Life after the transition period

“Nations with extractive political and economic institutions are likely to be poor, whereas those with inclusive institutions are likely to be rich.”

– Why Nations Fail

Finally the transitional period is over for us. We now have a legitimate government that has the blessings of our people and the international community.

We took new direction when our parliamentarians elected a president that was virtually unknown in the political circles of Somalia. His election is truly a major change for our country.

I say this, because this is the first time in a very long period that our people wherever they are in the world are truly feeling hopeful and optimistic about the future of our country. There is a real feeling that things will finally change for good in our country. There is the feeling that we have finally closed the dark chapter of the past 22 years.We are all feeling this way because we have recently seen real and concrete changes on all fronts in our country.

The first real change that we have experienced is that our people have realized after a long period that they just cannot keep backing groups who don’t have their interest at heart. And our honorable parliamentarians have reciprocated that feeling into action. They responded to our feelings and aspirations when they took the step of electing a president that was virtually unknown in the political circles of our country. Their action is truly a significant gesture. It means they have decided to cut the ties to the old groups who were running the affairs of our country. It means they have realized that our country needed to move forward and the only way they could do that was to once and for all change the old ways of doing things in our country.

However, the steps we have taken so far are great and they deserve to be hailed. But we have to remember that this is just the beginning. What lies ahead is the real challenge. As we all know our country has been in anarchy for quite a long time. Throughout that period, we have been living in a stateless country where there was no law and order. Our governmental and civil institutions were none existent because they had disappeared with the civil war.

The most critical step we need to take right now is to rebuild the institutions that will safeguard our people and our country. We need to build strong institutions that will ensure the integrity of any government that comes to rule the land. Without these institutions suspicions regarding the intentions of the government will always arise and people will not be able to trust their government. We will also not be able to achieve whatever we are trying to achieve as groups who want to destabilize our country and hamper our progress will always take advantage of the lack of transparent institutions that exist. That is why building these institutions are of utmost importance to our unity and survival as a nation.

One of the biggest problems the civil war period has created in our country is that there is little trust between some of the groups who are involved in the political and social process of our country. When the last government had collapsed everyone went back to their little towns and cities. Since there was no state that could rule the people and give protection, everyone gave their allegiance to tribes who in return looked after the interest of their own members.

We now have a government that is representative of all those tribes, but still the suspicion and mistrust that existed since the collapse of the last government still exists. I am sure anyone who is fully aware of the situation in our country knows this problem exists.

Therefore, we have to find a way to deal with this issue. One of the ways we can deal with this problem is to setup a transparent system that has checks and balances. In this way everything that goes in and out will be known and on top of that no group will be able to accuse the other without any verifiable evidence.

What we also need to build are institutions that are politically and economically inclusive. I believe if we do this then the playing fields will be leveled and all the stakeholders will be able to work together and have confidence in the system and the government.

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Riding the Storm: Somalia’s Free market.

‘Necessity is the mother of invention’

-Plato

In the year 1331, It was  the great Islamic scholar/explorer Ibn Battuta  who described  Mogadishu, the capital city of Somalia  as one of the best cities of the world in which to do business. As it is evident from the date, that was a long time ago and Mogadishu has lost that recognition because of the 1991 civil war that caused many deaths, displacements, destruction and  lawlessness .

Despite all the unrest, Somalia has maintained a fairly informal economy without government intervention with a near 0% taxation. This form of free market is mostly driven by investments and finances of the local people and the Somali Diaspora. In 2009, Somalia’s GDP was estimated by the CIA to be $5.731 billion, with a projected real growth rate of 2.6%. Although the agriculture sector is the main engine of the economy and accounts for nearly 65% of the GDP, the other two sectors that can’t be ignored and have surprised many skeptics are the telecommunications and finance sector. The former, in private control has been totally revolutionized and transformed.

For instance,Golis Telecom Group now offers one of the most technologically advanced and fairly priced telecommunications and internet services to many businesses and households across many regions in Somalia. Hormuud telecom accounts for nearly $40 million a year. People are now using mobiles to transfer money and make purchases. It takes just three days to get a landline connection up and running while it takes many months just across the border in Kenya. The tele-density in Somalia is much higher than many countries in Africa and three times greater than our neighboring country, Ethiopia.

Despite the non-existence of a Central Bank for nearly 15 years, the payment system of the country is fairly advanced. This is due to the emergence of private money transfer operators(MTOs). These remittance firms known in the country as Hawalas make sure that trade, transfer of money and transactions are done cheaply and quickly. This sector only accounts for more than one billion US dollar a year.

 On the other hand, the livestock sector which accounts for 40% of the GDP and nearly half of the export earning is now giving a fierce competition to countries like Australia who have a long history of exporting livestock to the middle east. The combination of high quality and competitively priced live stocks and the near proximity to the middle east is helping  grow the Somali live stock industry. Now countries like UAE and the Kingdom of Saudi Arabia are building facilities inside the country making this sector more competitive and lucrative.

All of this is the upside of the nearly free market conditions that exist in Somalia but at the same it is worth to mention and bring attention to negative aspects this form of free market economics created in the country. Due to the lack and absence of government and regulatory agencies, many businesses and self-serving individuals have taken advantage of the anarchy in Somalia.

In the market you can easily buy and sell illegal weapons. Counterfeit products and fake currencies are in abundant circulation in the big markets of Somalia. Many Pharmacies do not have legal licenses to import and sell life-saving drugs and because of that sell expired drugs to people. This has caused many illnesses and deaths. Deforestation  is at its highest peak because of people illegally chopping  and burning down trees and exporting them as charcoals . This has had a huge impact on the environment. Many businesses and firms are also colluding and forming monopolies which makes the free entry/ exit of the market by start-ups and smaller firms nearly impossible.

This is the dark side of the free market economy we have in our country and I hope our next government will fill the vacuum it has left behind and become a government by the people, of the people and for the people.

Due to the lack of effective government for along time and the exception of these unfortunate negatives,the spirit, entrepreneurship, and business ingenuity of the Somali people have never been lost. In fact it made the Somali people more resilient, hardworking and made them realize the need to be self-sufficient and determine their own future instead of depending on the government.