Si mag issue 4 for web

Issue no. 004 October - December 2015

SOMALIATHE

THE AUTHORITATIVE ANALYSIS OF BUSINESS AND ECONOMIC ISSUES

us$3/ssh 70,000

Special ReportSomalia Keen to Explore Oil Resource

AviationWill Somalia Airlines Return

TourismJazeera Palace Hotel: Face of New Resilient Somalia

EntrepreneurshipThe Fashion Designer with a Big Dream

The Somali oil PoTenTial: whaT nexT for The counTry?

SubScriptioncontact: [email protected]

Email: [email protected] - Somalia

ISSUE No. 004 October - December 2015

SOMALIATHE


US$3/SSh 70,000

Special ReportSomalia Keen to Explore Oil Resource

AviationWill Somalia Airlines Return

TourismJazeera Palace Hotel: Face of New Resilient Somalia

EntrepreneurshipThe Fashion Designer with a Big Dream

THE SOMALI OIL POTENTIAL: WHAT NEXT FOR THE COUNTRY?

JUNE-AUGUST 2015 THE SOMALIA INVESTOR 1

SOMALIATHE


Issue No. 003 June-August 2015

US$3/SSh70,000

Special report Aviation Social InvestmentFinance

What is Turkey’s agenda in Somalia?

SOMALIATHE


4th Edition and Counting

THE SOMALIA INVESTOR OCTOBER-DECEMBER 2015 3

Oct - Dec 2015

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Somalia’s Subterranean Minerals hold its future

History of Somalia’s unexplored oil resource

Surmounting oil Industry challenges

Somalia keen to explore oil resource

Jazeera Palace: Face of new resilient Somalia

From Egypt with lessons

Will Somalia Airlines return?

Somalia working to reclaim control of skies

Investing in youth for future dividends

MasterCard plans financial services for Somalia

Embracing technology for a better tomorrow

2224

The Fashion Designer with a Big Dream

ManagIng eDItOr Franklin awori

COMMerCIal DIreCtOrMohaMed dubo

eDItOrIal COOrDInatOrnzivo Mutune

senIOr WrItersabdirahMan YusuF

JudY waguMa egal abdiwaliMARTINE RIVERS

PhOtOgraPherabdiFitah hashi nur

COntrIbutOrsabdirahMan gutale

LIBAN OBSIYEIBRAHIM HUSSEIN

ABDULKADIR ABIIKAR HUSSEIN

CreatIve DIreCtIOn Media inside out

CreatIve DesIgner sharMa wasuge

DIstrIbutIOn COOrDInatOr abdFitah MohaMed noor

MarketIng DIreCtOr kadar MohaMed

+252619999685 I +252690010000Email: [email protected]

Mogadishu - Somalia

subsCrIPtIOnContact: [email protected]

FeeDbaCk [email protected]

ediTorial Team

32

Embracing co-operatives

to foster peace and

development

Hunger looms for many Somalis

For good reasons somalia has been billed as “the last frontier country in the world.” investors, economists, profiteers, multinational companies as well as countries looking to expand geopolitical footprint have their radars choking with frenzy.

the whole of somali is said to be geologically seductive to players in the mega extractive industry. the minerals, though yet to be ascertained, are said to be im-mense and diverse. oil and gas, iron, gold, uranium, copper and rock salt all lie beneath awaiting activation.

somalia’s hydrocarbon is what has got every other industry player training his economic arsenal towards our country. and who wouldn’t? the oil industry is the biggest industry in the world and boasts over 5000 years of existence.

the country is looking forward to maximizing on this lucrative industry once actual dis-coveries are made. Currently seismic studies are underway and indications are pointing towards good times ahead.

good times ahead is what every other citizen in the country is yearning for following a painful past. the oil dollars will help heal the wounds and wipe away endless tears that have been shed for lost loved ones, collapsed hospitals and education system, road infra-structure and government institutions.

however with great wealth comes great responsibility. oil wealth is but a means and not an end to itself.

For the country to make good “oil wealth is but a means and not an end to itself,” it will need to shade practices such as corruption that are widespread in its fledgling institutions. the government has to embrace sound financial management practices while coming up with innovative ways to diversify the economy so as to evade the dreaded dutch disease.

it is upon the government to ramp up security and legislate laws for a conducive busi-ness environment that attracts much needed capital. such laws should also call for trans-parency and accountability while empowering civil societies who act as public watchdogs.

due diligence needs to be taken to check against crippling resource curse. equitable distribution of the revenues and investing in the welfare of the citizenry is critical. estab-lishment of future generations fund ensures this national heritage spreads to future gen-erations.

extractive industries though highly lucrative, come with volatility. diversifying the econ-omy and establishing a fund to that effect should act as a shock absorber. Currently the oil industry has seen prices tumble to low depths that have negatively disrupted world economies. warning shot? Yes.

in this issue we engage several key stakeholders to shade light on the status and the finer details of the industry. the issue will take you through various sectors of the economy that the country will immensely benefit by investing in. in a cash-strapped country, our writers also head to egypt and share on innovative ways of raising capital domestically for mega infrastructural projects.

Mohamed Dubo

THE SOMALIA INVESTOR OCTOBER - DECEMBER 20156

The Somalia Investor Magazine-One year later

bY Franklin awori

one year ago, the somalia investor was launched. the glossy, 52-page publication was not launched with any fan-fare, despite its many firsts in somalia news and publishing industry.

the lack of fan-fare was not a reflection of the modesty of the achievement, but it was rather an acknowledgement of the heavy and daunting task that the somalia investor team had set upon themselves.

this nation, as we know it, was just emerging from over 20 years of civil war. the scars of war were all over the county. everything that made sense in modern world had been battered and flattened. the local media was no ex-ception. tv and radio existed within limited boundaries of Mogadishu. the newspapers, and the entire infrastructure required to run a successful print media industry were none existent.

it is in this environment that the somalia investor was born, as the first business and economic magazine in the country. the in-vestor was born out of the recognition that the somali people’s enterprise and undying spirit for business was the key to building a modern and progressive society.

in the midst of the conflict, the entrepre-neurial spirit of our people could be seen, whether at home or across the various con-tinents where they had settled.

the investor, therefore, was started out of the desire to capture the nascent spirit of the typical somalia businessperson and to create a forum for sharing of business and economic news that is emerging out of the new somalia.

at the somalia investor, we recognised that a thriving busi-ness sector and a responsible government will be at the cen-tre of creating a progressive and peaceful nation. Commerce and industry, supported by good fiscal policies, progressive legal framework that supports business and proper monetary management were critical for the growth of the new somalia

nation.in the first year of circulation, the magazine examined the

different facets of the somalia economy. we told stories of ordinary people who built thriving busi-

ness from nowhere. we also told stories of the many needs of the somalia business community and what the government and the international community can do to assist them de-velop even further.

during the one year in existence, we have dedicated pages and pages to tell stories of the everyday changes that are oc-curring in the country and provided context to understand the larger somalia economy. we told stories of how technology is driving commerce, including the banking and mobile telepho-

ny sector in somalia. we have analysed the legal framework that

is hindering commerce. we have also told sto-ries of the modernising of the somalia airport, the port and new infrastructure projects that are coming up daily in somalia.

our core responsibility has been to create a platform to learn from each other and to share with the world the other side of soma-lia- apart from the reported bombings and violence. business to us, is at the core of the somalia nation renaissance. it is the bedrock in which the new somalia will be built. it is probably the biggest asset our country has.

however, being a first has not been easy. the journey has been fraught with challenges, but the joy of seeing somalia rise again, brick by brick and inch by inch is a powerful motiva-tion to continue publishing.

in the last one year that we have been writing about business and commerce and interacting on a daily basis with the business community and government officials, we have been convinced, without any doubt, that somalia has everything it takes to be a great

nation. when the guns finally fall completely silent and the gov-

ernment and the international community fully embrace their responsibilities, the enduring spirit of the people will certainly push this nation into a commercial giant in the region.

and the somalia investor Magazine will be here to capture that journey-paragraph by paragraph, page by page.

anniversary

WE TOLD STORIES OF HOW

TECHNOLOgY IS DRIVINg

COMMERCE, INCLUDINg THE BANKINg AND

MOBILE TELEpHONY SECTOR IN

SOMALIA. WE HAVE ANALYSED THE

LEgAL FRAMEWORK THAT IS HINDERINg

COMMERCE.

Hass Petroleum Somalia, KM5 (Zope) Hodan DistrictTel: +25285088

Website: www.hasspetroleum.com

We have added a wide range of LUBRICANTS

and LPGAS

FUeLLING AFRICA’S eCoNomyHass Petroleum Group


bY abdulkadir abiikar hussein

somali’s extractive depos-its potential is as diverse and extensive as its shore-line. this is according to a 2015 investment report

published by the Ministry of foreign affairs. the report also collates infor-mation from partner nations and past investors.

hydrocarbons, uranium, rock salt, sepiolite, a number of base metals, auriferous (containing gold) and cop-per are just some of the underground

wealth that is waiting to be proven and tapped into. the government is undertaking a detailed evaluation and assessment process to ascertain the minerals’ marketability and readiness for exploitation.

the ministry is urging investors to be ready for bidding of production

Somalia’s Subterranean Minerals hold its future

Minerals and Oil


sharing agreements once an ongo-ing survey is completed. according to the report, an offshore indian ocean portion of somalia’s coast has shown tremendous potential for hydrocarbon exploration and investment after the recent discoveries in Mozambique, tan-zania and kenya.

the country is pegging part of its de-velopment to lie squarely on the shoul-ders of its underground wealth.

this report has rent the country’s air with high hopes as many citizens are banking on this potential to spur rapid economic reforms that will place the country on the path to recovery and development.

bur area and the golis Mountains range have the main occurrences of metallic manifestations. the govern-ment has its fingers crossed that the deposits will prove to be commercially viable.

Central somalia and south west state has also registered potential for various minerals that are required by multinational companies manufactur-ing products used in day-to-day live.

the report, louds somalia as “the last frontier country in the world” for hydrocarbon and notes that new seis-mic studies acquired in 2014 demon-strated structures existent under the sea-floor as containing prospects that justify further exploration, drilling and production. not to lie on its laurels, the government intends to complete 2-d seismic studies on offshore areas not covered by the 2014 survey.

somali’s geology has long fascinat-ed industry players. well-documented data shows the existence of working petroleum systems: source rocks in multiple layers, reservoir rocks, seals and traps. this is evidence of potential hydrocarbon deposits.

the potential in the extractive in-dustry remains mainly underexplored if not unexplored all together. the government is alive to the fact this is

a capital-intensive venture and it is rallying investors to come pouring in so as to spark this profitable industry into motion. in this regard it is working towards creating attractive incentives for the extractive industry players and generally making its investment envi-ronment conducive for all.

improving its infrastructure and sus-taining security is an ace card that the somali government is confident if they deal it well they will endear themselves to investors who are alive to the coun-try’s past and present.

in 2013, several european union countries, the united states, the world bank and the african development bank pledged close to $3b towards peace and state-building efforts.

used well, this amount could hold the key to tipping off the balance in fa-vour of the country.

so far, owing to the country’s past and current sporadic spats of terrorism, the country has only managed negli-gible extracts of gemstones, gypsum and salt in the last few years. artisanal

mining (small scale) is growing rapidly but the whole lucrative mining sector in somalia needs investments to develop to full capacity.extractive industries are as lucrative as they are volatile. in as much as they are capital intensive they are not pro-poor, they do not employ many people so the riches they provide might not necessarily permeate to the masses, hence the need to diversify the economy.

one area that the country has equal riches that is awaiting exploitation is in its marine life. somali boasts the longest coastline in africa, a whooping 3025 kilometers. with this comes di-verse marine life hence a lucrative fish industry. this is major. it can employ many as well as address rampant food shortages in the country. the so-called dutch disease has been known to bring down economies heavily reliant on ex-tractive industries.

Fishing industry should provide one way of providing an antidote.

however this live-saving industry, owing to lack of fisheries management, is embroiled with challenges following many years of unregulated fishing by foreign vessels. these vessels fish more annually than does the country.

as africa gears up to attract more direct foreign investment in the conti-nent as the last frontier of investment, the horn of africa state will be banking on its latest profile of lucrative minerals to climb the economic ladder.

Manufacturing and processing is known to promote a country’s eco-nomic standing through foreign ex-change revenues and job creation. security and critical infrastructure will play a big role in facilitating these in-vestments but being a virgin mineral territory, the benefits may override the difficulties for pioneer investors.

AN OFFSHORE INDIAN OCEAN pORTION OF SOMALIA’S COAST HAS SHOWN TREMENDOUS pOTENTIAL FOR HYDROCARBON ExpLORATION AND INVESTMENT AFTER THE RECENT DISCOVERIES IN MOzAMBIqUE, TANzANIA AND KENYA.


bY abdulkadir abiikar hussein

somali is poised for a bump-er oil harvest if its geology is anything to go by. the geology boasts of three requisites for hydrocarbon

generation. this includes the source rock, the reservoir and the seal. this coupled with the presence of two ge-

ological eras namely cretaceous and Jurassic, point to the possibility of mul-tiple reservoirs and traps with consid-erable deposits.

boosting this projection are the oil and gas discoveries that have been made else where within the east afri-can countries. worth noting is the fact that more hydrocarbons have been discovered in east africa in the last five years compared to elsewhere in

the world. according to the ministry for petroleum, the entire country’s 18 regions is awash with oil potential be-cause it is all covered with sedimentary basins. however, it is important that we do not to get over our heads until a discovery is made. Currently only ad-vanced seismic studies are underway.

somali is not new to oil exploration for it dates back to the 1940s, long before the country disintegrated into

History of Somalia’s

unexplored oil resource

Minerals and Oil


chaos. sinclair Company was first to lay foundation for hydrocarbon exploration.

in the seventies there was a period of slumber in the exploration as soma-lia adopted socialism while joining the soviet block. the country experienced capital flight as western companies took leave only to make a comeback in the 1980s.

Chevron signed a concession agree-ment in January 1986 with somalia over blocks lying along the northwest coast of somalia. the concession area encom-passed 40,509 km2 both on onshore and offshore, extending into the gulf of aden.

this was followed by a windfall of what mimicked a gold rush in so-malia by various companies among them Chevron, 1986 (on and offshore north-west coast, 40,509km2), Cono-co, 1986 (nugaal, sool and togdheer, 98,700km2), amoco, 1987 (block 6,9 and 12 near Mogadishu, 35,0912) and shell with exxon Mobil, 1988 (offshore

blocks from bandar beila to south Mar-ka. block M-3 and M-4.)

during this period, the then govern-ment mainly signed concession agree-ments. this form of agreements often grants oil Company exclusive rights to explore, develop, sell and export oil or minerals extracted from a specified area for a fixed period of time. oil companies compete by offering bids, often coupled

with signing bonuses for the license of such rights.

rules regulating the extractive indus-try drew from the somalia Mining Code. however a totalitarian regime reigned supreme. despite the many years of exploration there are no lessons for the current leadership to draw from.

this period however was marked with under exploration. the few blocks that were explored were in north east-ern and north western of somalia.

Following the 1991 degeneration into civil war, most companies that had signed agreements declared force ma-jeure.

the government is working to get into negotiations with the companies that had declared force majeure. getting back into negotiations might enable the government to recoup lost revenues that might have accrued according to the contracts but this seems farfetched since the involved companies are yet to come to the table.

CHEVRON SIgNED A CONCESSION AgREEMENT IN JANUARY 1986 WITH SOMALIA. THE CONCESSION AREA ENCOMpASSED 40,509 KM2 BOTH ON ONSHORE AND OFFSHORE

bY nzivo Mutune

as much as extractive in-dustries are rewarding, they carry along challeng-es that can at times seem insurmountable. getting

hydrocarbons to the surface is capital intensive, requires high-end technology and highly skilled manpower.

once the petro-dollars start flooding in, sound financial management skills and good political will is called for in or-der to use the opportunity to safeguard against the volatility of the industry, in-vest in the welfare of the people, diver-sify economies while at the same time saving for future generations.

somalia, a country that is in the pro-cess of recovering from a prolonged conflict, collapsed institutions and now the menace posed by al shabaab, the challenges they face in building and developing the oil industry can not be overstated. in the niger delta, nigeria, incidents of burst pipelines by locals who feel left out of this national cake, among other related attacks are not

new. when oil is discovered and soma-lis don’t feel ownership of the resource as well as a fair share of the revenues, if the locals aren’t employed where ap-plicable, then the safety of the pipeline and the moving of crude oil to the refin-ery will be difficult. we have seen this in many countries in which the communi-ties vandalize the pipeline and refiner-ies are attacked.

when drawing up agreements, in-ternational oil companies always take into consideration the risk factors of the venture. the more the risks the less the share of profits the host country gets. Many analysts have posed the question of whether oil discovery is going to be a boon or bane of the somali nation. Partly this question arises owing to the opaque legal, constitutional and property rights in somalia. the somali government is addressing the legal and constitutional matters dealing with the ownership of the natural resources. the government has drafted an interim re-source sharing agreement. it is intend-ed that the federal government and the regional member states will agree on the ownership and sharing of revenue

generated. Corruption is a cancer that has eaten away into public coffers of many countries, exposing the masses to abject poverty. Many governments with tons of petro-dollars have the ma-jority of its population living in less than a dollar a day. Corruption happens to be one of the sinkholes through which these monies never see light of the day.

a human rights watch group in an-gola estimated that between 1997 and 2002 more than $4b of state oil reve-nues “disappeared” from the angolan treasury.

noting that corruption is an issue within somalia, the government has introduced Public Procurement, Con-cessions and disposal act, which lays down principles and practices of public procurement hence creating a founda-tion for transparent financial govern-ance.

additionally, the government is the process of joining and domesticating extractive industries transparency in-itiative, this is an initiative that advo-cates for transparency in all dealings between the oil company and the host country. this way the citizens are away

Surmounting oil industry challenges

Minerals and Oil


of how much oil is extracted, durations of agreements, fees, rents and taxes col-lected, and any other details concerning the oil industry.

it is worth noting that whereas ex-tractive industries are capital intensive, they are not pro-poor. they do not em-ploy masses. these industries require highly skilled labour and unfortunately countries with new oil discoveries lack in these areas. hence international oil companies normally come with their own manpower. the unskilled labour re-quired is barely enough to cover the host country’s population.

sectors such as manufacturing, farm-ing and livestock and fisheries are pro-poor. they employ a lot. this way they improve livelihoods of the masses while at the same time cushioning the country against the volatility of the finite hydro-carbons.

it is against this understanding that the government of somalia is working on diversifying our economies. embrac-ing technology will reinforce traditional industries such as agriculture, livestock and fisheries. while doing this we will be working on others sectors so as to have a healthy sustainable economy.

against expectations, countries with huge deposits of natural resources nor-mally post a poor human development index with many of its populace living in less that a dollar. referred to as resource course or the paradox of plenty, it has bedeviled many countries including ni-geria, angola, democratic republic of Congo and Chad among others.

the somali government is committed to establishing a shared vision towards petroleum sector development while introducing solid legislations and imple-mentation of transparent policies.

after two decades of infighting in so-malia, its road infrastructure is in sham-bles though concerted efforts are under-way to restore its infrastructure.

this requires time and huge capital. it is undeniable fact that somalia’s limited budget is not sufficient for this heavy financial investment. For now, somalia will have to make do with what we can work on.

somalia adopted the federal system of government. there is the central as well as the regional governments. some of the regions are somaliland, Jubaland, Puntland among others with the central government sitting in Mogadishu.

unchecked this tiers can be in conflict

with each other owing to opposing in-terests or varying ways of doing busi-ness. under such circumstances its en-dowments would fuel retrogression as opposed to oiling development.

to overcome these challenges, the federal government, regional authorities and communities need to agree how to share and benefit from somalia’s natural resources. oil being a national heritage need to benefit current as well as future generations. enough countries have set up future generations fund to address this issue. this requires good will from the government’s elite. the somali gov-ernment, through the interim resource sharing agreement that it is proposing will ensure that future generations ben-efit from this finite heritage.

it would be counter productive to consider going into oil exploitation with-out considering inevitable environmen-tal issues. alive to this, the government of somalia is in the process of setting up an environmental institution to deal with consequent environmental issues.

You will recall that oil exploration dates back to the 1940s to late 1980s.

Contracts had been signed between these international oil companies and the then somali government. Following the collapse of the then government in 1991 many companies declared Force Majeure.

Force Majeure is a clause within the agreement that protects the parties against circumstances beyond their con-trol to deliver or see through the terms of the contract.

due to the change of circumstances in somalia, companies that had declared force majeure are coming back to re-sume operations. shell and exxon Mobil is an example.

Ministry of Petroleum and Mineral resources is negotiating with the prior holders on how to lift the force majeure and resume operations.

since most of the pre-1991 contracts were concession type, the challenge is upon the government to convert previ-ous contracts from concession type of agreement to Production sharing agree-ment (Psa).

is somalia ready joining oil producing country. it’s a space worth watching.

SOMALIA ADOpTED THE FEDERAL SYSTEM OF gOVERNMENT. THERE IS THE CENTRAL AS WELL AS THE REgIONAL gOVERNMENTS. SOME OF THE REgIONS ARE SOMALILAND, JUBALAND, pUNTLAND, SOUTH WEST AND gALMUDUg AMONg OTHERS WITH THE CENTRAL gOVERNMENT SITTINg IN MOgADISHU”

tHe SOMALIA INVeStOR OctOBeR-DeceMBeR 2015 15


bY nzivo Mutune

the business of hydrocarbon touches on every aspect our lives. Just as oil is black, so is the industry. one needs to take a deep dive to un-

derstand and make sense out of its murkiness. the minister of Petroleum and Mineral resources, h.e. Mohamed Mukhtar ibrahim had a chat with the somali investor to shade light on mat-ters oil.

give us a brief background of Oil exploration in somalia?

Prior to oil exploration, the geology of somalia fascinated geologists due to the existence of thick sedimentary cov-er. in the late forties and early fifties, an intense geophysical prospecting was carried out followed by seismic surveys on onshore somalia.

in the mid-fifties, sinclair Corpora-tion executed drilling many exploratory oil wells in onshore southern soma-

lia. the drilled wells were either dry or manifested gas or oil shows. there ware no discoveries with commercial viability.

agip Mineraria drilled few: gara’ad Mare, Cotton and darin. in late fifties and sixties, somalia led in exploration intensity in africa. amerada surveyed and drilled few wells in north somalia.

however, as a result of somalia adopting socialism and joining the so-viet block, western companies stopped operating in somalia in the seventies

Somalia keen to explore oil resource - Minister

h.e. Mohamed Mukhtar Ibrahim Minister of Petroleum and Mineral resources

Minerals and Oil


and came back again to do business in the 1980s and that is when somalia started opening up its market.

Is there any reason for the somalia people to be optimistic this time round?

Yes, the somali people are optimistic this time due to the fact that things are moving in the right direction:

the government considers a shared vision towards petroleum sector devel-opment as a top priority. the ministry is working on the necessary legal and regulatory frameworks that will place the oil and gas industry in their right position.

the current constitutional review is expected to address the contested au-thority over the petroleum sector. the government is also addressing the rev-enue sharing arrangement.

the production sharing agreement model of somalia will be an attractive one that serves the interest of the so-mali people and takes care of the inter-national oil/gas companies. it will strike the right balance between these two often-opposing parties.

the recently acquired data is modern and technologically advanced with a high resolution it may reveal the hidden structures that contain oil and gas.

What is this government doing differ-ently that previous governments did not do in as far as oil and gas explora-tion is concerned?

let me first tell you the nature of this government compared to previous gov-ernments. this is the first permanent national government somalia has since 1991. before 2012 somalia had transi-tional Federal governments.

as far as the oil is concerned, we are creating necessary institutions such as somali national oil company and somali petroleum authority function.

due to challenges owing to our two-tier system of governance, initiatives are in place aimed at enabling the Federal government and regional governments to collaborate in reviewing the Pro-visional Constitution with respect to ownership, management and revenue sharing of oil and gas. we are holding consultations with stakeholders and building partnerships with international and local communities.

of note is somalia is joining extrac-tive industries transparency initiative to

be more accountable, transparent and pragmatic about the way forward in de-veloping the resources of somalia.

our government is also partnering with well-respected institutions such as african development bank, world bank, deloitte and others to ensure that somalia receives the necessary support to develop the petroleum sector.

Insofar as the work already done in the ongoing oil and gas exploration, how much has been discovered?

the work that is done so far is related to seismic surveys and these activities will be followed by the start of explora-tion. discoveries will occur only after ex-ploratory drilling and meaningful drilling can only take place once deposits are considered proven or probable.

What is the time frame before oil dol-lars start flooding in?

it normally takes the following time frame in order to move the life cycle of a petroleum field up to production:

surveys that involve carrying out seis-mic studies take 2 years. three to five years goes into carrying out exploration and drilling.

once discovery happens then ap-praisal is required to evaluate the size of the field. More wells need to be drilled in order to delimit the field. appraisal is capital intensive, time consuming and may require additional seismic investi-gation. an additional two to three years might be needed in this case.

the next stage is moving to produc-tion, which needs planning, putting in place production wells and deciding the best route to export.

Which are the oil blocks that have been certified as oil rich with commer-cially viable deposits?

oil is not yet discovered in somalia. as it stands now, we can only talk about potentials and good leads but no oil.

What is the quality and quantity of the oil deposits and for how long are they estimated to last with active exploita-tion?

once oil is discovered in somalia, then that is the right time to talk about its quality and quantity.

has gas exploration been intense as oil exploration, if so, what are the pos-sibilities?

there is no exploration that is in-tended for gas. there is no exploration specific for gas. the target of petrole-um exploration is for both oil and gas. though the industry prefers oil, if the discovery turns to be gas, then the oil/gas company has to live with that reali-ty and appraise the field and develop it. gas production requires additional facil-ities – lng (liquefied natural gas) facility which goes into the billion of dollars.

What attitude have the somali people taken with the news of oil discovery?

Certainly oil discovery is good news and would trigger a positive attitude but oil or gas is yet to be discovered in somalia.

What are the areas that the companies doing exploration have taken interest in to give back to the society and are there any marked changes within the communities/clans owing to this?

Currently, no company is doing ex-ploration in somalia so we are yet to experience that.

From the rents already accrued from the exploration, has the government already started ploughing back the income for the welfare of the people?

there is only one company that has expressed interest to resume its explo-ration after 25 years of force majeure. that company intends to pay the rents accrued over the years and that revenue will go to the treasury to be spent on the priorities of the government.

In terms of skilled labour for oil explo-ration and exploitation, has the gov-ernment taken the initiative to spon-sor university students to the relevant degree courses?

the Ministry with the support of its international partners is giving somali workers new oil-related skills.

ExpLORATORY DRILLINg AND MEANINgFUL DRILLINg CAN ONLY TAKE pLACE ONCE DEpOSITS ARE CONSIDERED pROVEN OR pROBABLE


Currently are there somali technocrats with expertise of the oil industry?

there are some somali technocrats with rel-evant experience but in order to recruit more from the diaspora, capital will be required to recruit and retain them.

there are many somalis in the diaspora. has the news of oil industry imminent growth started pulling them back home: if so, how do you intend to work with them so as to tap into their experiences so as to develop the oil as well as other industries?

the momentum of oil industry develop-ment is in its early stage but it will certainly attract many to come into somalia and chase opportunities.

given this oil wealth, is there a time frame within which to expect somalia to modern-ize and industralise, can we expect to see rapid modernization as in the likes of gulf countries?

our Petroleum law 2008 is based several principles. one of them states that somalia should adopt principles of transparency in the conduct of petroleum operations to minimize the risks of the “resource curse”.

that is exactly what we intend to do so so-malia can use its resources to modernize and industrialize. we can talk about time frame when oil is discovered.

Which companies are already on contract and on the ground?

shell/exxon Mobil and soma oil and gas (seismic option agreement in 2013). in ad-dition spectrum will start to execute seismic studies and data management for somalia.

Is the government taking loans against its oil wealth; if so, where are the monies being invested in?

the government has not taken loans to this effect.

Oil prices have been tumbling for some time now. Is the government cautious in the way it is signing oil contracts?

no oil contract has been signed up to now. the shell contract comes from 1988. spec-trum is a seismic service company, not oil exploration and production company (e & P Company). we are forming somali Petrole-um authority to apply regulatory principles of equality, openness, accountability, transparen-cy and non-discrimination.

What lessons does the government intend to borrow (or has already borrowed) from the gulf countries that have done so well to improve and diversify their economies as well as invest in the welfare of the people?

the first lesson to learn from the gulf states is the need for political stability, continuity of

governance, consistent vision and commit-ment to achieve it, patience over the years of development and keeping the public expec-tations managed. we are starting the oil in-dustry of somalia in a time when everything about oil is in place and we can benefit from that wealth of experience.

to recoup fast but in a sustainable way from time lost since 1991, what plans has the gov-ernment put in place?

somalia has put in place a number of meas-ures to this effect. at the forefront is the con-stitution that makes clear the development agenda of the extractive industry.

a general policy of developing oil and gas upstream industry is in place while others such as mining are under drafting.

somalia is also working in partnership with international institutions so as to align with and domesticate world best practices as far as the extractive industry is concerned.

the african development bank, the world bank and extractive industries transparency initiative (eiti) are some of the institutions.

are there plans to put up an oil refinery within the country so as to benefit from technology related to the industry as well as maximizing profits?

Yes, there are plans to put up a refinery in somalia.

Minerals and Oil


Jazeera Palace hotel:Face of new resilient Somalia

bY egal abdiwali

Jazeera hotel has been bombed several times but the hotel always rises up and of-fers even better services.

a somali proverb goes: the best bed that a man can sleep on is peace. indeed somalia is experienc-ing tranquility. the people of somalia can go through nights unpunctuated by cracks of gunshots and explosions. sleep is no more a luxury. better still, visitors and locals alike can check in at the Jazeera Palace hotel and enjoy a serene night.

Mogadishu is a prime business desti-nation with rapidly growing trade pros-pects and adequate cash circulation. More business is expected after the us government honoured its promise to reopen its somali Mission following 21 years of absence.

the Jazeera Palace hotel is strategi-cally positioned 300m from the aden abdulle international airport, a crucial entry point for somalia.

somalia is not yet out of the woods

and once in a while Mogadishu experi-ences spats of terror.

You need resilience and determina-tion to make sense and thrive in the challenging environment. it is exactly this kind of personality that is embodied by this premier hotel. the Jazeera Place hotel has become the face of somalia’s resilience and dogged determination to overcome the past and embrace a new peaceful future.

the hotel has come under attack three times but no matter how hard below the belt kicks it suffers, it bravely picks itself up by the bootstraps and lit-erally uses the debris to rebuild.

the first attack (2012) took place when President sheikh Mohamud was a resident. they rebuild. the second at-tack (2014), that by far was the most devastating, involved a lorry load of ex-plosives that was rammed against the hotel’s parameter wall. it brought down part of the hotel and five lives were lost. they rebuild.

as they are wont to saying: once is an incidence. twice is a coincidence. thrice is a pattern. the hotel management and

other real estate developers are deter-mined in staying afloat despite what is thrown at them.

“the attackers are enemies of de-velopment and anything that shows progress is unacceptable to them. they have to scuttle any activities that relate to the reconstruction going on in so-malia because they are worried that the government’s attempt to create jobs or provide education and healthcare will render them irrelevant to the masses,” the hotel management noted.

not to take the attacks lying down, the management hinted on investing in security measures that will see them prevent and even repulse such repug-nant attacks.

the hotel general Manager Justus kisaulu who spoke to somali investor Magazine after its third attack in July said the hotel is too focused to be dis-tracted.

“i have been here since 2012 and i have witnessed the rapid recovery somali is making. new buildings are coming up in every street around Mogadishu. inter-national firms setting up. roads being

hOspitality


re-carpeted. this is the next frontier for business in east africa. the resilience of the somali people is admirable,” kisau-lu oozed of enthusiasm and confidence.

the young hotelier, who previously worked at the nomad Paradise hotel in nairobi, boldly ventured into somali as an expatriate in the hotel industry.

one of his loyal customers in his pre-vious working station had approached him with the job offer to spearhead the hotel.

“i felt the need to take up the chal-lenge in somalia despite the security situation in the city and lack of connec-tion to the main power grid. we have a superb destination here and business is booming.”

the Jazeera hotel has a boarding capacity of 70 rooms. they have pres-idential suites, deluxe as well as stand-ard rooms. the hotel also offers confer-encing facilities.

historians will have a place for the hotel when they are documenting post-conflict somalia. President sheikh Mohamud took official residence in this hotel when he was sworn in 2012.

as though on cue, Jazeera hotel has remained the preferred destination for hosting the country’s high profile guests. diplomatic Missions, united nations staff, shipping Companies, bankers, businessmen and civil society make the bulk of the hotel’s residents.

“the business potential in Moga-dishu is innumerable. average hotel oc-cupancy rate is 95 per cent throughout the year. despite competition, we are constantly in demand,” said the man-ager.

the manager glows in the fact that some guests have booked rooms two years ahead. he urges those interested in investing in the hospitality industry to venture into the Mogadishu market.

the hotel’s aim is to be the leader in the hospitality industry and steer eco-nomic and tourism recovery in somalia.

“we have been training a number of youths and we hope to empower them so that they have the skills and experi-ence to one day take over the manage-ment of the hotel,” kisaulu envisioned, as part of their strategy

the hotel reckons its success is firm-ly anchored on their warm ambience, superb services, beautiful beaches and the prevailing peace.

they are confident that if they play their part and the government ramps up its effort in sustaining security then more visitors and investors will keep checking in, hence the exponential growth of the industry as well as the country.

THE FIRST ATTACK (2012) TOOK pLACE WHEN pRESIDENT HASSAN SHEIKH MOHAMUD WAS A RESIDENT. THEY REBUILD. THE SECOND ATTACK WAS IN (2014). THEY REBUILD. THE THIRD ATTACK (2015) INVOLVED A LORRY LOAD OF ExpLOSIVES THAT WAS RAMMED AgAINST THE HOTEL’S pARAMETER WALL. IT BROUgHT DOWN pART OF THE HOTEL AND FIVE LIVES WERE LOST, THAT BY FAR WAS THE MOST DEVASTATINg. THEY REBUILD.


bY Martin rivers

a state-owned national airline is regarded as a physical demonstration of statehood, promoting national prestige, pride

and a symbol of modernity.somali airlines seemed poised to

make a triumphant return to the skies in november 2013, when a boeing 737-400 painted in the flag-carrier’s dis-tinctive blue livery was photographed in the hungarian capital budapest. so-mali government officials confirmed at the time that the national carrier, which ceased operations in 1991, was about to make a comeback.

despite the encouraging signs, however, weeks gradually turned into months and the aircraft failed to make its much-anticipated debut in Moga-dishu. it was subsequently purchased by spain’s swiftair and converted into a freighter, dashing any hopes of the flag-carrier’s imminent rebirth.

while the false start was dishearten-ing, somali aviation experts continue

to talk of resurrecting their cherished national icon. Mohamed Mohamud guled, the airline’s longstanding Chief executive, is the man overseeing these efforts.

Currently, somali airlines is looking for investors, “three companies have expressed interest in being a share-holder. we are studying their propos-als. there is a chance in the coming month or two something will happen. but we have to do it step-by-step and carve ourselves a niche. it is challenging and it will take time to make a come-back,” notes guled.

Calls to resurrect the flag-carrier in-tensified after kenya temporarily sus-pended flights between Mogadishu and nairobi in June, isolating somali travellers and exposing their depend-ence on foreign aviation airlines. with their own flag-carrier back in opera-tion, somalis would, in theory at least, regain sovereignty over their freedom of movement.

guled was put in charge of somali airlines in 1983 during the flag-carrier’s heyday, when it employed 700 staff

and flew to destinations as far afield as rome and abu dhabi.

italy’s alitalia had helped found the company as a joint venture in 1964, lat-er selling its shares to the government.

during 1970s, a commercial deal was struck with germany’s lufthansa to provide maintenance services and turning Frankfurt into the main euro-pean gateway for somali travellers.

according to dr Joachim vermoot-en, a south african transport econo-mist, the flag-carrier needs to rekindle this focus on international cooperation if it is to have any chance of success. Citing the limited scale of somali traf-fic flows, he believes teaming up with a larger network carrier in the region would be the most prudent strategy.

“the development of large hubs in the gulf countries provides an oppor-tunity to link a smaller scale of opera-tion into one of these hubs, which can then provide international long-haul connectivity for travellers to and from somalia, as opposed to rolling out many direct services from a zero-sup-port base,” vermooten explains.

Will Somalia Airlines return?

aviatiOn

boeing 737-400 painted in the flag-carrier’s distinctive blue livery was photographed in the hungarian capital, budapest in november 2013.

this implies a moderate scope of activity with lower financial exposure. in the past, contrary to today, it might have been possible to operate long haul direct flights with smaller equip-ment and still make economic sense.

in the modern marketplace, only a handful of airlines have the economies of scale and financial wherewithal to operate large inter-continental net-works profitably. their massive fleets and route networks have set the standard for pricing, service quality and convenience, making it near im-possible for smaller rivals to compete effectively.

the need for a big brother to lean on is underscored by the financial hardships facing many african flag-carriers. kenya airways posted its big-gest ever annual loss at the end of July. south african airways continues to lose money despite a series of turnaround strategies. Many others like gambia bird, air nigeria and zambian airways have closed shop in recent years.

a resurrected somali airlines must therefore tread carefully when building up its route network. although suffi-cient demand exists for a nonstop Mog-adishu-london service, for instance, the flag-carrier would struggle to make the route commercially viable. its relatively high cost base would result in ticket prices that are uncompetitive with rivals such as emirates airline, turkish airlines and kenya airways.

rather than going head-to-head with these regional goliaths, vermooten be-lieves somali airlines would be better off focussing on short-haul connectiv-ity while maintaining one medium-haul trunk route to the hub of an overseas partner. Commercial agreements could spread risk on the trunk route, while the foreign partner could provide technical and operational assistance to somali airlines during its fledgling years.

“with so many excellent airlines in the region it may be advantageous to sub-contract airline services to one of these airlines or develop new services on a contractual basis until volumes increase to a sustainable mass,” vermooten says, acknowledging that the flag-carrier would relinquish some independence under this strategy.

guled concurs on the need for cau-tion, insisting that somali airlines

should initially prioritise low-capacity, short-haul routes that are less costly to operate.

“the aeroplanes that we think are most feasible now are 50-seater pro-peller planes for domestic services, not jets, and for regional services maybe 150-seaters,” he recommends.

aircraft should be leased rather than purchased in order to minimise capital outlays.

although the long-term plan envis-ages the launch of european and pos-sibly Canadian services, the airline boss further cautions, “we must first see how successful the regional flights are. only then could they go international.”

it is a strategy that several other small airlines have adopted: Focusing on the regional footprint while developing a strategic inter-continental feeder ser-vice. air namibia, for example, operates entirely within southern africa except for one long-haul flight to Frankfurt. in afghanistan, safi airways deploys four out of every ten flights to dubai.

For somali airlines, the existing daily service flown by turkish airlines be-tween Mogadishu and istanbul presents an obvious opportunity for long-haul

penetration. the two flag-carriers could share commercial responsibility for the route, either by deploying air-craft on alternate days or by signing codeshare agreements whereby so-mali airlines markets and sells tickets for turkish airlines. as yet, however, turkey has not shown interest in as-sisting with the re-launch of somali airlines. ankara already has its hands full with several other projects in the country.

before finalising plans for the route network, guled must first secure in-vestment, “at this time i don’t think the government has sufficient finances,” he admits, “we are working on a pub-lic-private partnership.”

although these investors would need to finance the start-up in full, guled left open the possibility of loan repayments further down the road. he singled out banks as the preferred partners, per-haps aware of the west african devel-opment bank’s stakes in askY airlines and air Cote d’ivoire.

asked about the overall viability of the project, vermooten maintains his cautious tone by emphasising the heavy financial burden of setting up an airline. even with the best management team in the world, costs can quickly skyrocket.

“apart from major start-up losses, airlines always require more funding for updating systems, in-flight enter-tainment, seats, newer aircraft, training, technology and expansion,” he says.

these factors demand a direct ac-cess to capital markets that has to be weighed against other government funding requirements.

somalis must ensure that their avia-tion dreams do not, inadvertently, trump more pressing economic priorities.

due care must also be taken not to undermine the private sector. local operators such as daallo airlines have performed admirably during somalia’s lost decades, keeping the country con-nected without eating up public funds.

any attempt to shield somali airlines from competition by restricting growth in the private sector or by blocking the entry of foreign carriers would be ill ad-vised.

in the long-run, such protectionism would dilute the positive contribution that civil aviation makes to somalia’s recovery.

THE FLAg-CARRIER NEEDS TO REKINDLE THIS FOCUS ON INTERNATIONAL COOpERATION IF IT IS TO HAVE ANY CHANCE OF SUCCESS - dr JoaChiM verMooten south aFriCan transPort eConoMist



bY Martin rivers

airspace management is an integral part of any country in a world that is highly interconnected. it requires skilled manpow-

er, cutting edge technology, coordina-tion and cooperation with the outside world, strong institutions and stability a country.

Controlling the safe movement of aircraft into, out of and over a country’s skies is not merely a domestic affair. events such as the downing of Malaysia airlines Flight 17 in ukraine underscore the interconnectivity of the world and how grave sub-standard domestic pro-tocols can be.

the collapse of somalia’s govern-ment in 1991 left the state unable to provide most basic services. the unit-ed nations (un) took over the coun-try’s airspace management.

since 1993 the un has had overall re-sponsibility for the country’s skies, pro-

cessing civilian aircraft movements and over flights in the horn of africa nation. the programme specifically tasked with these duties is the Civil aviation Caretaker authority for somalia (Ca-Cas), which operates out of nairobi, kenya.

Fulfilling much the same function as a Civil aviation authority elsewhere in the world, CaCas draws from the expertise and resources of two un divisions: the international Civil avia-tion organisation (iCao), which sets the rules for global air transport, and the united nations development Pro-gramme (undP), which provides hu-manitarian assistance to developing countries.

CaCas mandate is to provide these services on ad hoc basis whilst the country puts necessary measures to eventually take over.

efforts of transferring airspace con-trol back to Mogadishu have been un-der way for years. but following several missed deadlines, the Federal govern-

ment of somalia admits that currently they are not ready to meet stipulated international standards.

rather than jeopardising safety by pushing forward with a handover, for-mer transport Minister said korshel instead signed a transition agreement with iCao in 2014. the agreement sets a tentative handover date of 2018.

“this project is the roadmap for the transition of airspace management back to Mogadishu,” affirms iCao spokesperson anthony Philbin to the somalia investor Magazine.

Philbin observes that the caretaker body ‘no longer exists’ because its mandate officially expired with the creation of the Federal government of somalia in 2012. however its dissolu-tion is nominal.

CaCas officially changed its name to Flight information services for somalia (Fiss). iCao nonetheless continues to issue documentation under the CaCas acronym. the facilities and staff at Ca-Cas have remained largely unchanged

Somalia working to reclaim control of the skies

aviatiOn


throughout the body’s successive over-haul.

with its remit intact, CaCas main-tains its focus on enabling safe and reli-able operations through somalia’s skies while also collecting over flight revenues on behalf of the Federal government of somalia.

the annual sum paid by airlines en-tering somali airspace has averaged about $7M over the past five years. Phil-bin insists that managing air navigation services for the Mogadishu Flight infor-mation region, a block of airspace that covers all of somalia plus parts of the indian ocean, is “business as usual” for the CaCas experts.

“there are no unique challenges asso-ciated with controlling somali airspace from nairobi,” he observes. “the chal-lenges are the same as faced by many african countries: that is meeting iCao standards in terms of technical and hu-man resources.”

while the responsibility for the qual-ity and safety of services lies with the air navigation service provider (CaCas), the obligation to ensure the rule of law and oversight of the service providers is that of the state.

it is important for the state to have the capacity to meet its oversight ob-ligations under the convention of civil aviation. these obligations are set out in iCao’s 1994 Chicago Convention to which somali is a signatory.

iCao’s concerns about somali over-sight capabilities mimic perceived short-comings elsewhere in africa, notably libya and democratic republic of the Congo. airlines from both nations are banned from europe due to the sub-standard competencies of their Civil aviation authorities. without sufficient oversight at home, the argument goes, it is impossible for global regulators to enforce safety standards in these black-listed countries.

thus a key priority for iCao and the somali Civil aviation and Meteorology authority (sCaMa), somalia’s Civil avi-ation authority, is to ensure that Moga-dishu attains full competency before, not after it assumes airspace control from CaCas. training somali air traffic controllers (atC) will play a crucial role

in delivering this goal. Philbin confirms that iCao is involved with the training of somali atC staff. the un agency is also procuring all the necessary equipment for modern air traffic management.

Parallel aviation training programmes are also being pursued elsewhere. in Mogadishu’s aden ade international airport, turkish development agency is helping to fund the construction of a new aviation training academy that will eliminate the need to seek aviation training outside the country.

the semi-autonomous northern re-gion of somaliland has meanwhile sent two batches of aviation students to nai-robi and addis ababa to be trained as technicians, meteor-ologists and domes-tic atC staff.

speaking at hargeisa’s egal in-ternational airport in april, Mahmoud hashi abdi, somali-land’s aviation Min-ister, said the latest ethiopian scholar-ships would pave the way for a new breed of indigenous aviation experts to manage local air-space. although the first group was sent to nairobi in 2014 to work with iCao, he criticised the un agency because, in his view, it had nei-ther cultivated competent somali per-sonnel, nor put in place procedures for a smooth handover.

dissenting voices from somaliland are unsurprising given the apparent fail-ure of the Joint airspace Management agreement between Mogadishu and hargeisa. this was a atC deal mediated by turkey in 2013, but now abandoned by both sides. somaliland’s government declared the agreement dead in July, accusing iCao and the Federal govern-ment of sidelining hargeisa in the effort for somalia to regain control of its air-space. the semi-autonomous region has always seen control of its airspace from

Mogadishu as incompatible with its as-pirations for statehood. and whereas a 2013 agreement envisaged a central body in hargeisa, Philbin confirms that Mogadishu had been agreed upon to be the main area Control Centre (aCC).

however, he leaves the door open for future compromises to be hammered out between Mogadishu and hargeisa, noting, “there is also provision to create another aCC in a location to be agreed upon by the involved parties.”

iCao President olumuyiwa benard aliu met with somalia’s current trans-port Minister, ali ahmed Jama Jangali, in Canada in June, to reaffirm the road-map laid down. the Minister stressed

at the meeting that political disputes between Moga-dishu and hargeisa should not detract either side from their shared goal of restor-ing sovereignty in the skies.

another contro-versy surrounding iCao’s activities in somalia relates to the distribution of over flight revenues.

local media out-lets have accused the un agency of a lack of transparency in how it spends the $7M collected annu-ally from over flights. asked about this,

Philbin reassures that revenue collected goes into a somalia trust Fund.

the money is then invested into the nairobi center, as well as local services in Mogadishu, bosaso, hargeisa and ber-bera. “iCao’s accounting policies and practices are audited by iCao’s external auditor on an annual basis,” he notes, flatly rejecting any suggestion of misap-propriation.

only time will tell if the 2018 hando-ver target is realistic. both iCao and the Federal government of somalia remain fully committed to an eventual repatria-tion of the control of the airspace to so-malia.

THE COLLApSE OF SOMALIA’S gOVERNMENT

IN 1991 LEFT THE STATE UNABLE TO

pROVIDE MOST BASIC SERVICES. UNITED NATIONS (UN) TOOK OVER THE COUNTRY’S

AIRSpACE MANAgEMENT


bY liban obsiYe

Youth development is piv-otal to somalia’s march towards stability, progress and prosperity.

President hassan sheikh Mahamud said this during the international Youth day this august.

he emphasised that without em-powering and offering them oppor-tunities that will stimulate economic change in the society there could be no meaningful progress.

70 per cent of somalia’s population is under 35 years. they represent one of the largest youth population com-pared to other countries. a vast ma-

jority of them are educated, ambitious and ready to take advantage of all the economic opportunities presented by the new dawn of peace.

the youths’ image and mind-set is transitioning alongside that of the country. the image of war-torn soma-lia with the youth firing ak47 is shading off. they are embracing themselves as a national asset. they have confidence in their ability to exploit the country’s potential and drive it to prosperity. the workforce they present is magnetic to any investor.

Many of the youth are not waiting to be employed rather they have become innovative and ventured into entrepre-neurship. they have taken successful

stabs at the hospitality, transport and retail sectors. others make a living as drivers, shoe shiners, sales representa-tives as well as street vendors.

despite the successes the youth have enjoyed they also have to make do with a number of challenges. so-mali, just like any other african society, is haunted by hierarchy.

“every corridor of opportunity is crowded with grey-haired men who don’t want us to pass through,” ob-served the youth during a workshop concerning their economic opportuni-ties.

Claiming what is theirs in the socio-economic and political ladder is going to be an uphill task but they note that

Investing in youth for future dividends

yOuth

Youth attending a sports tournament in one of Mogadishu stadiums


they are up for the task. Micro-financing, vocational training,

mentoring and impacting business skills will go a long way into empowering and widening the field for the youth.

the government need to be proactive in coming up youth-centered policies that will prop them up while levelling the investment field for youth.

both the 1987 and the revised somali investment law currently before the Parliament provides incentives for those companies which act responsibly and put the nations human capital to effec-tive use.

this should be used to encourage skills, innovation, knowledge transfer and employment for the youth who are capable of truly changing the economic landscape of the country.

the government need to clean up economic ills such as monopoly so as to enable the youth to penetrate hither to fields considered the preserve of a cho-sen few.

investment promotion strategies al-ways highlight country’s labour force capability. the youth numbers coupled

with the country’s enormous natural resources’ potential paint a bright eco-nomic future if the right formula is put in place.

somali is alive to the fact that the tra-ditional aid model cannot be relied upon to spearhead sustainable economic de-velopment.

the country is wired to the alternative that a post conflict nation must create an enabling investment environment

for all investors so that somalia can be prosperous and gain economic inde-pendence.

the nation has to flex its muscles and be psychologically tuned to the mental-ity that creating an enabling and attrac-tive environment can take decades to mould and sustain. however as a coun-try we should be encouraged by neigh-bouring rwanda.

Maintaining peace, effective and ef-ficient labour force, political good will and stability, enabling investment en-vironment are come of the ingredients that rwanda has used to position itself as one of the fastest growing economy in the region.

it should be noted a youth that is not empowered would lapse into drug use and trafficking, be easy targets for recruitment into terrorism and piracy among other social ills. such engage-ments by the youth normally lead to social unrest, political instability and ul-timately armed conflicts.

the 70 per cent must be empowered because they are the country, they are the economy, and they are the future.

THE YOUTHS’ IMAgE AND MIND-SET IS TRANSITIONINg ALONgSIDE THAT OF THE COUNTRY. THE IMAgE OF WAR-TORN SOMALIA WITH THE YOUTH FIRINg AK47 IS SHADINg OFF


Embracing technology for a better tomorrow

technOlOgy

bY abdikariiM JaMa barre

technological innovations are dictating the dizzying pace and convoluted shapes of the world economy. numer-ous man-hours are being

dispensed so as to ensure technology translates to a panacea for both man-made and Mother nature oriented

challenges. More than any other econ-omies, less developed countries need to embrace technology so as to hasten much needed economic transforma-tion. somalia falls at the dead center of coun-tries that are in dire need of embracing technology to jump-start and drive various sectors of the economy. so-maliland university of technology that

was founded in 2000 provides a crucial platform through which the country can grow and adapt technology to fit the unique needs of the country. whereas the country has arid weather, insuffi-cient infrastructure and a fledgling gov-ernment, it is ironically blessed with rich mineral deposits, a long coastline and a favourable land for agricultural activ-ities.


the country is well positioned to ex-ploit technology so as to turn its current state of affairs while unlocking its docile potential, finally bearing fruition to the “last frontier for investment in the afri-can continent,” tag. egypt comes across as a country that somalia can borrow a leaf from. its been plagued by droughts, floods and long famines. but it has man-aged to come top of these challenges by skillful management of the river nile waters. it has tamed its harsh climate and deserts.

egypt has successfully harnessed the nile resource through technology to generate electricity that powers indus-tries as well as irrigating farms for food security. if technology has sufficed the 100 million population of egypt then it should do wonders for somali’s 12 mil-lion.

seawater greenhouse this is one great agricultural technol-

ogy that boosts yields hence the much craved for food security. the technology involves the use of a greenhouse struc-ture that enables the growth of crops in arid areas using seawater and solar energy. it buttresses agriculture against vulnerabilities of the weather.

the technology involves pump-ing seawater (or where possible to gravitate) to the farming location then subjecting it to two processes. First it is humidified to cool the air. secondly it is evaporated by solar heating and distilled to produce fresh water. Finally the remaining humidified air is expelled from the greenhouse and used to im-prove conditions for outdoor plants.

this technology has been tested and proven in spain, united arab emirates and oman. in australia it is used in the commercial production of vegetables.

solid Water Irrigation system or

simply solid rain is definitely a technol-ogy that the government and people of somalia would want to take time and study to determine if actionable. it is an alternative to the problem of drought-plagued areas and even to other sys-tems of irrigation. it is a system for planting solidified water in crop fields.

it is a formula made up of potassi-um polyacrylate powder particles that

when mixed with soil allows it to hold water 500 times its liquid weight hence forming a water reservoir and slowly feed plants. the stored water can last up to one year from the time it captures rainwater. the formula that goes by more official name, water silos, can be removed from the soil and rehydrated at every crop-cycle and has a life span of up to ten years during which they will provide plants with regular water allowing the plant to be ventilated and

preventing evaporation. its effectiveness has been proven. in

2005 a comparative study of cornfields (maize), one using traditional rain fed irrigation system, harvested 600 kilo-grams per hectare while solid rain irriga-tion system collected 10 tons of grains per hectare. the technology has been successfully used in in india for the cul-tivation of papaya, mango, peanut, cot-ton, wheat and coconut palms as well as in Colombia in rose and carnation greenhouses.

researchers recorded 75 per cent savings in irrigation costs, 100 per cent increase in foliage and flowers and a 300 per cent in root development with a matching yield increase.

desertification, climate change and uncertainty about rain seasons makes this system crucial for somalia as it of-fers the possibility of storing water in bags and in solid form, allowing it to be transported to places that water is scarce or nil. this technology was de-veloped by a Mexican engineer, sergio Jesus rico velasco. in 2012 he was nom-inated for the global water award 2012,

which is awarded each year by stock-holm water institute located in sweden.

though the system has received its own share of criticism, the food secu-rity it promises to sustain should trigger the necessary conversation and action around it.

electricity is one crucial factor that can wholly determine if investors will come flocking into the country or not. somalia needs investors, however a stumbling block stands to hinder this inward movement of capital.

Currently the country relies on ex-pensive diesel powered generators to generate electricity. this comes with ex-travagant operational and maintenance costs. the business community as well as general populace has to bear this huge cost, definite deterrent for would-be investors and raises cost of living for ordinary somalis.

somalia enjoys lengthy periods of sunny conditions. in this lies a resource that remains untapped for which the country stands to benefit highly when harnessed correctly.

gemasolar, a solar plant developed by terresol energy of spain has the ability to innovatively harness solar energy. the company has set up a solar power plant that has the unique ability to keep producing electricity even during the night. this solves the problem alternative sources of energy: solar panels that cannot convert solar energy into electricity at night, wind power that only works when it is windy and wave power that disappears when the seas are not turbulent.

the plant has an array of 2650 mir-rors with a total reflective surface of about 300000 square meters to con-centrate sunlight into a solar collector that is heated up to 500 degrees to boil water and produce steam.

the system uses a mass of salt as a heat sink to collect the heat and store the thermal energy. once the salt is heated it turns into molten salt that can store the thermal energy and enable for electric generation for up to 15 hours without solar feed. the plant is capable of producing 110 gig watts per year that is enough to power 25000 households.

IF TECHNOLOgY HAS SUFFICED THE 100 MILLION pOpULATION OF EgYpT THEN IT SHOULD DO WONDERS FOR SOMALI’S 12 MILLION


From Egypt with lessons

bY aYan abdi diriYe

somalia is in a stage where its urgent need for funds cannot be overstated. its education, health, sanitation, water, elec-

tricity and road infrastructure amongst other sectors need to be restored if not built from scratch. it will take billions of dollars for the country to have a sem-blance of its neighbours.

and here is where the egyptian model comes in. egypt has been able to create a fund raising model that over-looks international lending institutions by relying on internally generated funds for huge infrastructural projects. this is basically infrastructure bonds that a number of countries has come to adopt.

somalia has many lessons to learn from. according to the world bank, so-malia’s 76 percent of its domestic reve-nue is from taxes on international trade. livestock exports, the mainstay of the

countries economy, generates 80 per-cent of its foreign currency. remittances from somali nationals in the diaspora in 2012 totaled to $1.3b. in 2014, as per a world bank report, somalia’s domestic revenue accounted for half of its budget while the other half was from develop-ment partners. Put in other words, so-malia relies heavily on aid and remit-tances.

the statistics above might not look as rosy but somalia is working hard at transitioning from fragility to sustain-able stability. african solution for afri-can problem is a renaissance philosophy that is gaining traction in the continent. in no other country was this recently ex-emplified than egypt.

egypt demonstrated beyond doubt the power of pooling up resources and taking charge of a country’s mega infra-structural project that would otherwise have to be subject to backbreaking ne-gotiations with international lending in-

stitutions or developed countries. Funds sourced from such institutions

normally come with conditions that might not necessarily be beneficial to the recipient country and are subject to high interest rates and delays owing to bureaucracies involved.

it is against this backdrop that Presi-dent abdel-Fattah al-sisi went against the grain and sourced for a colossal mount from within, from the people.

$8.5b is what it would take for egypt to widen and deepen part of the suez Canal, adding 72 kilometers to the ex-isting canal. the canal, one of the most important waterways in the world forms a crucial link between the red and the Mediterranean sea. the expansion turns the suez Canal zone into a global logis-tics, industrial and trade centre.

after making known his intentions, the president made a call for national subscription in which the population was invited to buy interest-bearing in-

Finance


vestment certificates. in a record eight days the subscription was closed by the Central bank because the targeted amount had been raised. work com-menced immediately and the project that was slated to take three years to completion took one year.

it is said that close to half the funds contributed for the project was money that had been lying outside the formal financial channels.

the immense benefits of this project are as dizzying as they are mouth wa-tering to the populace that invested in the new canal as well as the country at large. the country’s go at this capital-in-tensive project is a rare and radical stab at financial independence. it is an echo that should rip across the african con-tinent. the challenge it has posed to an african shackled on loan dependence syndrome is gigantic.

what a better place for this philoso-phy to extend its footprint than soma-

lia. somalia’s population of nine million might not be as formidable as egypt’s 83 million. somalia’s population might not be as rich as its counterpart. Yet, somalia’s capital needs are not as mind-boggling as those of egypt.

somalia’s financial needs are unique to those of egypt. adopting and adapt-ing the concept to suit their unique en-vironment is the call they need to make without losing sight of the prize: break-ing out of the vicious cycle of borrowing while spurring economic recovery that is by and for people.

embracing this philosophy will not be as smooth as it was in egypt.

somalia will need to gain confidence of both the locals and its populace in the diaspora. they will need to strengthen their institutions, weed out corruption while showing cause that they are prac-ticing sound financial management. if they can manage well the funds they get from development partners then this will be a clear indication that capi-tal sourced from within will be in safe hands and invested as intended.

transparency will be of paramount importance in how they handle pub-lic affairs. enabling the civil society to operate freely will galvanize the public trust in the government.

indeed related laws should be up to par and the judiciary should be inde-pendent and efficient enough to enable for recourse where investors feel the ship has started taking in water.

the government will also have to burn midnight oil sensitizing the popu-lace why they need to rise up to the philosophy of being the answer to their problems. if the people are bought into the philosophy then they will board the ship more than willingly.

For somalia, this will be a big deal. Pooling together resources for a com-mon goal will solidify a highly fractured society. this has the ripple effect of cre-ating and sustaining peace.

analysts are in agreement that peace becomes evasive if the post-conflict populace is not empowered econom-ically. Funding development projects creates employment, consequently improving livelihoods which otherwise had been decimated by protracted

conflicts. this way peace is sustained. Money raised from such sources frees the government meager resources to be utilized in other needy sectors that would otherwise have been neglected by a tight budget.

Pooling together to fund communal, regional or national development pro-jects creates a sense of ownership, a sense of entitlement, sense of pride as well as fostering nationalism. these are all important portions in the cocktail of spurring development and its concom-itants. the psychological effect of em-bracing this philosophy augurs well for a nation that would fit to be declared as economically young. 70 per cent of its population is below 35 years. hence it is a young nation by all definitions.

Practiced well, this philosophy of self-reliance will nurture this generation as well as generations to come that, “Yes we can.” what a better lesson for tran-sitioning from debris to sky-scrapping economy.

WHAT A BETTER pLACE FOR THIS pHILOSOpHY TO ExTEND ITS FOOTpRINT THAN SOMA- LIA. SOMALIA’S pOpULATION OF TWELVE MILLION pLUS MIgHT NOT BE AS FORMIDABLE AS EgYpT’S 83 MILLION. SOMALIA’S pOpULATION MIgHT NOT BE AS RICH AS ITS COUNTERpART. YET, SOMALIA’S CApITAL NEEDS ARE NOT AS MIND- BOggLINg AS THOSE OF EgYpT”.


bY abdikariiM JaMa barre

global payments services provider MasterCard has revealed plans to deep-en financial inclusion in somalia using the latest

card payment technology systems.the american firm says it will part-

ner with banks and telcos to open up the largely unbanked population of the country whose systems remains largely underdeveloped due to years of administrative challenges. MasterCard has already partnered with somalia’s Premier bank as part of its roll-out plans.

MasterCard president for Middle east and sub saharan africa, daniel Monehin, who spoke to the somalia investor Magazine, said there is a huge potential to tap in the somali financial space using modern technology.

“we have already partnered with the

Premier bank and we are constantly in advanced stages of talks with banks and telcos to drive our reach to as many somali citizens as possible. the beauty of technology is that it can pen-etrate even areas considered remote or hostile for establishing a physical busi-ness unit,” Monehin said.

MasterCard is currently establishing $11M technology lab in nairobi to help improve financial inclusion in the re-gion. technology solutions developed in the lab will be tailor made to fit the circumstances of the intended areas most of which still largely consist of the unbanked

the payment service provider said there were in advanced talks with other major banks in somalia with significant footprints to provide the crucial infra-structure needed to reach more people and incorporate them into the formal financial system.

the goal is to open up the market for

payment solutions and improve finan-cial inclusion.

Monehin noted the country’s under-developed technology infrastructure presents it with an opportunity to ben-efit from the latest technology in light of advanced industry trends.

“somali isn’t very disadvantaged be-cause in technology there’s a late-mov-er advantage the same way those who began using phones ten years ago bore more burden than those beginning to use phone’s right now. late entry ena-bles efficient and low cost solutions to be deployed in areas with certain infra-structural challenges. such areas end up with the best technologies.”

he further projected that the entry will be procedural as there are many dynamics at play including the assess-ment of partnerships that will drive the largest reach to the unbanked popula-tion across the economic strata.

recently, local wireless provider tele-

MasterCard plans financial services for Somalia

banking


som launched zaad, a mobile banking system in somaliland region. Fortune magazine reported difficulties in imple-menting such system in volatile states considering that 70 per cent of the re-gion’s estimated 3.5 million inhabitants are illiterate and majority are without bank accounts or atM card.

“since somaliland region lacks formal financial institutions, bringing financial inclusion and contributing to the eco-nomic well-being of our society is the primary aim,” says abdirahman adan shire, services manager for zaad at telesom’s headquarter in hargeisa.

thanks to zaad, somaliland region has achieved one of the world’s highest rates of digital transactions in roughly two years.

at present some 281000 active sub-scribers use their mobile phones every day to transfer money, make purchases, pay bills, and buy airtime. that number is expected to burgeon.

MasterCard’s entry into somalia is expected to find relevance in the coun-try where african development bank report released in 2013 indicated 66 per cent use bank accounts to receive money from family members living elsewhere.

the american giant payment firm announced at a June world economic Forum on africa, that it had entered into partnership with Premier bank, becom-ing the first international payments net-work to enter somalia.

as a result of the partnership, Premier bank now issues and accepts Master-Card-branded payment cards in soma-lia. the country has not had any form of formal banking service since the col-lapse of the government and financial services system in 1991.

somalia’s Minister of Planning and international Cooperation, abdirahman Yusuf ali aynte, said the move would be a major boost to open up the country to financial opportunities in a rapidly trans-forming business world.

“somalia has made significant strides to rebuild the country and instill peace and stability. today marks a historic milestone, signaling somalia’s finan-cial liberation following years of global economy exclusion.” Premier bank atM machines are currently being used as the platform for cash withdrawals as other payment platforms will be incor-

porated later. the bank has projected to issue 5,000 MasterCard debit cards this year, followed by prepaid cards, and point of sale (Pos) machines.

introduction of the MasterCard pay-ments network will improve payment capacity within government agencies. Foreigners, expatriates and internation-al aid organisations sending funds to somalia can do so via a formal, trace-able network that complies with inter-national security standards, eliminating the risks of transferring and transport-ing cash.

remittances con-tribute well over $1b to somalia’s econo-my annually, a 35 per cent of the country’s gdP. these funds are an essential source of income for individuals and development of the country.

deepened finan-cial inclusion and the availability of such digital payments will go a long way in reassuring foreign investors, somalis in the diaspora and those distributing aid who remain cru-cial to somalia’s eco-nomic well-being.

Premier bank, Managing director Mahat Mohamed ahmed said the Mas-terCard-branded debit cards enable somalis to withdraw funds from any MasterCard-licensed atM globally, shop online, and pay for goods and services at millions of merchants that accept MasterCard payment cards around the world. “we can now provide our cus-tomers with a safe, cost-effective and convenient means of transacting both at home and abroad. it is our hope that increasing card payment usage in somalia will encourage merchants and citizens to demand more electronic payment services as they engage with and contribute to the formal economy.”

demonstrating the value of close col-laboration in the banking and payments technology industries, this landmark partnership is a significant step towards

reducing somalia’s dependence on cash, increasing financial inclusion and ultimately contributing to the country’s financial stability.

“to promote economic growth in somalia, which has long been isolat-ed from the global economy, there is a need for electronic payment solutions that align with international security and regulation standards,’’ says daniel Monehin, division President for sub-sa-haran africa, MasterCard.

the agreement with Premier bank comes at a time when MasterCard is

working closely with governments and financial institutions across africa to intro-duce safe and simple financial solutions. this goal is in tandem with the institution’s vision of a world be-yond cash.

on the other hand, MasterCard entry into somalia with its elec-tronic payment sys-tem is bound to open trading opportunities with an international payment platform available in a country where banking ser-vices penetration is still quite low.

the service will open up soma-lia-based businesses

to international practices while enabling them to transact in world currencies.

the tourism industry that crumbled following the civil unrest is beginning to experience spikes of rebirth. histori-cal sites, beaches, waterfalls, mountain ranges and national parks are receiving visitors.

electronic payments should provide a bigger incentive for tourists to spend more. Consequently this will revive the industry, create jobs while bring in much needed foreign exchange.

MasterCard, through its philanthropy arm, MasterCard Foundation, is known for its massive corporate social respon-sibility. the country is hoping it will benefit from sponsorships of students in both secondary and tertiary learning institutions.

INTRODUCTION OF THE MASTERCARD

pAYMENTS NETWORK WILL

IMpROVE pAYMENT CApACITY WITHIN

gOVERNMENT AgENCIES,

FOREIgNERS, ExpATRIATES AND

INTERNATIONAL AID ORgANISATIONS


The Fashion

Designer with

a Big Dream

entrepreneurship

bY aYan abdi diriYe

a fashion designer is not a term you are likely to as-sociate with a country like somalia recovering from decades of turmoil. how-

ever, Muna khalif had her fashion road map charted long before she could read a map. khalif, who was born in somalia, found her way to america to escape the chaotic situation in somalia. she set-tled in her new country and eventually set- up a successful clothing line with outlets in america and dubai. she is now keen to set up a production line in somalia.

this journey for khalif has not been easy. imagine journeying across the bor-der to your neighbouring country and before the dust can wash off, you are tossed and bounced across the atlantic ocean to the united states of america. in sum, culture shock.

For most of us, under such circum-stances, we are more than happy to jump right into the dominant culture wagon, go with the flow and fit in. but this was not the case with khalif. she was not going to take into other people’s

tHe SOMALIA INVeStOR OctOBeR - DeceMBeR 201538

Muna khalifFashion Designer


culture lying down especially where her grooming was concerned.

but again, perhaps khalif was not taking up arms against her newfound home’s culture of dressing. rather she was perpetuating a stand that she has always taken since she can remember herself. a Muslim by religion and somali by ethnicity, there is a way that she was brought up and there are values that she believed should be preserved and projected through the way she grooms herself. her quest to espouse her reli-gion and culture dates back to her child-hood as she was growing up both in her motherland, somalia and later in kenya.

“i could hardly be satisfied with most of the clothes that were available in malls,” she points out.

upon landing in america, the land of opportunities as most have it, she could not get a reprieve despite the fact that there are numerous designers as well as clothes outlets.

as though mother nature was con-spiring to shape her future, she noted that she was not alone in her dissatisfac-tion in the way clothes were fashioned without taking into consideration of the various and differing needs of those in need of them. “there were many somali girls who couldn’t find clothes that were both modest and religiously acceptable. sadly though, they had to contend with the western styles, they were suffering in silence with no recourse in sight.”

but wait, was relocation, modernity, religion, culture and demand a cocktail conspiring to shape and grow the de-signer in khalif? Yes it was.

“designing clothes was something living inside me. anytime i bought clothes they failed to fit my taste. every time i buy a cloth i have to take it to the tailor to be restyled.”

her passion to become a designer would not fall into place without a fight from conventional beliefs, “i was enrolled in a nursing course. Common practice has it that designing falls no-where near careers like teaching, medi-cine or nursing for that matter.”

but the designing bug had already struck and she was not going to let common belief sway her away from her passion. alongside her nursing classes, she enrolled for designing.

lady luck smiled her way when she secured a position in a tailoring shop,

“i was tasked with designing cloths for this shop. i would wear some of the new outfits for Friday prayers,” and guess what, she sure did turn heads among her friends and other worshipers. word of mouth soon caught around like sum-mer wild fires as well as creating an on-line frenzy.

“You’ve indeed liberated me from the chains of western-oriented attires. thanks to you i can now dress comfort-ably and carry on my prayers and other activities without being in conflict with my religious beliefs,” says one of her customers. soon scads of orders were flooding in. after three years of swing-ing between her passion and a society imposed career of nursing she finally decided serving two masters was not in her interest and she walked away from the nursing college.

business kept flowing in until Mother nature pulled the plug on her as though to mock her decision to leave college and shake her resolve in her passion for designing. things easily tumbled to worse and before she could get a grip they escalated to worst for the mother of one. surviving in the u.s under such circumstances was excruciating to say the least. but when she thought she couldn’t take it any more her mother came to her rescue.

her mother loaned her $15000 and without thinking twice she sunk the amount into starting a own design-ing business, more than determined to swing back and roar to heights only she could put a cap to. she flew to China to buy clothing materials. as they say, chance favours the prepared, “i ended up identifying a factory that could actu-alize my designs.” needless to say, Muna was back in business.

a Munakay design was born. the en-

tire first batch sold within one month, “i did not have a shop from were to sell my designs. i started literary from the ground, actually below ground since i used a basement belonging to the building where i rent my apartment. the network that i had established ear-lier on in my employment really helped to move the first batch fast,” she recalls with a glow to her face. since then she has put up a shop in the states and dubai as well as establishing a new ba-by’s collection called baby norah. the line’s name draws from her daughter’s name who has also been bitten by the designing bug.

due to her online presence her cli-entele extends to england and has in several occasions shipped her clothes there. Just as Muna answered to the call of her passion, heeded to the needs of the long neglected needs of the so-mali womenfolk in the states, she is now turning her ears to the cries of the woman folk of her motherland as well as kenya. this time she is going it the big way by setting up a factory in her motherland that will supply her chain of shops within the region.

“before setting up the factory i will open up shops in nairobi malls to act as a launch pad for the factory.”

however Muna is going over and above that by answering even a higher call. she is venturing into philanthropy.

after visiting hadgeisa, somalia, she decided to form a foundation, Muna kay Foundation. she intends to train and mentor women and girls in her craft. this way she can give back to her socie-ty as well as hand fishing rods to this lot.

“i want to let women from my moth-erland have something to identify with and be an example that all is possible. if i made it, they too can be.”

AFTER VISITINg HARgEISA, SOMALIA, SHE DECIDED TO FORM A FOUNDATION, MUNA KAY FOUNDATION. SHE INTENDS TO TRAIN AND MENTOR WOMEN AND gIRLS IN HER CRAFT. THIS WAY SHE CAN gIVE BACK TO HER SOCIETY AS WELL AS HAND FISHINg RODS TO THIS LOT.



bY egal abdiwali

a sizable population is at the risk of facing hunger as well as acute malnu-trition through to de-cember. this is according

to a report released by Food and agri-cultural organisation (Fao).

below average harvests, death of livestock and trade disruption are some of the reasons contributing to this grim forecast.

this year’s gu rainy season that runs from april to June occasioned low yields because whereas the rains start-ed on time in most regions they ended up ceasing early. areas that normally record high yields in southern soma-lia produced 25 per cent less than ex-pected. drought conditions in guban contributed to severe water shortage leading to livestock deaths.

during a press briefing in kenya, Fao estimated that over 343000 chil-dren and 855000 adults would be star-

ing at the grim face of food insecurity. amongst the malnourished children under the age of five are bound to fall sick or die owing to acute malnutrition. this report draws from 39 nutrition sur-veys conducted from May to July.

this state of affairs has been wors-ened by insurgent activities in south-ern urban areas leading to disruption of trade. impeding el nino expected to pound central and southern somalia between october and december will likely cause flooding in riverine areas compounding the situation.

the many years of instability that led to poor infrastructure and insecurity will make it difficult for aid organiza-tions to deliver much needed human-itarian assistance. internally displaced persons make up the larger chunk of the population to be severely affected by the famine.

rural and urban populations follow respectively. the internally displaced owes it to insurgency. bulo burto, hu-dur and wajid have been hard it by in-

surgency. however all is not gloomy, “in most pastoral and agro-pastoral zones, livestock production and reproduction has continued to improve, contribut-ing to improved food security,” said richard trenchard, head of Fao in the country, intimating that January will spring new hopes.

rains that start in october are ex-pected to bring run-off water to gu-ban from adjacent highlands. this is expected to bring reprieve and stop death of livestock hence restoring food security. the affected populations need lifesaving humanitarian intervention, livelihood support and health services especially for the acutely malnourished between now and december.

Major areas of concern include be-nadir, south Mudug, bari, lower Juba, woqooyi galbeed and north Muduq.

Fao points out that pastoral, agro-pastoral and riverine populations have been earmarked for special atten-tion because malnutrition is reaching critical levels.

Hunger looms for many Somalis

agriculture


bY abdirahMan YusuF

the current somali land-scape screams for one thing. Co-operatives. so-malia’s fledgling economy buoyed by its thriving agri-

cultural sector, coupled with its desire to foster lasting peace and improve the livelihoods of its citizens, should be anchored in the formation of co-oper-atives.

in india dairy co-operatives generate employment of 13 million rural house-holds. in a country where unemploy-ment stands sky high, this movement would be a major boost in job creation while at the same time improving the living conditions of the masses.

Co-operatives help farmers expand market access and capture more of

the value chain mainly through get-ting involved in processing activities. with this kind of upward movement it is possible for farmers to move out of poverty.

through co-operatives small scale farmers can access fair trade certifica-tion that guarantees maximum prices for their goods as well as access funds for investment.

somalia is working towards rolling back the effects of over two decades of conflict. Co-operatives come out as a panacea for acrimony that has sim-mered over time. Co-operatives bring together people of different ethnic and political groupings hence building trust and solidarity leading to greater social responsibility. Countries previously afflicted by conflicts such as rwanda, Mozambique, bosnia and east timor

have successfully used co-operatives to foster positive relations amongst people of different backgrounds hence fueling solidarity and economic re-covery. Co-operatives are a pro-poor movement that involves the poor. in-volvement of the poor in economic growth is the best way to get people out of poverty and also represents an exit strategy from cyclic aid.

Co-operatives can form part of the major private sector players with the potential to drive national growth. Co-operatives can be efficient in the provi-sion of utilities such as electricity and water, which are essential to growth. to this end members are assured of major economic gains.

somalia needs a sound economic strategy as a fundamental requirement for human development because in the

Embracing co-operatives to foster peace and development

develOpMent


post-conflict context, broad-based eco-nomic recovery is critical for avoiding the recurrence of violence.

a key micro economic recovery en-gine the country can deploy is the use of simple microfinance models that aims at pooling the meager resources.

there may not be necessarily estab-lished macroeconomic policies in post-conflict countries in pursuit of recovery. however african societies have always, as a matter of tradition herded together for the purpose of accomplishing cer-tain tasks that would otherwise be hard to achieve as a solo endeavor.

this is the same concept that is be-ing advocated in modern day somali to bridge the country from ruins to pros-perity.

the model needed simply involves a united economic front that basically starts from families and villages then sprouts to regional and sometimes to national investment groups.

dr esther Macharia, a banker from kenya who also consults for an aid or-ganization in Mogadishu observes that co-operatives’ co-guarantee set up normally attracts financiers after the co-operative’s saving structure and lending models prove beyond doubt that they are serious with their financing.

“in a country that has been through conflict like somali, women can form simple groups with affordable contribu-tions with the aim of raising capital to provide crucial services or goods need-ed in the community. the group model is very viable,” dr Macharia told the so-malia investor.

“one outstanding model is where the money is collected and then mem-bers take soft loans until all the money is used up. during the next meeting, each member pays back her loan with an in-terest varying from 10 to 20 per cent, depending on what the group agrees on. this way, the money keeps grow-ing and more money is available for members to borrow every time,” says dr Macharia.

the loans create a rapid growth for the pooled money as the group model continues to draw benefits like training and access to formal financial services.

the model is also meant to foster

harmony amongst once antagonistic communities which is crucial in a post conflict scenario.

the united nations development Programme (undP) estimates that countries emerging out of wars are more likely to relapse if no economic in-tervention is made than those that em-brace economic recovery models.

undP advocates for self-realization. Communities must take charge of their economic destiny despite the disrup-

tions caused by the conflicts. “Post-con-flict recovery policy must begin with a robust understanding of the indigenous drivers of recovery. People who live in post-conflict settings don’t, in general, wait passively for external agents to fi-nance and direct their activities. rather, they take charge of their lives with de-termination and show hard work and in-genuity in resuming or developing new economic activities.” undP notes in one of its post conflict economic advisories seen by tsi.

recovery is likely to be sustainable if it is grounded in the full understanding of these social dynamics and institutional processes, and if it fosters local capaci-ties and initiatives.

the need for such a model in a post conflict situation is backed by the fact that when war ends, countries face seri-

ous macroeconomic problems including massive unemployment, high inflation, chronic fiscal deficits and high levels of external and domestic debt that weakens a country’s economy, leaving citizens to fend for their own growth formulas. the table-banking model acts like a small seed that grows to become a huge tree with economic benefits that cut across the masses.

in south sudan, the cooperative con-cept started growing in a small way but has since attracted the government’s attention.

by 2012, the country’s minister for co-operatives and rural development, Michael tongun Martin had begun seek-ing kenya’s advice on how to advance co-operatives in the new nation.

More than 200 agricultural and con-sumer co-operatives in south sudan emerged when the war receded and the government began plans to form an umbrella body that will support them with marketing, management, packag-ing, storage and mechanisation.

once the government structures be-gin working well, the state will definitely step in to scale up these co-operatives through enterprise funding.

“banks will not wait to be invited once they realize there is substantial amount of money circulating somewhere. they will have to reach out to these groups and this is where financial literacy comes in,” dr Macharia said.

however the struggle to have the people become independent determi-nants of their economic destinies should be supplemented, humanitarian and aids organizations are still crucial in pro-viding the necessary support to push these economic scale ups.

in agricultural areas, livelihood pro-grammes normally distribute seeds, pesticides, fertilizers and tools.

in north kivu, eastern democratic re-public of the Congo, where cattle were looted or killed and cheese making and abattoirs were no longer productive; a local ngo purchased goats and started a rotation programme. this macroeco-nomic model is considered by many fi-nancial experts as one of the best mod-els prescribed for a post conflict nation like somalia.

THE MODEL NEEDED SIMpLY INVOLVES A UNITED ECONOMIC FRONT THAT BASICALLY STARTS FROM FAMILIES AND VILLAgES THEN SpROUTS TO REgIONAL AND SOMETIMES TO NATIONAL INVESTMENT gROUpS


bOOks

bY DanIel YergIngenre: nOn-FICtIOnPage COunt: 912

it is a book delving into the history of the global pe-troleum industry from the 1850s through 1990. the book has been called the “definitive” history of the oil industry. the book was released in 1990. it became a bestseller and in 1992 won the Pulitzer Price for gen-eral non-fiction.

the text will take you through a captivating journey into the depths of oil history. You will be drawn into the center of simmering broth made up of wealth and power that is informed by oil.

these variables have shaken the world economy, dic-tated the outcome of wars and transformed the des-tiny of men and nations.

translated into 14 languages, it has received flattering reviews.“written by one of the foremost us authorities on en-ergy…is a major work in the field, replete with enough insight to satisfy the scholar and sufficient concern with the drama and colourful personalities in the his-tory of oil to capture the interest of the general public.

though lengthy, the book never drags in developing its themes: the relationship of oil to the rise of mod-ern capitalism; the intertwining relations between oil, politics and international power; and the relationship between oil and society in what the writer calls today’s age of ‘hydrocarbon Man’,” Prof. Joseph r. rudolph Jr.

somali is at the dawn of oil discovery. government of-ficials, investors, the civil society, journalists, college students and the populace in general can not assume interest in the extractive industry and not take a shot at this piece of gem. intrigues of the oil industry are as deep as they are complex.

a chapter by chapter should demystify the intricacies of the industry while arming one with the necessary equipment to serve himself and the nation accord-ingly vis-à-vis the oil industry and its concomitant.

The Prize: the Epic Quest for Oil, Money, and Power

BOOK TITLE


bY lee kuan YIeWgenre: nOn-FICtIOnPage COunt: 828

by any definition, somalia could be qualified has having more mineral resources, more agriculturally viable and geographi-cally bigger than singapore. somalia gained her independ-ence earlier than did singapore from the same imperialists, the british.

but that about marks the end of the areas that so-malia out does singapore.singapore gained her independence in 1965 and lee kuan Yew took over. he inherited a poor country that was consid-ered as a british military outpost whose income mainly relied on british military bases that were due for closure soon. Many observers were pessimistic about its future. the country was ideologically and racially split.

lee a lawyer by training however transformed the country in a span of three decades to become wealthy with its eco-nomic model studied by both the Chinese communist and western capitalists. it boasts the world’s number one airline, best airport, busiest port of trade and world’s fourth highest per capita. lee also created the least corrupt state in asia.

singapore education, housing and uniting a frac-tured people also marks lee’s enduring legacy.Question: how did lee kuan Yiew pull the rabbit out of the hat? in From third world to First: singapore story: 1965-2000 lies the answer. these are memoirs of the president recount-ing how he managed a feat that few third world countries have managed, if any.

the book recounts the legacy of an extraordinary man. the book, just like the man is smart, thoughtful, blunt and pro-vocative. it is about a man who was as radical in his thought-process as he was in his actions. he had the penchant to chal-lenge accepted wisdom of the west and was always “aiming to be correct, not politically correct.”

somalia would stand to benefit by investing in the philosophy of this legendary figure and work at meshing his ideologies with the uniqueness of the country’s needs. any leader, in any capacity, those aspiring for leadership and economists ought to give it a go.

BOOK TITLE

From Third World to First: Singapore Story:1965 - 2000

Si mag issue 4 for web

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Transcript of Si mag issue 4 for web