africa-19323535 (Accessed: 21 August 2016).

(BBC,2012)

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(Birrell,2011)

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Nixon, L., Wilson, S. and CCgroup (2012) Somcable selects Bluwan to roll outnext generation broadband across the horn of Africa (copy 1). Available at:

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(Accessed: 20 August 2016).

CCgroup,for Bluwan

(BluWan et al., 2012)

Bright,J. (2016) A brief overview of Africa’s tech industry – and 7 predictions forits future. Available at:

https://www.weforum.org/agenda/2016/05/a-brief-history-of-africa-s-tech-industry-and-7-predictions-for-its-future/

(Accessed: 21 August 2016).

25

(Bright,2016)

Bythe Edna Adan Hospital Foundation and Girls’ Globe (2014) Fighting maternaland infant mortality in Somaliland. Available at:

http://www.huffingtonpost.com/girls-globe/fighting-maternal-and-inf_b_5901080.html

(Accessed: 21 August 2016).

(Bythe Edna Adan Hospital Foundation and Girls’ Globe, 2014)

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(Cornwelland Reporter, 2016)

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(Accessed: 21 August 2016).

22

(Cutler,2015)

Dahir,A.L. (2016) The story of a Somali Olympian refugee who died at sea is the

subject of a new graphic novel. Available at:

http://qz.com/737787/the-story-of-a-somali-olympian-refugee-who-died-at-sea-is-the-subject-of-a-new-graphic-novel/

(Accessed: 21 August 2016).

(Dahir,2016)

Davis,K. (2013a) Investing in Somaliland (part II). Available at:

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(Davis,2013a)

Davis,K. (2013b) Investing in Somaliland (part II). Available at:

http://www.africa.com/investing-in-somaliland-part-ii/ (Accessed: 21 August2016).

(Davis,2013b)

Davis,K. (2013c) Investing in Somaliland- is it Dubai 20 years ago? Available

at: http://www.africa.com/investing-in-somaliland-is-it-dubai-20-years-ago/

(Accessed: 20 August 2016).

(Davis,2013c)

Dias,D. (2016) Perth entrepreneur Haweya Ismail wins $20, 000 to take her DIY

skin care brand mud and musk to the next level. Available at:

http://www.smartcompany.com.au/growth/69844-perth-entrepreneur-haweya-ismail-wins-20000-to-take-her-diy-skin-care-brand-mud-and-musk-to-the-next-level/

(Accessed: 20 August 2016).

(Dias,2016)

Elmi,N. (2016) What Somaliland can teach the rest of Africa about peace and

stability. Available at: https://www.weforum.org/agenda/2016/03/what-somaliland-can-teach-africa-about-peace-and-stability/

(Accessed: 20 August 2016).

WordEconomic Forum,

(Elmi,2016)

ErnestYoung (2011) Growing in Africa. Available at:

http://www.ey.com/…/Africa…product…/Growing%20in%20Africa%20-%2..

(Accessed: 21 August 2016).

(ErnestYoung, 2011)

GenelEnergy plc (2016) Somaliland. Available at:

http://www.genelenergy.com/operations/exploration-assets/somaliland/ (Accessed:

21 August 2016).

30

(GenelEnergy plc, 2016)

Jackson,T. and Wall, M. (2015) Can ‘flying donkey’ drones plug Africa’s transportgap? Available at: http://www.bbc.com/news/business-30895278 (Accessed: 20

August 2016).

(Jacksonand Wall, 2015)

Jeffrey,J. (2016) Djibouti faces new kid on the block. Available at:

http://www.bbc.com/news/business-36537044 (Accessed: 21 August 2016).

(Jeffrey,2016)

Note:

27

Moosajee,N. (2016) Is Africa leading the innovation revolution? Available at:

http://www.huffingtonpost.com/naadiya-moosajee/is-africa-leading-the-inn_b_9018882.html

(Accessed: 20 August 2016).

(Moosajee,2016)

Pecquet,

J. (2016) Somaliland minister of foreign affairs Mohamed Yonis: An Africansuccess story. Available at: http://thehill.com/policy/international/198720-somaliland-minister-of-foreign-affairs-mohamed-yonis-an

(Accessed: 21 August 2016).

(Pecquet,2016)

Note:

29

Petroff,A. (2016) Somaliland to Ivy League: How one African school gets kids intotop U.S. Universities. Available at:

http://money.cnn.com/2016/04/21/pf/college/harvard-ivy-league-university-somaliland-africa-school/

(Accessed: 20 August 2016).

(Petroff,2016)

SAP

(2014) SAP to accelerate innovation and growth in Africa with up to US $500

Million investment. Available at:

https://news.sap.com/sap-africa-accelerate-innovation-growth-500-million-investment/

(Accessed: 21 August 2016).

23

(SAP,2014)

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