Mogadishu (HAN) April 10, 2014 – Somali officials say a stronger economy is vital to prolonged peace. The remittances lifeline, which is essential for survival to some 41 percent of Somalia’s population, is threatened by the potential cutoff of access by Somali money transfer operators to Western banks. For Somalia, the UK and the US are the two top remittance-sending countries, but most banks refuse to deal with the money transfer operators. One of the largest still handling such transactions has been Barclays Bank, which decided last May to close off these ties because of the alleged risk of financing terrorism. This is according to Africa Focus.
“Ever since the outbreak of the tragedy in Somalia, UAE has participated in all efforts aimed at reaching a political solution for the war there, and has repeatedly declared its readiness to exert further efforts for the achievement of this goal. It also realized that the way to deal with this tragedy is to follow the investment and re-construction path,” UAE Emir said.
Participants at the Somalia Investment Summit in Dubai painted a different picture of the East African country than the one the world has become familiar with.
“If in past years the image was hunger, piracy, terrorism, today you will see a different scenario,” noted Ali Mohamed Gedi, the former prime minister of Somalia’s Transitional Federal Government.
“You will see a light at the end of the tunnel. You will see hope, and that life is coming back. This is the image we now want to show.”
Growing stability in Somalia, a country which is grappling with a two-decade-old civil war, can largely be attributed to outside intervention.
Over the past year, African Union troops helped drive al-Shabab militants from major cities. And out at sea, international naval patrols led to a significant decrease in pirate attacks.
But Gedi warned that the outcome of these efforts could be short-lived unless more is done to address the underlying problem of poverty among the population.
“The young generation who have been employed by al-Shabab they are not ideologically radicalists, but [do it ] for their survival,” he explained. “So if we create jobs for them I believe that they’ll play a role in the stabilization and the security of the country.”
Hassan Dudde, the chairman of the Somali Economic Forum, agrees that the lure of illegal activity, especially piracy, will always be great when employment opportunities do not exist. He said attracting investment to Somalia now, while the security situation is improving, is crucial as it will create jobs and help promote safety not only in the country, but throughout the region.
“I think what the international organizations and the international community is starting to realize is that bringing troops to Somalia will not be the answer to this problem,” Dudde said. “When people have jobs and a better life they will be less likely to get in trouble.”
While conditions in Somalia have been improving they are by no means ideal for investors. In addition to safety threats and the lack of a central government, corruption is rife and there is an absence of a skilled workforce.
There is also no secure legal framework for foreign investors, although authorities are reportedly in the process of forming new legislation.
“Investors are a bit afraid of going into situations like that, but there’s a huge opportunity,” noted Hirsi Dirir, CEO of Dahabshil Bank, which operates 130 branches in the country.
“The GDP growth of Somalia is equal to Ethiopia; it’s actually higher than some of the stable African countries. Somalia is growing, the economy is growing.”
Analysts say Somalia has substantial potential in natural resources, including agriculture, livestock, fishing and hydrocarbons. Its telecommunications sector is also expected to attract future investors.
Although an increase in stability has led to a growing number of investments from overseas, overall activity remains weak.
The United Arab Emirates, Oman and Yemen are the leading investing nations in Somalia. Original report Part published by: BY PHILLIP WALTER WELLMAN and the Geeska Afrika Online Business Reporter in Dubai, UAE.
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