Somalia talks reforms in bid to woo foreign investors
The Hanvard Africa CEO Hassan Noor speaks during a media briefing on May 22, 2013. Photo/File
What you need to know:
Somali Reconstruction and Investment Conference (SORIC), which ends Wednesday, called for clear regulation to protect foreign investments and allow firms to repatriate profits.
Kenyan investors have come face-to-face with weak investment laws and the lengthy process of obtaining visas and work permits in their pursuit of opportunities in Somalia.
Industry players said expanding operations to Somalia required paying a Sh4,000 ($50) visa fee per worker, spending days to obtain work permits, and putting money in a regime with no clear capital transfer guidelines.
“While there is no question regarding our excitement to take part in Somalia’s reconstruction, these concerns need to be addressed to boost trade,”
James Mureu, the Mombasa chapter chairman of the Kenya National Chamber of Commerce and Industry told a Somalia investment forum in Nairobi yesterday. The investors attending the first
Somali Reconstruction and Investment Conference (SORIC), which ends Wednesday, called for clear regulation to protect foreign investments and allow firms to repatriate profits.
They also want the newly installed government and donors to spell out their development priorities to guide long-term investments.
Somalia has in recent months joined its neighbour Somaliland in an aggressive search for foreign investors since a joint Kenya Defence Forces and African Union mission forced out Al-Shabaab militia to end 22 years of statelessness.
On Tuesday, top Somalia officials invited Kenyan investors to put money in the country’s hydrocarbons, construction, food processing, and tanning industries.
Other areas that require immediate inflow of foreign capital included tourism, insurance and mining industries, said Mahmud Ahmed Hassan, Somalia’s commerce and industry minister.
Kenya, which bore the brunt of 20 years of lawlessness in its neighbour, stands among the likely drivers of its reconstruction.
“Foreign investors will only feel free to invest in a liberalised economy where the laws regarding movement of capital is certain,” said Alec Davis, CEO of Davis & Shirtliff, a supplier of water equipment which on Tuesday signed a partnership with Hanvard Africa to expand to Somalia.
However, Mr Davis warned those eying Somalia to initially prepare for high costs and low returns in line with experiences with other countries emerging from prolonged civil strife.
Somalia applied for membership to the East African Community last year in a move aimed at forging closer diplomatic ties with neighbours and to ease current travel and immigration restrictions. At the conference Somali traders criticised the EAC governments for restrictive border rules in East Africa.
“The $50 visa fee that EAC citizens pay to enter Somalia is a luxury compared to the screening and difficulty in obtaining the travel documents that a Somali faces in the region,” said Hassan Noor, CEO of Hanvard Africa.
Somalia is a key destination for Kenyan goods, accounting for Sh19.2 billion of the Sh517 billion exported last year compared to EAC partner states like Rwanda and Burundi, which absorbed goods worth Sh16 billion and Sh5.3 billion in 2012 respectively.
Mohamed Ali Americo, Somalia’s ambassador to Kenya, said the number of investors enquiring about opportunities in the country had increased significantly in recent months.
“The Somalia I know today is far from the one we entered into two and half years ago,” said Noaman Akram, Country Manager of Sima Marine (K) Ltd, a shipping firm. “We already have several container terminals in Mogadishu because Somalia is where our future focus is.”
On Tuesday, the Somali officials said the government would prioritise regulatory reforms including an investment legislation and an incentive structure in its bid to attract foreign capital.
“We have made important steps in making our investment climate favourable but a lot more are coming up in terms of regulatory reforms and development of infrastructure,” said Somalia foreign affairs minister Mohammed Abdullahi Omar.
The forum comes two weeks after the London Somalia Conference organised by the British Foreign and Commonwealth Office.
The London conference, which was also attended by President Uhuru Kenyatta, saw the British government along with other Western governments pledge £200 million (Sh25.4 billion) to help rebuild the country.
