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ECONOMY-SOMALIA: Walking The Line Between Business and War

Najum Mushtaq

NAIROBI, Nov 14 2008 (IPS) - A doctor in Mogadishu gives medicine to a man complaining of an upset stomach. ‘‘This medicine won't work,’’ groans the patient, ‘‘I got sick after eating expired food; only an expired medicine will cure it.’’

Such real-life anecdotes livened up a two-day seminar on the otherwise grim and tragic history of commerce and economy in Somalia's capital since 1991 when the state collapsed, leading to anarchy and a seemingly unending civil war that rages until today.

Before the war there were 23 major markets in Mogadishu; now there are only two—the main Bakara Market, divided into 46 sectors, and the smaller but equally vibrant Souk Ba'ad. The biggest partner of Mogadishu's business community is Dubai with a total annual trade volume of 600-700 million dollars.

Organised in Nairobi by the Norwegian Institute of Urban and Regional Research, the recent seminar presented the findings of a research team led by Dr Stig Jarle-Hansen, based on a survey of Mogadishu's economy from 1991 to 2008.

The meticulous study covers different aspects of doing business in a civil war context—from its ethics to logistics, and from the ‘‘novel’’ means of raising business capital to the more ‘‘orthodox’’ techniques of survival such as raising a militia to protect business interests.

More than 150 companies and business concerns in four districts were studied by the Jarle-Hansen team made up of university students and interns. And among those invited to discuss and critique the report was a group of leading Somali businesspersons, academics from the Mogadishu University and civil society activists.

‘‘The economy of war depends on the structure of war,’’ said Jarle-Hansen. On that basis, he said, Mogadishu's economic history can be divided into five distinct periods: the era of destruction (1990-93); the United Nations (UN) interlude (1993-95); the era of fragmentation (1995-99); the time of the weak warlords (1999-2006); and the era of unification (2006-08).

During the first wave of war between clan militias fighting for control over the capital in the wake of President Siad Barre's fall, most of the businesses were destroyed and much of the capital was moved to banks outside the country.

‘‘Demand was skewed towards the basic necessities such as food and clothes. The people had no purchasing power. Economic actors had to depend on warlords.

‘‘And plundering became one of the means of getting starting capital,’’ according to Jarle-Hansen, giving the example of a famous businessman-cum-warlord who had city phone lines and cables uprooted to create a market for his copper stockpile.

As banks, too, collapsed with the state, informal financial mechanism filled the vacuum. Hawala, or the hundi system, took over as the main means of money transactions. Patronage of one warlord or the other—or many—became necessary to do business.

The city's infrastructure and its traumatised population never recovered from the shock of the first wave of violence, characterised by the Four Month War between the forces of warlords Farah Aideed and Ali Mehdi.

The following two years of UN intervention through UNISOM-I gave the business community in Mogadishu a new impetus. New guys with money came to town. Fuel imports became a major business. Demand for meat and seafood also increased.

Many new companies emerged, vying for UN contracts. Many businesspeople who had to flee the city returned.

The mobile phone was introduced in Mogadishu for the first time and it spread throughout the country like the plague. Telecommunication, mobile phones in particular, has since grown into perhaps the most efficient and successful business in Somalia, flourishing despite—or because of—the persistent conflict.

However, for those like Jarle-Hansen who are trying to collect data and put together a picture of the economy during the UN interlude, this period is the most intractable to investigate.

‘‘While other political and economic actors have been forthcoming and transparent in sharing information and data with us,’’ said Jarle-Hansen, ‘‘We could not get the same level of cooperation from UN organisations, especially their procurement departments, which leaves us with a significant gap in the project.’’

The UN withdrawal in 1995 was a blow to economic activity. Several companies catering exclusively to international organisations disappeared as soon as their clientele left. Another side-effect of the UN presence was the appearance of new warlords who had developed a stake in the way business was being conducted in a Mogadishu with a UN presence.

Post-UNISOM the war scene changed. Compact warring entities split. The fragmentation of organised militias meant smaller fiefdoms for the new and old warlords whose influence and power weakened both in terms of the space they controlled and the people they commanded.

‘‘Suddenly, for the business community, the warlords were not good patrons,’’ said Jarle-Hansen. The result was a growth in the private security sector. Madani, or local vigilante groups drawn from the communities in which the businesses operated, began to provide a security cover.

The business community grew stronger and more self-confident. The devastated Mogadishu got a new manufacturing sector. In the late 1990s pasta and candy factories were set up.

To this day, the Bakara market's own security system, funded by the business community with armed recruits from local communities, remains intact.

Jarle-Hansen explains that during the period of the weakened warlords, inter-company solidarity within the business community was strengthened and they came to rely on their own devices for protection against looting and militia attacks.

He cites the example of Hurmood Telecom, a major provider of communication services, 50 percent of whose staff were security guards, each of them getting 70 dollars per month.

‘‘When the 2004 transitional national government (TNG) was installed, we gave them our cooperation and donations, and surrendered our arms,’’ explained Syed Ali Mohammed Siyad, the chief of the Bakara market business association which is responsible for providing security to traders

‘‘We did the same when the Islamic Courts gained control and the business community has also been financially supporting the transitional federal government (TFG) since the ouster of the Islamic courts.

‘‘Except for the six-month interregnum of the rule by Islamic Courts (June-December 2006), neither the TNG nor the TFG have been able to provide us with adequate security. So we have to keep a minimum level of arms and armed men on our own to ensure that business remains functional,’’ Siyad told IPS.

Jarle-Hansen terms the last two years in the Mogadishu conflict as the period of unification. Instead of multiple warlords and factions, there have been two major, quite compact groups fighting to gain control of the historical capital of Somalia.

‘‘After more than a decade and half, the business community have to deal with state-like structures,’’ he said. The Mogadishu port reopened in 2006. Investment from the Somali diaspora has also increased.

But as the fighting goes on, intensified by the Ethiopian military intervention and continued presence since early 2007, these state-like structures have only added to the problems of doing business in Mogadishu.

In October this year the Islamic Courts Union (ICU) and the UN-backed transitional government entered into a peace agreement.

But the extremist insurgents represented by the al-Qaeda linked Al-Shabab (the erstwhile youth wing of the ICU) oppose the peace deal and continue to gain ground militarily, last week capturing the Merka port, 50 miles from Mogadishu.

The Bakara market has often been a target of heavy shelling by the TFG and Ethiopian troops who allege that insurgents use the safe areas in the market to launch mortar attacks.

The chief of the traders' association, however, denies the allegation that they provide support to the insurgents. He claims political neutrality and cites the business community's cooperation with successive warlord governments and the ICU as a proof.

Ismail Abdillahi, head of the Banadir Business Association, quotes a Somali proverb to explain the business community's political role and how it would prefer environs of security and peace to any particular brand of government.

‘‘We have a saying that ‘whoever marries my mother is my uncle’,’’ said Abdillahi. ‘‘Whoever rules Mogadishu, our main concern and interest is business growth which can be possible only when the city regains a semblance of normality and the businessmen have a sense of security.’’

Given the new dimensions of violence – Al-Shabab being poised for battle with its parent organisation the ICU – the prospects of peace seems remote. For the foreseeable future, it seems business as usual in Mogadishu.