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Investing in Somaliland- Is it Dubai 20 Years Ago?

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ramzy2277
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Investing in Somaliland- Is it Dubai 20 Years Ago?

Postby ramzy2277 » Tue Aug 11, 2015 4:10 am

Investing in Somaliland- Is it Dubai 20 Years Ago?
Kurt Davis Jr
Posted by Kurt Davis Jr



Somaliland. Not Somalia. Somaliland has been an independent region of Somalia proper for more than 20 years. Yet, most Westerners do not associate the former British protectorate with 20 years of independence and stability but rather with the instability and chaos of Mogadishu (which is not part of Somaliland if you did not know).

As I crossed the Somaliland border by land, I was quickly reminded of the Kurdistan part of Iraq. In similar fashion, Kurdistan is not far from Baghdad but bears little resemblance to the chaos of the Iraqi capital city. Further, Somaliland similarly bears little resemblance to Mogadishu. Rather it looks like Dubai 20 years ago. The construction and economic activity seemed out of place in Dubai 20 years ago, but now it is the norm and the epicenter of the booming Middle Eastern financial sector.
Somaliland: Emerging Economy in the Face of Contradiction

Due to the lack of official recognition internationally, Somaliland still suffers from the international trade
A tailor sews the Somaliland flag

A tailor sews the Somaliland flag, which was introduced in 1996. CC Image courtesy of Alfred Weidinger at Fotopedia.

embargo imposed on Somalia. Still, Somalians have made a name for themselves as Africa’s most skilled traders. As keen businessmen working within constrained parameters, Somalians are a driving force in Africa’s informal market.

Sitting down with the Somaliland Central Bank Governor Abdi Dirir, you learn quickly how informal the Somaliland economy is. “The GDP of the Somaliland economy is possibly $1.5 billion,” said Mr. Dirir. In response to my speculation that the Somaliland economy could range from $3 to $4 billion, the governor easily replied “it is possible.” The movement of money throughout the Somaliland economy is a misnomer for modern day economic growth. If you are looking for commercial banks and “visa accepted here” signs, you will be highly disappointed.

According to the Governor, the Somalian Schilling maintains a stable exchange rate except for the minor fluctuations that occur when the diaspora visit this territory usually at the same time for a holiday week. During this time, a huge influx of Somalians brings U.S. dollars into the economy, creating a minor boost in the dollar supply. To say informality characterizes this economy would simply be an understatement.
From Traders to Entrepreneurs

Entrepreneurship is the second best characterization of the Somaliland economy. If you ask a local Somalian to introduce you to some local entrepreneurs, he will ask if you are staying for a couple weeks. A short visit will not do the country justice.

Somaliland is a country of more than 20 newspapers, more than 15 universities, and several telecom operators. For a republic that has around 4 million inhabitants, these types of numbers are both impressive and concerning. In the world of media, newspapers come and go as the best ones rise to the top and the defunct ones disappear. As one local Somalian described the situation, one day a guy is a newspaper entrepreneur and the next day he is pitching you on a new agribusiness idea.

In the world of education, starting a new university may seem as easy as a hobby in Somaliland. Yet, in reality, it is an area of opportunity where the local population is starving for increased education. At the same time, it is another manifestation of a growth opportunity for government regulation. As the government begins to implement a quality standard around education, the number of universities should shrink and the quality of graduates should improve. Despite all the challenges in sectors, such as news media and education, optimism must be taken from the current situation.

“Free enterprise is Somalia,” according to the Minister of Planning Dr. Sa’ad Ali Shire, “because the prior circumstances of the country required the private sector to do a lot of work.” The private sector effort in creating modern day Somaliland can never be fully appreciated. “It is the private sector building this country,” added the minister. Calling Somaliland the emerging Silicon Valley for its creativity may be an overstatement today but give it time.
Booming Telecom

The Somaliland telecommunication industry is a beacon of the championed free enterprise system in Somaliland. Six telecom operators populate the bandwidth of Somaliland. Some telecom experts speculate that mobile penetration could be as high as 35 to 40 percent as of January 2013. The amount of companies and the accompanying penetration rates are a stark contrast to the estimated 3 to 5 percent penetration rates at the turn of the century. Telesom is the biggest player in the market with more than 85 percent of the mobile subscriber market and the only firm with significant market power. SomTel is the second largest operator with a rapidly growing number of internet users. The presence of multiple operators, despite the imbalance in market share, has made Somaliland one of the cheapest mobile phone environments in the world.

And that’s just one example. Next week we’ll look at the challenges facing the booming telecom industry, and dive into mobile banking, and the import/export business in Somaliland, which is centered around Port Berbera.

———————-

Kurt Davis Jr. is a Senior Associate with Schulze Global Investments in its Ethiopia office. He is a private equity professional and early business/start-up consultant with experience in Sub-Saharan Africa and North Africa, Asia, Europe and United States. He is an avid traveler who has been to 60+ countries throughout the world in search of new investment opportunities, new people, and a better understanding of the world

Source:
http://www.africa.com/blog/investing-in ... years-ago/

ramzy2277
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Re: Investing in Somaliland- Is it Dubai 20 Years Ago?

Postby ramzy2277 » Tue Aug 11, 2015 4:13 am

Investing in Somaliland (Part II)
Kurt Davis Jr
Posted by Kurt Davis J


Last week, we looked at investing in Somaliland, whose economy is characterized by its informality, and entrepreneurship. This week, we delve into different sectors, starting with the telecommunications market, which is booming, but still facing many challenges.
Booming Telecom

Sitting at a meeting with business leaders, it is common to see each person with two phones (one for Telesom and one for SomTel). The telecommunications market is completely unregulated. Accordingly, Telesom users cannot contact SomTel users unless they keep a second SIM card for the SomTel or keep a second phone with a SomTel SIM card. Yes, this situation seems a relic of the early mobile phone days and a sad manifestation of bad government oversight. Such lack of cohesion in the telecommunications market and a heavily underdeveloped broadband system frustrate the unaware traveler and investor.

At the same time, the change in Somaliland telecommunications cannot be understated. The airport in Berbera has wireless internet, often a rare commodity in African airports. In the eyes of local NGO workers, the Somaliland internet is one of the fastest in the Horn of Africa. Such a compliment only indicates a small advantage for Somaliland heading towards the finish line but does not say much for the current quality. However, given Somcable’s recent deal to offer FTTA (fiber-through-the-air connectivity) access to subscribers, internet speeds should pick up. Local Somalians talk of great expectations with this cable, specifically the potential mobile phone interconnectivity and the elimination of the two SIM card lifestyle.
Mobile Banking Before Bricks and Mortar

Zaad services in SomalilandTo further understand the growing strength of the Somaliland telecommunications industry, consider the banking industry in Somaliland. Somaliland is the epitome of the African informal market. You can ultimately pay with Ethiopian Birr, Euros, U.S. Dollars and any other exchangeable currency while in Somaliland. Local money changers will sit on the side of street with stacks of local currency ready to exchange with passersby. As one visiting British tourist stated it, this type of easy on-the-street bartering could not exist in most Western countries where crime would likely wipe out such culture. Yet, this is life in Somaliland.

More surprising to the average observer in Somaliland is that most transactions require no cash. Somaliland has completely lept over the brick and mortar stage of banking. Most transactions can be accomplished through Zaad – a money transfer system provided through Telesom. Almost everyone in the country has a Zaad account particularly because it makes transactions a simple two second interaction. Once you add credit to your account, you can use your phone for anything, from paying for your gas at a station, to buying a Coke at a small roadside stall. This type of quick exchange is something the West will not see for years.

While mobile banking may be the de facto banking system of Somaliland, the recent Central Banking Act passed by the Somaliland Parliament opens the door to commercial banking in the near future. “Commercial banks should arrive in 3 months,” says Somalialand Central Bank Governor Abdi Dirir. “Come invest, the commercial banks will make investing easier.” He speaks to the obvious complication of investing in a country where currently you would have to carry the investment money in a suitcase or transfer via a mobile phone. Commercial banks and a lax tax system will surely help investment. For those who can swallow risk, there is huge opportunity to be had. As Minister of Planning, Ali Shire characterizes the situation, “investors need to just come see what is happening and they will be sold.”
The Port of Berbera

Port Berbera in Somaliland

On the way out of Hargeisha, travelers by plane must take a 3-hour bus to Berbera to get to Somaliland’s only functional airport. Upon arrival in Berbera, the majestic coastline grabs your attention. The presence of numerous ships at sea perplexes those with a Mogadishu-perspective of Somaliland.

Somaliland has a coastline to the north along the Gulf of Aden that covers more than 850 km (over 520 miles). The Somaliland Administration through the Berbera Port Authority (BPA) owns and operates the Port of Berbera. The former Soviet Union built the port as a military base and a challenge to the influence of the U.S. and its allies in the Horn of Africa in the 1960s. When the regime of General Mohamed Siad Barre cut ties with the former Soviet Union, the U.S. assumed control of the port as its new military base in the 1980s. The former Soviet Union originally constructed 300 meters (nearly 330 yards) and the United States added 330 meters (361 yards). Today, the port has a storage capacity of one million tons and can accommodate more than 1,000 ships per year depending on length and size of the ships.

While the Port of Berbera is only mere reflection of the Djibouti ports, it presents a strategic and potentially attractive alternative to the Djibouti corridor to the Horn of Africa. As the Horn of Africa, particularly Ethiopia and Sudan, takes off economically, import-export corridors and sea routes will become ever more important. The Djibouti corridor serves as Ethiopia’s primary access to the sea such that any congestion in Djibouti means a 3 to 6 month delay for Ethiopian commerce. While the Djiboutian government prioritizes the expansion of its ports, the expansion of the ports still cannot outpace the long-term growth of the economies in the region. Additionally, the Djiboutian custom taxes and duties will not decrease anytime soon.

The expansion of the Port of Berbera could cost more than $65 million. Ali Omar Mohamed, in charge of the Port of Berbera, recently stated that he imagines the port becoming 20 meters (22 yards) deep compared to its current 11.5 to 12 meters depth. At 20 meters, the port could accommodate the world’s largest container ship, weighing 300,000 tons. The port currently only accommodates 35,000 tons. While the expansion of the port may seem a pipe dream to many Western observers, it is very much a documented expectation for the future of the Somaliland. Just take a look at the National Develop Plan (2012 – 2016) for Somaliland. Still, attracting private investors into the port remains an ongoing process.
When Somalia is Somaliland

“There is great hope for Somaliland,” says Minister Ali Shire, “but more private investment is needed.” Investment in Somaliland carries its risks and rewards. The minister and the rest of the returning Somalians diaspora believe in the long-term rewards outweighing the benefits. Walking around Hargeisha, commercial capital of Somaliland, will make you preach the same thing.

Source:

http://www.africa.com/blog/investing-in ... d-part-ii/

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Re: Investing in Somaliland- Is it Dubai 20 Years Ago?

Postby LiquidHYDROGEN » Tue Aug 11, 2015 5:09 am

Hargeisa alone is richer and more developed than Dubai was 20-30 years ago. But we don't want to follow the gulf arab route. We should be aiming for industry and manufacture like the east Asians. For that we need a more technically skilled population. At the moment, there is a huge segment of the population that is illiterate - it's 2015!

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Re: Investing in Somaliland- Is it Dubai 20 Years Ago?

Postby axmed89 » Tue Aug 11, 2015 5:17 am

Hargeisa alone is richer and more developed than Dubai was 20-30 years ago. But we don't want to follow the gulf arab route. We should be aiming for industry and manufacture like the east Asians. For that we need a more technically skilled population. At the moment, there is a huge segment of the population that is illiterate - it's 2015!
Dubai? What planet are you on? It's the most least developed country in the world. It does'nt even have basic infastructure like roads, running water etc how can it be dubai? Lay off the khat.

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Re: Investing in Somaliland- Is it Dubai 20 Years Ago?

Postby mahoka » Tue Aug 11, 2015 5:20 am

Hargeisa alone is richer and more developed than Dubai was 20-30 years ago. But we don't want to follow the gulf arab route. We should be aiming for industry and manufacture like the east Asians. For that we need a more technically skilled population. At the moment, there is a huge segment of the population that is illiterate - it's 2015!
Dubai? What planet are you on? It's the most least developed country in the world. It does'nt even have basic infastructure like roads, running water etc how can it be dubai? Lay off the khat.
Yemeni runaway slave, dubai is not a country. Nor was it developed 20 years ago. Don't comment on things u don't know about

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Re: Investing in Somaliland- Is it Dubai 20 Years Ago?

Postby axmed89 » Tue Aug 11, 2015 5:26 am

Hargeisa alone is richer and more developed than Dubai was 20-30 years ago. But we don't want to follow the gulf arab route. We should be aiming for industry and manufacture like the east Asians. For that we need a more technically skilled population. At the moment, there is a huge segment of the population that is illiterate - it's 2015!
Dubai? What planet are you on? It's the most least developed country in the world. It does'nt even have basic infastructure like roads, running water etc how can it be dubai? Lay off the khat.
Yemeni runaway slave, dubai is not a country. Nor was it developed 20 years ago. Don't comment on things u don't know about
Thats not even the point. The point is how can someone compare dubai to a place that does'nt even have roads, running water or a sewage system, in 2015!

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Re: Investing in Somaliland- Is it Dubai 20 Years Ago?

Postby Rambie » Tue Aug 11, 2015 5:50 am

You don't seem to know
that Dubai used to be a town 30 years ago.
UAE is a relatively young country that was established
just 40 years ago.

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Re: Investing in Somaliland- Is it Dubai 20 Years Ago?

Postby LiquidHYDROGEN » Tue Aug 11, 2015 7:25 am

Hargeisa alone is richer and more developed than Dubai was 20-30 years ago. But we don't want to follow the gulf arab route. We should be aiming for industry and manufacture like the east Asians. For that we need a more technically skilled population. At the moment, there is a huge segment of the population that is illiterate - it's 2015!
Dubai? What planet are you on? It's the most least developed country in the world. It does'nt even have basic infastructure like roads, running water etc how can it be dubai? Lay off the khat.
Who let the Special kid have access onto the internet again?

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Re: Investing in Somaliland- Is it Dubai 20 Years Ago?

Postby dvision01 » Tue Aug 11, 2015 7:29 am

you somalilanders are dreamers, i give you that :lol:

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Re: Investing in Somaliland- Is it Dubai 20 Years Ago?

Postby mahoka » Tue Aug 11, 2015 7:59 am

you somalilanders are dreamers, i give you that :lol:
rather be a dreamer then a starver

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Re: Investing in Somaliland- Is it Dubai 20 Years Ago?

Postby PrinceDaadi » Tue Aug 11, 2015 8:11 am

There were number of factors which contributed to Dubai success which is not available in Hargeisa starting with a visionary leader like the father of current ruler of Dubai.

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Re: Investing in Somaliland- Is it Dubai 20 Years Ago?

Postby theyuusuf143 » Tue Aug 11, 2015 9:45 am

There were number of factors which contributed to Dubai success which is not available in Hargeisa starting with a visionary leader like the father of current ruler of Dubai.
Lool an Arab Badoun have no vision he just have money. Imagine if hersi gaab have plenty of Oil money. in fact hersi gaab has his own documented vision 2030. including expanding Berbera port. Bringing cheap electricity. rail and high ways. Complete road network all over the country. Introducing Drought tolerant Plants which Arabs still don't have. Sea water desalination again Arabs have no this vision. Establishing strong airforce as soon as arms embargo are lifted.

Image

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Re: Investing in Somaliland- Is it Dubai 20 Years Ago?

Postby cheifaqilbari » Tue Aug 11, 2015 9:45 am

A very good read, im sure Somaliland can archive many of the development goals of gulf states and to do that we must create a culture of hard work , and sacrifice .

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Re: Investing in Somaliland- Is it Dubai 20 Years Ago?

Postby PrinceDaadi » Tue Aug 11, 2015 10:54 am

There were number of factors which contributed to Dubai success which is not available in Hargeisa starting with a visionary leader like the father of current ruler of Dubai.
Lool an Arab Badoun have no vision he just have money. Imagine if hersi gaab have plenty of Oil money. in fact hersi gaab has his own documented vision 2030. including expanding Berbera port. Bringing cheap electricity. rail and high ways. Complete road network all over the country. Introducing Drought tolerant Plants which Arabs still don't have. Sea water desalination again Arabs have no this vision. Establishing strong airforce as soon as arms embargo are lifted.

Image

It seems you have never read the history of Dubai, go and read history of Dubai then we discuss whether hersi can match the former ruler of Dubai.

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Re: Investing in Somaliland- Is it Dubai 20 Years Ago?

Postby Kaafiye » Tue Aug 11, 2015 10:59 am

Hargeisa alone is richer and more developed than Dubai was 20-30 years ago. But we don't want to follow the gulf arab route. We should be aiming for industry and manufacture like the east Asians. For that we need a more technically skilled population. At the moment, there is a huge segment of the population that is illiterate - it's 2015!
InshaAllah this becomes a reality :up:

Somaliland needs industry, manufacturing, and a strong middle class :up:

Somaliland should emulate the development of countries such as Chile. Chile was once extremely poor but now it's a prosperous, developed country with a large middle class.


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