As we all know the Republic of Somaliland is unrecognised and there have been only a handful of investors other than the Diaspora. Majority of the big companies in Somaliland such as Telesom & Sompower are made up of private equity shareholders that have come together to invest in these companies. These business owners (Shareholders) receive their share of profits every month (Dividends). Somaliland has not had IMF and World Bank loans like their neighbouring African nations because they have been unrecognised for the past 31 years. Majority of income coming into Somaliland is from the export of Livestock and the money from Diaspora by way of remittance to loved ones.
The Diaspora have been the backbone of Somaliland as they send over one billion US dollars each year. Majority of the villas, hotels and restaurants are owned by the Diaspora, which they have built using their savings. I believe Somaliland can be transformed by building a reliable institution for the Diaspora and citizens to invest in a stock market of Somaliland Businesses. There would have to be a trusted company or bank that would hold and mediate people’s funds and invest it in the country.
If Somaliland were to increase its GDP by creating companies that are funded by the Diaspora, they would need:
Transparency
The Diaspora would need to know:
- How much needs to be raised?
- What are the possible returns?
- The percentage of the company each investor will own.
- Details of what their investments were spent on.
Trustworthiness
The investors would need reassurance that their investments are safe and secure. This can be done by:
- The government holding institutions to account and ensuring the people’s Investments are safe
- Creating a register for companies to sign up to, to operate in Somaliland
- To have business courts that are easily accessible to settle business disputes (Funded by taxation of businesses)
There are now a few companies that are not well known who are attempting to turn this idea into reality. The two that stood out to me are SomalilandInvestments.com and Wadaag.com.
Somaliland Investments Limited
This company has been started by a group of Somaliland Diaspora based in Birmingham UK. This company has just launched in April 2022 and it is based and registered in the UK. They describe the company as a “Crowdfunding Platform” where instead of taking donations, they would be selling a share of the business at a price. They only sell shares of start-ups that they are going to manage.
They are going to Crowdfund for the following industries:
On their website they explain “how it works” in three steps:
Step 1: You Purchase Shares
Step 2: They create and manage the start-up
Step 3: They aim to turn your Investments into profit
In the two characteristics needed in an institute to create a stock exchange and hold people’s investments which is Transparency & Trustworthiness, let’s see how this company did:
Transparency
Currently SomalilandInvestments.com is raising Funds for a Tuna Factory in Berbera and a High School in Hargeisa. On their website they show:
- how many shares sold
- Total Shareholders
- The amount of Money raised
This website also has a progress bar to show how far they are from the target:
So, transparency wise they are on the right track.
Trustworthiness
This Crowdfunding platform is a registered company in the UK, you can find them on Companies House. This makes it a lot easier to hold them accountable, also this company does only sell shares via online payment system, therefore it is very easy to request your bank to chargeback and retrieve your funds if things do go wrong.
Wadaag
This an investment & wealth management company based in Somaliland. They have an office in Hargeisa, and they specialise in Investment Management, Project Financing and Fund Management. They have professional well-built website with a great amount of information. This company was established in November 2021 so they have a few months more experience under their belt.
They invest in the following categories:
On top of their investment activities, this company offers Car Insurance and Health Insurance to citizens of Somaliland.
In the two characteristics needed in an institute to create a stock exchange and hold people’s investments which is Transparency & Trustworthiness let’s see how this company did:
Transparency
To invest in anything with Wadaag.com, you are required to contact them first. They do not specify what the investments are for and how many people would be investing on their website, but you would have to contact them to get this information.
Trustworthiness
This company does have a physical office you can go to. Since they are based in Somaliland I would assume they take payments via Zaad and Edahab which makes it convenient to request phone provider to retrieve your funds if anything does go wrong.
Conclusion
Both companies have their Pros and Cons it is up to you as the investor to decide which one makes more sense. It would be great for the Government to step in and promote these kinds of investment activities to the Diaspora as they are Somaliland’s biggest investors. I believe it is a great moment for Somaliland to setup their own Stock Exchange to become the next Singapore. I believe Somaliland’s Business owners and Diaspora community are capable of Investing Billions of US Dollars each year. It is up to us as a collective to come together and make it happen.
