A man steers a cart pulled by a donkey in Hargeisa, capital of the unrecognized breakaway republic of Somaliland in northwestern Somalia. Investors are beginning to move into the untapped market in Somaliland, a stable island in a turbulent region.
by Benno MuchlerTuesday, August 28, 2012
Somalia is synonymous with failed states, pirates and Islamist militants. But in the nation's northwest lies a peaceful, stable territory with an elected government known as Somaliland. The enclave broke away from the fractious Horn of Africa nation in 1991 and has been going it alone ever since.
To the disappointment of its residents, Somaliland has not been recognized as an independent nation, but its stability is attracting investors that other parts of Somalia can only dream of.
The biggest investment project so far sits along a dirt road in the desert some 20 miles outside of the capital, Hargeisa. There, Moustapha Guelle and his four brothers have built a new $17 million Coca-Cola bottling factory.
Its green yard, worker cottages and state-of-the-art water treatment plant seem a mirage in this country of sand and stone. Nearby, camels eat the treetops of pale, brown acacias. A ragged nomad drives his black-headed sheep with a stick.
In front of the factory site, there's a reservoir for the treated water that flows from the plant, explains Guelle, 41.
It's become "a vital watering point for the gazelles and the wildlife around here," he says.
When the pond grows into a lake and lures enough wildlife, the Guelle brothers — who own Somaliland Beverage Industry — want to open a game park for tourists, complete with lodges and safari tours.
Challenges Of Doing Business
This entrepreneurial spirit has made the brothers some of the most successful businesspeople in their native Somaliland.
The Coca-Cola factory employs 57 workers and produces 11,000 bottles an hour for more than 120 clients in Somaliland, Puntland — an autonomous region of Somalia — and Mogadishu, the Somali capital, where the country's former Coke plant was shut down years ago.
The Guelle brothers brought South African Gavin Dehning aboard as managing director because he had successfully built other Coke plants throughout Africa. At first, Dehning was skeptical. Doing business in Somaliland is difficult.
"Somaliland is treated the same way as Somalia. It's not recognized, it has no banking system, it has no formal structure or infrastructure," Dehning says. "So, that poses enormous challenges to put up a factory of this nature with all the first-world standards that are required by the Coca-Cola system."
Getting the franchise from Coca-Cola? No problem. Getting the machines in one piece from Europe to the site in the desert over Somaliland's unpaved roads? A quest.
And then there is the lack of skilled labor. Dehning says Kenyans from the Coke plant in Nairobi train the Somalilanders on the line over a period of six months. But he says Somaliland — with its population of 3.9 million — offers huge potential.
"There is nobody else playing in this playground," Dehning says. "It's an open market for any potential investor who in the next five to 10 years will be able to come in, set up their business and really gain a tremendous market share."
Just recently, Google came and visited the biggest of Somaliland's six telecommunications companies. China plans to invest in the fisheries off Somaliland's more than 500 miles of coastline.
And at the London conference on Somalia in February — the first that included a delegation from Somaliland — Western countries agreed on an investment fund for the secessionist enclave, with the United Kingdom and Denmark providing an initial investment of $20 million. Guelle, the local entrepreneur, is optimistic.
"Even if it means not being recognized for another 200, it's not really a problem," he says. "We've survived for 20 years without a single government recognizing us, and people are doing OK."
It's not easy, he says, but Somalilanders have learned how to survive.