NAIROBI, 31 March 2010 – Despite the insecurity and the lack of a formal banking system, the private sector is alive and well in Somalia – and helping feed the country.
Against all the odds, more than 50 percent of the food consumed in Somalia is imported by local traders. The challenges are significant; one of the biggest hurdles is dealing with exporters without having a proper bank account, say business people.
Liban Yusuf, who is based in the coastal city of Bosasso, the commercial capital of the self-declared autonomous region of Puntland, told IRIN that to overcome the banking challenge, “you either use money transfer companies to send the money or you open an account in a place like Dubai [United Arab Emirates] and put the money there – and neither is easy.
“We bring stuff from Brazil, India, Thailand, Pakistan, Dubai and Oman,” he said. “I import sugar, rice, flour and cooking oil.”
Since the 11 September 2001 attacks in the US, he said, money transfer companies are reluctant to deal with large amounts, “even when they know that it is going to buy food. They are terrified and they make our lives more difficult.”
Cash in a bag
A businessman in the capital, Mogadishu, who requested anonymity, said another option was simply to carry cash.
“Just imagine someone carrying a million dollars in a bag; it is impossible, but people do what they have to, to get the food into the country,” he said.
According to the Food Security and Nutrition Analysis Unit – Somalia, a food security watchdog, more than 50 percent of the food consumed in the country is commercially imported.
The unit said in its 2009/2010 Post-Deyr (short rains from October to December) report that 542,000MT of cereal was imported in 2009, of which 119,000MT was food aid while 423,000MT was commercial.
Somalia faces a deep humanitarian crisis, with 42 percent of the population – an estimated 3.2 million people – in need of emergency humanitarian assistance and/or livelihood support until June 2010.
However, due to insecurity and fighting between the government and Islamists insurgents, humanitarian assistance is not reaching most of the country’s south.
Yusuf notes that importing difficulties increases the cost passed on to consumers. “We have to pay every step of the way and that adds to our expenses, making our goods even more expensive.”
He said importers also have to deal with shipping goods twice. “If I buy sugar from Brazil and the ship is bigger than 7,000T, I have to unload it in Dubai or Oman and put it on another ship that can dock in the port of Bosasso [which accommodates ships no larger than 7,000T].
“This of course will add to the cost of the goods,” he added.
Extra “taxes”
But, said Yusuf, the problems did not end with the goods’ arrival in Somalia.
A 50kg bag of rice imported from India cost US$24 to import to Bosasso but then, he said: “I have to pay $1 per bag tax, so that makes it $25.”
To transport the same bag to the central town of Beletweyne, some 1,100km south, will cost another $4, Yusuf said.
“This not only includes the transport cost but also the money paid at different checkpoints manned by different militias,” he said.
Ali Mohamed Siyad, chairman of Mogadishu’s Bakara market traders, told IRIN that 20 years of non-existent government had taken their toll on trade.
“For the past 20 years, things have been getting progressively worse for us,” he said, adding that the continuing upsurge of violence in Mogadishu was making importing goods “next to impossible”.
Siyad said: “A ship docks today and then fighting erupts in the city. That ship has to wait however many days it takes for the fighting to stop before it can offload its cargo.”
He said any additional cost is passed on to the consumer. “It is unfortunate but it is a fact of life that the poor consumer usually pays in the end.”
Caveat emptor
The lack of government structures to regulate imports has other negative effects on the consumer, according to Salad Dini, another Mogadishu businessman.
“Less than five months ago, unscrupulous businessmen brought in a consignment of rice that was rejected by Dubai, because it was not fit for human consumption.”
The consignment ended up in the Mogadishu markets, he said. “We have no way of knowing if people got ill or even died because of it; who is there keeping records of such things?”
By and large, he said, Somali businessmen are honest, “but you get the odd ones who will bring in stuff that will harm their people, and we have no way of stopping them”.
ah/mw/oa
* The headline and lead paragraphs of this story were amended on 31 March
[This report does not necessarily reflect the views of the United Nations]