18 May 2012

Somalia: Mogadishu On the Up

Photo: Kate Holt
Displaced women and children.

Mogadishu — It is Friday morning in Mogadishu and Lido beach presents a scene reminiscent of seaside towns around the world. At the top of the beach, women sit with their wares, selling water and ice-lollies from cool-boxes.

The middle-beach is dominated by young men playing football using driftwood as goalposts. At the water's edge, boys and girls, the latter heedless of their long flowing garments, hurl themselves into the waves or bob on the surface like apples.

"We're on holiday", says Ibrahim, a Londoner in his twenties who was born in northern Somalia. Ibrahim is travelling in a group of 20, all from the UK. "We came here for the beaches", he said. On the road behind him, blue lettering advertises the Indian Ocean Star, a new beach-front restaurant and bar.

Bashir Osman has facilitated journalist visits for years and now plans to capitalize on the swelling ranks of visitors like Ibrahim who are choosing, for both business and personal reasons, to come to bullet-ridden Mogadishu. Osman has purchased 500-metres of beachfront land a few kilometres south of the international airport compound, where he hopes to open a restaurant and eventually a hotel. His infectious fondness for Mogadishu belies a strong philanthropic streak.

People are returning and reconstruction is under way. According to the UN Refugee Agency (UNHCR), 3,800 people returned to Mogadishu in March alone. From afar the city glints with shiny new tin roofs dotted among dust-covered ruins and camps. Private operators are offering electricity in the old town for US$30 a month. Fishermen are enjoying a healthy demand for shark-fins from Dubai and the Middle East, with a shark fetching as much as $500. Building materials lie in piles on street corners, where camel's milk and cappuccino vendors ply their wares.

International NGO and diplomatic missions are also coming back - according to a UN source, Britain has already identified the plot for its permanent diplomatic base on the airport compound - and property prices have spiked. According to Osman, a 100-square metre plot near K4 in the city centre sold recently for $2million.

"The key is security", said Abdullahi Godah Barre, minister for planning and international cooperation, of the city's renovation. While African Union troops have largely taken Mogadishu and continue to push beyond the city limits to secure outlying areas where Al-Shabab operatives remain obdurately in place, the Somali capital is still in counter-terrorism mode, and kidnap and ransom, improvised explosive devices, and suicide bombers remain an everyday threat.

Turkish investors

But there are investors willing to look past this. "We have a lot of interested parties, for example the Turkish government and Turkish business people", said Mohamed Ibrahim, deputy prime minister in Somalia's Transitional Federal Government (TFG). In March, a delegation of Turkish investors met Somali officials to discuss opportunities. "These are the first willing investors on the Turkish side," Ibrahim said.

It is estimated that 25 percent (or even 50 percent according to some sources) of Somalia's GDP comes from remittances abroad. In what is known as the economy without a state, the World Bank says minimal interference in Somalia's private sector has allowed it to flourish.

Mogadishu's 30 road, which was until last summer held by Al-Shabab, is now one of the city's busiest highways. Workers at the nearby headquarters of Hormuud Telecom view the bombed-out ruins of the city through mirrored glass windows. The largest telecoms company in Somalia, Hormuud, reported sales of $40million in 2010 - staggering when the World Bank estimates that 73 percent of Somalia's population of nine million lives on less that $2 per day. The company also distributes emergency food aid.

Like many in government, civil society and the diaspora, Ibrahim wants Somalia to cease being dependent on the international community. Somalia is believed to have significant oil deposits and interest in these has been sparked by this year's announcement of drilling in semi-autonomous Puntland, northern Somalia. "The difficulty is this political situation. It is not the right time for international investors to come in," acknowledged Ibrahim on the exploitation of Somalia's oil. But he went on to add that Somalia welcomes discussions with any investors.

"The diaspora are coming back. We've been appealing to them for a long time", said Abdullahi Goodah Barre, Somalia's minister for planning and international cooperation.

Junaid Egale is a 30-year-old former Londoner who this year opened a UK-registered international business consultancy firm, MIJ, in Mogadishu, and whose political ambitions include running for president. "We are here now to service the Somali government projects and the international private sector firms i.e. NGOs, telecom and finance," he said.

However, Egale is sage about the risks. He cautions that until the transitional government's term has ended and a new mandate is under way, private investment from overseas is not viable. "On the other hand I do believe both private and foreign government investment is, and should be, an alternative fund towards the rebuilding of Somalia than aid from the donors via UNDP [UN Development Programme]", he said.

Corruption

The transitional government has received criticism this year for corruption and a lack of accountability. According to a February report by the International Crisis Group, there is "no reliable database covering all development funds" in Somalia, while as much as 85 percent of the central government's revenue is never recorded, according to an audit by the Prime Minister's Office in Mogadishu.

A 2011 report by the Center for American Progress, Twenty Years of Collapse and Counting, said that, according to a confidential audit of the TFG, "in 2009 and 2010 some 96 percent of direct bilateral assistance to the government had simply disappeared, presumably into the pockets of corrupt officials."

But TFG officials defend themselves against the allegation. Minister for Constitution Abdi Hosh said: "We don't qualify for bilateral aid." The ports generate $2million per year for the government. "That's peanuts when you see the wreckage in the city", he said.

Brad Parks, co-director of the transparency initiative AidData, cautions in a blog that recent gains are both fragile and reversible, and that the TFG must accelerate domestic reform efforts if it is to have any hope of building a legitimate state. "In particular, there is a growing sense that the TFG needs to bring some transparency and discipline to its management of public finances", he said.

Somalia receives very little bilateral, i.e. direct donor to recipient government, aid. "Sadly the TFG has failed to demonstrate that it can manage funds responsibly," said James Smith, Horn of Africa Project Manager for the Rift Valley Institute.

Much of the bilateral aid that the TFG does receive is from non-traditional donors in the Arab world, such as Qatar and United Arab Emirates. Of the $350 million pledged for Somalia by the Organization of Islamic Cooperation last year, less than half was channelled multilaterally, something which the broader humanitarian system has found difficult to manage.

"If the TFG inspired confidence in its ability to conduct development programmes I imagine it would have received significantly more financial support. If it can just ensure a stable environment, Mogadishu will rebuild itself," said Smith.

[This report does not necessarily reflect the views of the United Nations]

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