The country’s big six telecom companies are undermining the government by evading taxes and refusing to cooperate on surveillance
By Steve Liddle, Special to Weekend Review
Friday, January 17, 2014
After the recent change of leader in the year-long Somali Federal government (SFG) there is again concern about the way forward, as powerful financial factions are still operating within the country.
Given the relative success of this administration, formed with the help of the UN and international community following the failure of previous Transitional Federal Governments (TFGs), it is timely to examine the forces and circular logics operating against it. And the roles of the international community, Arab League and powerful Somali business groupings.
When the International community called a June meeting in Brussels to discuss what in historical language was called “A New Deal for Somalia”, it soon became clear that there was little new in the circular logic of their decision-making. In refusing to make available the pledged $1.8 billion (Dh6.6 billion) because local banking institutions were not functioning, thus depriving the government of an ability to develop important institutions including the financial sector, the EU effectively dealt the government a body blow.
This decision was also confusing and inconsistent as big sums were somehow delivered to states within Somalia, such as Somaliland and Puntland, rather than to a federal government recognised by both the UN and the United States. Such actions sent mixed messages and did little to support an already undermined government.
Somali embassy spokesman in Abu Dhabi, Hussain Mohammad, says that the EU should immediately initiate desperately needed projects including wells, hospitals, schools and roads. “Even if only roads connecting Mogadishu with all centres. These things have immediate benefits for common people … and many are in complete ruin,” Mohammad said.
The role of regional powers, helpful in bringing an end to the piracy problem, has also been mixed. The convention called by the UAE in September, the third in three years, played a significant part in formulating policies for the elimination of piracy. However, such initiatives seem driven largely by business self-interest, with little help from the Arab League in finding solutions to the menace of internal pirates in Somalia: remittance and telecommunication operators.
For it is within Somalia’s own business sector that pirates, of the airwaves in particular, are responsible for another circular logic bedevilling successive governments: tax avoidance. Without tax compliance the best of governments flounder — and cannot sufficiently finance police, army and other forms of security which are the bedrock of business confidence and civic institutions.
Based in Mogadishu, Somalia’s big six telecommunications “companies” are all offshoots of, or modelled on, those business pirates who seized government facilities after the collapse of the last government in 1991. Following the ouster of Somalia’s warlords from the capital by Amisom (African Union Mission in Somalia) troops and their more recent clearing of radical Al Shabaab militias, this more insidious invasion has been gathering strength. And huge wealth.
Moreover, these self-styled telcos continue to control and exploit Somalia’s citizens in ways both unfair and corrosive. What is immediately damaging, in terms of lives, is their ability to prevent a fragile government from starving militia of communications. An electronic blockade could help isolate a militia known to be trained largely by foreign terrorists.
With control of mobile-phone technology authorities could accurately identify, profile and locate offenders simply by regulating the users. Responsible governments have realised it is reasonable to expect all mobile-owners to register their SIM card at telecommunications offices, complete with identifying documents. Those not doing so are cut off immediately from the network.
Given the importance of communications, especially for a country of more than 10 million with a huge diaspora all over the western world, these telcos have become wealthy pariahs. Without firing a shot, this mafia charges refugees and citizens for communications necessary for re-development and community rebuilding. How did this form of electronic piracy happen? What makes these “businesses” so impregnable?
The mechanism of this wealth creation is no secret. By persuading other telcos worldwide to clip the ticket for them, these groups has become wealthy enough to avoid attempts by government and the regulatory International Telecommunication Union (ITU) to rein them in.
Not only do these groups exploit vulnerable customers charging them often beyond their means and disproportionate to costs, there are also suspicions that some sponsor the terrorist scourge, Al Shabaab.
By negotiating with foreign companies to charge above the usual rates and to put money collected into overseas funds, these “companies” avoid tax — and have sufficient clout to offer deals to favoured factions, or fund groups they believe will deliver a government suited to their economic or ideological aims.
Given this situation, such circular traps, what can be done to bolster a legitimate government?
As the special representative of the secretary-general for Somalia said recently in his 90-day review to the Security Council, the tackling of Somalia’s terrorism requires a comprehensive approach: political, military and developmental.
Praising Somalia for increasingly addressing problems through political processes, Nicholas Kay also called for “enhanced judicial security structures and systems” in the light of the assassination of four judges in November.
The UN, he reported, is providing increased technical assistance to police and security groups, allowing Somalia’s national army to benefit from a “targeted logistics package when engaged in joint operations with Amisom”. However he cautioned that Al Shabaab is still targeting international partners, including the UN. Announcing plans to open a third centre for “disengaged combatants from armed groups”, those who have defected from terrorist groups, he added the Westgate attack had also galvanised international support for both Amisom and Somali national forces.
However, the scant coverage of the killing of an MP when his car was blown up recently outside the parliament is revealing not just of the threat of ruthless militias but also of continuing psychological pressures upon both the government and media.
Crisis fatigue and downplaying stories is a reality, but self-censorship and partisan pressures — particularly in smaller centres dominated by Al Shabaab — can be as damaging to the strength of civic institutions as shooting either judges or messengers.
Though not specifically mentioned in Kay’s review, Somalia desperately needs regulatory policing to rein in telco opportunists who decades ago pirated premises, equipment and bandwidths — and continue without operators’ licence and refuse to pay spectrum fees or tax. Unless checked, they will seriously undermine any government’s long-term ability to act independently, without UN, EU or World Bank assistance. Especially when constantly delayed assistance is justified by the logic of institutional insecurity — or is conditional upon so many unilateral restrictions, it can appear like some form of neo-colonial patronage.
The measures made possible by the $1.8 billion pledged — and the confidence in autonomy it represents — are particularly important in the lead-up to the planned 2016 elections. Somalia was the first state in Africa to hold such elections some 50 years ago next year.
Though characterising progress so far as “chequered”, Kay said that Somali political institutions in the past three months had proved strong enough to resolve major problems, such as a no-confidence vote, without bloodshed.
Mohammad Ebrahim, information and communications technology (ICT) adviser to the Somali government for the past four years, agrees. However, he said, while telcos and remittance companies had made gap-filling contributions in the rebuilding of Somalia, the time had now come for them to work with the government.
“Paying tax is the foundation of any social contract, while the rule of law strengthens government’s mandate to develop the whole country,” Ebrahim said.
Calling for both Somali telecos and remittance companies to collaborate with government, Ebrahim cited the Somali transfer firm Dahabshill recently winning an injunction in the UK to prevent Barclays from cutting its banking services. “There are clear advantages to working in a business environment where the rule of law exists,” Ebrahim said.
And it is also essential for survival. When the ITU’s Telecom World Event convened in Bangkok in November, the hurricane in the Philippines had cut land communications, making rescues difficult. Alerted by major news outlets, ITU and other global telecos soon had communications restored by providing emergency communications equipment.
A Somali delegate at the event congratulated them, while commiserating with the victims. He then revealed that just days later, in the northeast of Somalia, more than one hundred people had died — with hundreds more missing — in a tropical cyclone so rare that there is no Somali word for it.
Initially, no humanitarian effort was even possible, he continued, because no one knew about it. This was because of a lack of phone coverage in that area, in contradiction to the universal service provision specifically prescribed by local laws to allow for “access to communication for all”. For though Somalis know the many satellites in permanent orbit above them as well as they know their stars, none of those satellites’ bouncing beams could connect Somalis to each other — nor to the outside world.
In the competitive world of international communications such links simply do not pay, and there aren’t the political connections to apply the necessary pressure to offer even compassionate deals, as done by some telcos operating in the Philippines.
If this is the price you pay for being off-satellite, under the radar of world news, it is a high one. How can a recovering state with tax-evading businesses, with big, oil-the-machinery budgets, counter the misuse of money that can be brought to the table?
If strict provisions on remittances are problematic, perhaps the EU banker guardians could themselves devise supply solutions enabling effective measures against home-grown subversives?
This rogue behaviour of financial warlords is well entrenched. It is a major contributor to an insecurity often used to excuse delaying finance for denying Somalia the very means to restore security.
If the pledged funds are released, Somalia can afford the watchdogs needed to end the reign of this new wave of swaggering pirates.
Steve Liddle is a freelance journalist now travelling in the region and researching the history of civil society.