In Somalia, It’s All Business and No Government

It has become a common sight here: barefoot stevedores, their glistening ebony faces powdered with dust and sand, staggering up from the ocean onto a sand beach that has become the main trading port of this ravaged city in the Horn of Africa.

On their backs they lug 110-pound sacks of Indonesian cement, Brazilian sugar or flour from the United Arab Emirates. Others clamber atop barges to discharge crates of foreign food, electronic goods, car engine parts or generators.

A fee of $1.50 per box covers the cost of ship-to-barge transportation, offloading and handling at El Maan in northern Mogadishu. There are no import taxes. Anyone can bring in anything--a radical departure from the days when only entrepreneurs with hard-to-obtain government permits could conduct trade, and the ability to bribe and cajole officials determined business success.

A 10-year power vacuum, vicious clan fighting, famine and a disastrous U.N. mission followed the overthrow of the socialist regime of dictator Mohamed Siad Barre. But the violent demise of central authority has permitted an explosion of trade and private enterprise. Amid the concrete jungle of rubble and ruins, workshops and kiosks are brimming with activity. New buildings are going up in many parts of town. Locally owned companies have stepped in to provide electricity and telephone service. Recent months have seen the creation of the country’s first private television and radio station, a pasta factory and many other new enterprises.

“Privatization is booming,” said Abdulkadir Yahaya Ali, a Mogadishu-based consultant for the War-Torn Societies Project, an international nongovernmental organization. “In the past, there was no motivation and everything was monopolized by government.”

In short, it has been a while since Somalia’s business sector functioned so well. All the same, many Somalis would rather see the return of a national government, and their efforts to come back from rock bottom might provide a lesson for all of Africa--a continent where overbearing government still tends to crush entrepreneurship.

A central administration would give Somalia legitimacy and could engage in nationwide infrastructure development, Somalis say. A federal authority would mean the reemergence of public undertakings such as hospitals, schools, transportation and law enforcement.

In the absence of a government, religious groups emphasizing studies from the Koran typically run schools. Public hospitals collapsed, but doctors have joined to establish private hospitals and clinics that charge a nominal fee but sometimes also treat poor patients free of charge.

But perhaps the most important of these functions is law enforcement. Clans led by gun-toting warlords and their supporters have filled the void. Anyone who owns anything of value has to hire truckloads of armed militiamen to protect them. While businessmen long for the reestablishment of a central bank to provide credit and loans, others are anxious to again be able to freely travel outside of Somalia with valid travel documents.

Even the issuance of passports is in the hands of entrepreneurs. Virtually worthless Somali documents, leftovers from the days of central government, are on sale in the market where businessmen will affix your picture and stamp them for $15 each.

Abdulkadir Osoble Ali turns a huge profit as director of Benadir Maritime & Port Operations, which spent about $1 million to develop the El Maan beach into a port following the closure of Mogadishu’s official seaport in 1991.

But he too sees the need for a government. “If you are a trader or business person, maybe it’s better than before,” said Osoble, a former resident of Alexandria, Va. “But the overall situation is not better.”

“It is much harder to run and set up a business when you have to set up your own security, you have no electricity and you have to power your generator,” said Ahmed Abdisalam, who last December helped set up Horn Afrik, Somalia’s first private television and radio station. “A government which can take care of [these services] is good. On the other hand, now you don’t have the limitations that a government would impose.”

The main challenge for a new government would be to preserve and promote incentives for private enterprise while providing some checks and balances. What many people here say they want is simple: a central authority that provides basic services but refrains from interfering in business and in the lives of private citizens.

In Africa, that is close to a revolutionary idea.

“They want a government, but it will not be the type of command-and-control government it was before,” said Michel Del Buono, a senior economist with the Nairobi office of the United Nations Development Program. “They want central control but not too much control at the center.”

Such a setup is rare on a continent known for the big-footing influence of government in all sectors of life. The political fate of Somalia, infamous for the failed 1990s United Nations humanitarian mission, is being decided at a reconciliation conference in neighboring Djibouti. Thousands of delegates, including clan elders, ethnic minorities and women, who until now have been politically marginalized, are expected to choose a transitional government and a president.

The caretaker administration is to govern for three to five years, after which the country will hold multiparty elections. Some key Somali warlords have boycotted the meeting, which has won considerable support from the international community and has largely sidelined the warlords.

Local political analysts and foreign diplomats attending the conference insist that the absence of the warlords will have little impact on the outcome of the talks because most other segments of society are determined to have peace and a central governing authority.

“[People] are so tired,” said Yahaya, the research consultant. “They cannot travel. They don’t have the freedom to move. Ten years is enough time. We are tired, fed-up.”

He added that those who are not participating in Djibouti are now seen as the “enemy of the people. They are not seen as patriotic.”

“People have come to the conclusion that it is no longer about clan,” said Abdisalam, the media executive. “It’s about [personal] interest. People have come to the stage where they no longer feel their warlords or clans can deliver.”

The warlords could hamper Somalia’s quest for peace; after all, they have the guns. But analysts believe that the key to success for any new administration will be its skill at managing the business community.

“The [new] government can establish laws and regulations, but it cannot monopolize things and take them out of the hands of the private citizen,” Yahaya said.

“The businessmen need everything a government can give them in terms of sovereignty, insurance and protection for foreign trade,” said Del Buono, the development economist. “They also need domestic law and order.”

Indeed, security is key for Somalia’s burgeoning business community. At least 200 of Osoble’s 500-strong work force are guards--more specifically, gun-toting militiamen. They use 23 “battle wagons,” or pickup trucks, each equipped with a 37-millimeter antiaircraft gun, antitank rifles--and a cellular phone.

Abdi Mohammed Sabrie, the manager of Somalpast, the country’s first private spaghetti manufacturing company, pays 30 armed guards to protect the compound where he and his partners also make plastic bags and run a bakery.

“Before the civil war broke out, you needed no civil guard for business or personal security,” Sabrie said. The gunmen cost him about $3,000 a month--a large sum for a nation where the average person makes less than $50 per month. Sabrie spends an additional $5,000 a month on fuel to power the pasta factory equipment.

“A government with sound economic trade policies would benefit us, 100%,” he said. “Now business people have to provide security, power, water and a seaport [for themselves].”

Many of them have taken advantage of the absence of a central authority to provide such basic services. A proliferation of private telephone companies has made many individuals rich while helping to contribute to Somalia’s survival. In Mogadishu, three companies--consisting primarily of a satellite dish, a foreign carrier and local offices with booths for callers--compete for business.

Calls to anywhere in the world cost less than $2 a minute, said to be the lowest price on the continent. Local calls are free. Telephone service has enabled traders to make deals across the Gulf of Aden with the Arabian Peninsula, a welcome improvement from the days of the old regime when making a business call often required physically crossing into a neighboring country. Residents are also able to keep in contact with exiles or family members living abroad. But there is a catch.

Mogadishu’s telephone companies are not interconnected, so customers can call only those subscribing to the same service, making it necessary to have three separate phone services. Efforts to get the ventures to unite have so far failed, because, according to Mohamed Abukar, a field coordinator for the U.N. Development Program, “everyone wants his own area of control.”

About 75 generating stations in Mogadishu provide city residents with electricity. The Elman Electricity Co. runs eight of them, each housing a huge diesel-powered electrical generator.

The company’s customers, about 6,000 households and businesses, can choose the number of hours of electricity they wish to have per day and exactly how many lightbulbs and outlets to power. According to Mohamed Mohamoud, Elman’s vice chairman, the average family uses five bulbs and three outlets, and spends about 55 cents a day. The company provides free electricity for street lights, mosques and private schools.

Clan membership is largely irrelevant to business, and the entrepreneurial spirit infuses the lives of small tradesmen. At Mogadishu’s central market, a hodgepodge of dilapidated kiosks set amid whitewashed and bullet-scarred concrete structures, money changers sit behind bundles of Somali shillings.

In the absence of a central bank, businessmen rely on them to exchange foreign currency. One U.S. dollar currently trades at 10,000 Somali shillings.

Although they can earn enough to live comfortably, even the money changers said they were tired of having to fend for themselves and would welcome the return of a central authority. “I will be happy if a new government comes back,” said Ali Barre, a former civil servant who got into the money-changing business two years ago with $2,000 of savings. “Everything will be safe. There will be peace. Our children will go to school.”

“Everyone is expecting a government to come out of Djibouti,” said Hajji Ali Ibrahim, who sells passports out of his rundown photo studio in the market. “We don’t sleep at night. We sit and watch the conference on television.”

Such people can watch the conference because of one of the private enterprises--Horn Afrik, the television and radio network that opened in December. From 2 p.m. to midnight each day, residents of the capital are treated to a cocktail of news and current-affairs programs interspersed with Islamic readings.

The proceedings at the Djibouti meeting are beamed live into the living rooms of capital residents every evening, and viewers are encouraged to call in and air their thoughts.

“When a government comes, if they tried to shut us down, they would have a challenge on their hands,” said Abdisalam, Horn Afrik’s director of programs. “How the government deals with the entrepreneurial spirit will be very interesting.”

It also will be crucial in maintaining long-term peace and stability, since the ability to trade freely has transcended clan hostilities and done much to further reconciliation. “Somalis are united when it comes to business,” said Mogadishu faction leader Hussein Mohamed Aideed.