The success of the Somalis in business particularly in Africa hasn’t received enough attention though it’s a phenomena well-worth looking at.

Peter Leeson argues in his paper Better Off Stateless that Somalis are better off without a government at least economically, and I would agree. Business in Somalia is booming particularly is cities like Mogadishu, Bossaso and Bur’o. Most of the trade in Somalia is with Kenya and Gulf states. Trade between Kenya and Somalia is estimated at about $1 million a day (about $300,000 is Qat trade).

It’s remarkable how Somali refugees in Kenya have transformed themselves from refuges to a prominent business community in Kenya and throughout Africa. The Somalis established small businesses in Kenya in the early 1990s, and within a short time expanded all the way to South Africa where there is a thriving Somali business community.

Dubai however is the main hub for Somali business. Somalis at some stage were (may still be) the second largest customer of Dubai just behind the Iranians. They manufacture and import from South East Asia (Malaysia, Indonesia and China) to Dubai then to either to Africa(through Kenya) or Somalia.

Most Somali businessmen/women prefer to keep their investments abroad because of the security situation. It’s inevitable that improved security in Somalia will convince many to invest in Somalia.

Links:
Better Off Stateless: Somalia Before and After Government Collapse
Somalis Cash in Dubai Boom
Anarchy and invention : How does Somalia’s private sector cope without Government?
Discussion: How to Capitalize on Entrepreneurship in Failed States?

Aren’t both of these special cases, though? Somali Telecom is based in, and mainly provides services to, one of the few parts of Somalia that does have a functioning government. And Daallo has the advantage of being able to base much of its operations abroad. I’m not sure these are representative of the business climate in southern and central Somalia.

Somewhat tangentially, has anyone ever done a scholarly and non-racist study of why certain cultural groups (Igbo, Luba, Somalis, Lebanese) are geared to succeed in business while others aren’t?

Twose notes that he’d just sat through a series of meetings where government ministers worried about Lebanese dominance of the Liberian economy and needs to ensure that the economy is “Liberianized”

Shades of Idi Amin and the Asians, although Sirleaf is no Amin and I doubt things will get that far. I think a much better way to mediate the political issues arising from non-indigenous merchant minorities is to persuade the minorities to open up employment opportunities and skill transfers.