Huge investment opportunities in Somaliland through Guul Group

Somaliland has plenty  and unexploited  locally available resources and encourages local and international investors to exploit these resources. The state has sufficient human resource that can be utilized. Somaliland government has laws in place for the promotion; protection and guarantee of foreign investment.

Guul Group, a commercial conglomerate that runs a range of services – from agro-processing to transport and logistics, construction, fisheries, import/export, and business consultancy is the best bridge to business and investment in Somaliland. Guul Group provides specialist complementary; conduit, consulting, contracting and facilitation services delivered using effective, world-class communications tools.


Important areas of investment opportunities: 

Housing sector: 
The housing sector is vital for every society particularly those coming out of prolonged conflict .The cities of Berbera , Erigavo , Las Qoray , Las Aanod and Burao face huge shortages of affordable housing with the widest gap existing in Hargeisa and Berbera where the returning Diaspora and employees need affordable housing .

The ports: 
Berbera port needs expansion and modern facilities.The port could  act as a gateway to neighbouring landlocked Ethiopia. Imports of food and commodities for  the population in excess of 90 million  in Ethiopia could make Berbera one the most busiest ports in the Horn of Africa.

Cement: 
Somaliland imports huge amounts of cement from countries like Oman while the country has the potential of exporting cement to the neighbouring countries. Bebera Cement Factory has been  the largest in the country before the civil war  in the country in the late 1990s. The factory is currently obsolete after it has been  looted by vandals. Somaliland needs investment in the production of cement sector which is plenty in the Guban areas just north of Berbera and in many other parts in the Guban plateaus adjacent to the coastal areas through out Somaliland.

Electricity : 
The electricity grid in Somaliland is poorly developed . Most of the electricity suppliers throughout  the country are small private businesses that use small generators to supply the neighbourhoods. Electric generators currently in place in the capital do not have the capacity to supply the city. New generators with more capacity , and introduction of both wind energy and Solar power systems are the only sustainable possibility to provide electricity and therefore also support economic development.

Oil : 
Somaliland has the oil potential of billions of barrels both in offshore and onshore. There are currently 4 identified blocks with abundant oil potential . Among the largest of these four blocks is Odwayne block which has an estimate of more than a billion barrels of crude oil. There are currently oil exploration companies that have already acquired these blocks . But there is the potential of supplying equipment , prefab facilities , and catering to these companies when the production commences.

The above mentioned sectors are few among the many business investment opportunities in Somaliland. One other good news for investment the country is that the Potential profits are higher in Somaliland than in most other western countries.

For best opportunities of investment in Somaliland , please get in touch with Guul Group by email :contact@guulgroup.com

By Medeshi

Guul Group : Young entrepreneur abandons life in the West to spearhead investments in Somaliland



What is it that is driving the prosperity in this island in a region torn apart by decades of political and social upheavals?
No single factor is responsible, but peace, stability, a patriotic citizenry, and functioning civil service have all contributed. But arguably the most important development has been the return of hundreds of Diaspora ‘Somalilanders’ who have abandoned life in the West to set up business in the country.
Mr Mahamed-Guled, is one such returnee. After several years living in the West , Guled decided to follow his dream of playing a part in the economic development of his ancestral land. In Somaliland  he and a small team of young people floated the Guul Group, a commercial conglomerate that runs a range of services – from agro-processing to transport and logistics, construction, fisheries, import/export, and business consultancy.

Mahamed has also proven his mettle in the business world. Last year, he won the 5th Somaliland Community Achievement award in the business category for 2013 at a colourful and high profile event at Brunel University in London. The award was in recognition of his role in spearheading the public issue of Pontus Marine Ltd shares worth $5m, which was and remains the first of its nature in Somaliland within the very short span of less than four months. 
From their base in Hargeisa, Guulgroup is blazing a trail that other Diasporans look set to follow.  Their key aim is to drive foreign direct investment into Somaliland, but they are also keen to support home-grown business ventures, especially business start-up. The services offered by the company include business planning, development, strategy, project management, event management, marketing, branding and training.
Guul Group provides investment opportunities with the aim of bringing and working with foreign investment and strategic alliance partners on projects in Somaliland, Somalia and other Horn of Africa markets. Given the peaceful environment, and a highly-motivated population backed up an excellent shipping infrastructure, the potential for Somaliland to outdo regional neighbours as an emerging business hub is clear.
The company is constantly looking for new ideas, opportunities and partnerships. To get in touch, please email : contact@guulgroup.com
By- Medeshi

The rise of Africans Investing in Africa (AIA)

AIA-VC4A

This article previously appeared on Huffington Post and is published with permission.

“Africans Investing in Africa is the best way forward for Africans to have ownership of their development process” write Ibrahim Sagna &Jacqueline Muna Musiitwa. “With a market place of over one billion people and all associated opportunities, there is little excuse not to invest!”

Foreign firms are not the only ones heavily investing in Africa’s numerous opportunities, shows the “Africa attractiveness survey 2013, getting down to business” published by Ernst & Young (E&Y). Increasingly, Africans, who were previously Missing In Action (MIA), are becoming Africans investing in Africa (AIA). Investments range from individuals in Africa, the diaspora, the private sector, governments, multilaterals and even social enterprises.

The rise of Africans investing in Africa (AIA) is not only a catalyst for attracting greater amounts of foreign capital, but is also a positive sign of growing domestic investor confidence. This is a welcome development needed to increase Africans’ wealth, but not without promoting sustainable development and inclusive growth. Thanks to technology, increased access to information, improved and more transparent legal and macroeconomic policies as well as lucrative returns, more Africans are investing not only in their countries, but across borders as well. This finding reinforces Vincent Le Guennou, Co-CEO of Emerging Capital Partners, a fund that invests heavily in Africa, comment that, “It is difficult to ask foreigners to come to Africa if Africans themselves do not invest there,”; this simply makes sense.

It is indeed time for Africans to look within and beyond their borders to realize Kwame Nkurumah’s words to the effect that until all of Africa is free (and in this case economic freedom is part of that), none of Africa is free. Africans invest in Africa for many reasons, including but not limited to pan-African sentiments, the promise of high returns on investment, the contribution to the development of the continent. The direct investment by Africans on the continent is following a growing trend as that from Europe, Asia and the United States. In value, investments by Africans in other parts of Africa, is still lower than foreign direct investment (FDI), which reached almost € 38 billion in 2012 (double the volume received ten years earlier).

Private Sector Trending

Nigerian tycoon, Tony Elumelu’s Africapitalism philosophy, which emphasizes the significant role the African private sector has to play in Africa’s development is increasingly more important for Africa’s growth. Africapitalism is, “The private sector’s commitment to Africa’s development through long-term investment in strategic sectors of the economy that create economic prosperity and social wealth.” Successful entrepreneurs like Aliko Dangote of Nigeria, Manu Chandaria of Kenya, Kone Dossongui of Cote d’Ivoire, Yerim Sow of Senegal and Ashish Thakkar of Uganda are effectively using their conglomerate clout and are leading the change with a new breed of AIA, one that sees no borders, seeks to service the African market and relishes diversification. Furthermore African brands can use their expansion within Africa as testing ground for further global expansion. The Sawaris’ increased investments activities across Europe and Asia, or Dangote’s upcoming investments in Europe, Asia and Latin America, or even Tony Elumelu’s Heirs Holdings investment foray into US technology companies are just a few testimonies of this.

AIA is not limited to African conglomerates. South Africa is the country with the foremost intra-African investments. According to Ernst & Young, South Africa is the champion of intra-African investment, with a total of 235 investment projects between 2007 and 2012, an overall increase of 57% during the period. Since 2003, nearly 46,000 jobs were created in the rest of the continent by South African companies. In 2012 alone, businesses and South African institutions led 75 distinct investments, amounting to 1.1 billion euros. Some of South Africa’s most notable and fastest growing brands are MTN, Standard Bank, Shoprite, Pick n Pay, Woolworths, Tiger Brands. South Africa is not the lone African country investing heavily in Africa and aggressively exporting home-grown brands and products. Kenya, Nigeria and Morocco are other notable intra-African investors. The most common sectors that receive AIA are banking, telecom, construction, retail, hospitality, raw materials, and food.

The Sovereigns Do Not Want To Miss Out

AIA is not limited to private enterprises. Africa has seen a steady rise in the number of funds, in particular sovereign wealth funds and pension funds. According to the calculations of the Russian investment bank Renaissance Capital, the total assets of the six largest African pension funds could reach € 465 billion in 2020, and most important of them, the South African GEPF (currently has 90 billion euros), already invests a significant amount in the rest of Africa. Furthermore, sovereign wealth funds are not limiting their investments domestically. For instance, Angola, which thanks to its oil revenues launched a fund of € 3.7 billion, announced that its first investments will target the hospitality industry in Sub-Saharan Africa. Furthermore, African development banks (both regional and domestic) such as the African Development Bank, the Eastern and Southern African Trade and Development Bank (PTA Bank), Afrexim Bank and so on play a significant role in investing in Africa.

Investing in Africa is no straight road

The AIA phenomenon has not come without controversy. The debate lingers as to who has an advantage over the other as far as investing in Africa, Africans or non-Africans. Lindsey Domingo at E&Y argues that Africans have an advantage over foreigners because Africans know the field because of experience in their own countries and the cross cutting challenges. Furthermore, Africans have developed a defined set of skills to approach such markets such as negotiation as well as perception of risk.

However, one must caution against generalizing operating environments in African countries. Every country has its own peculiarities, different legal systems, business cultures and so on. The most successful in investing in Africa are the ones that understand local environments yet bring value addition to such environments by making the markets more competitive. Furthermore, there are still numerous barriers that make investing across border prohibitive, e.g. prohibitive laws regarding the free movement of people, poor trade facilitation, corruption and so on. Additionally, sometimes AIA brings pre-existing geopolitical baggage for instance; some countries in Southern Africa have been resistant to the entry of South African businesses because of fear of unfair competition with domestic businesses. Further, companies such as Shoprite have had numerous legal issues because of its failure to adhere to local sourcing policies (Shoprite has since enforced its policy to establish and support local supply chains).

Take Away Home

All in all, AIA is the best way forward for Africans to have ownership of their development process. Additionally, AIA breaks barriers of nationality, ethnicity, race and allows all interested investors to focus on the important colour, green representing money. The trickle down effects on regional integration further encourage the development of regions rather than individual countries. As underlying tensions arise in some parts of the continent because with the rise of foreign partners who do not respect local laws and customs or benefit local communities, AIA provides an appropriate alternative. As doing business in Africa improves and technology becomes more widespread, more innovative platforms such as Homestrings, which connects the diaspora with investment opportunities in Africa will arise. Fading are the days when Africans sought security of their investments abroad. With a market place of over one billion people and all associated opportunities, there is little excuse not to invest!

By Ibrahim Sagna on February 24, 2014

Raising funds through a diaspora network

Diaspora opportunities in Horn of Africa

Somali fishing - Albany Associates

Photo courtesy of Albany Associates

As the first part of its series looking at the impact of worldwide diasporas, PathfinderBuzz examines the impact that dispersed former Somalis have had on the country of Somalia and the semi-autonomous region of Somaliland.

Somali opportunities - Albany Associates

The Somali civil war caused an exodus of people from the region. But returning stability coupled with increasing wealth from natural resources has brought some back. 

Returning diaspora are bringing seed money for new ventures, skills and expertise picked up from other business climates, and an appetite to do things in a better way.

But is it enough? What is the best way to connect the diaspora back to its homeland? And would Somalia and Somaliland have been better off had more people stayed through the war and attempted to rebuild?

The Somali diaspora has demonstrated a growing business involvement with its country of origin. Whether this means returning home to set up an enterprise or providing funding or other forms of help from afar, more and more Somalis are connecting with Somalia and Somaliland.

For example Guul Group, a multi-sector Somali business, has partnered with Pontus Marine, a Somali fishing firm, to raise £3m ($5m) in funds for investing in the skills and capabilities necessary to expand commercial fishing in Somali waters and create a seafood export industry.

To raise these funds, they have turned to the extensive diaspora, says Mahamed Liban, chief executive officer (CEO) of the Guul Group. It shows how the diaspora can work with its home country to create wealth and opportunity for both the investor and the home community.

“Business is the way forward for Somaliland and the rest of Somalia, in order for it to be stable,” says Liban. “There are more people in Somalia so that means there are more opportunities there, but it is more stable up north in Somaliland.”

As opportunities emerge on the Horn of Africa, many of the diaspora are finding the going more difficult in their new adopted lands. Increased restrictions on visas and passports mean some cannot have family join them while others have no option but to return home. Meanwhile the continuing global economic slowdown coupled with further regulations oninternet money transfers are limiting the remittances they can send back.

The timing is right for many members of the diaspora to come back and invest in person, says Anna Bowden, associate director at One Earth Future Foundation, a non-profit organisation dedicated to eliminating conflict through economic opportunity.

Businesspeople are coming back, setting up businesses and either staying to run them or returning to their new countries to run them remotely. ”They’re not scared about the instability. They know there’s great opportunity on the ground,” she adds. “It’s one of the most exciting pieces of the puzzle.”

But diaspora returning home must be careful about where and what they invest in. Significant research is required, especially considering the speed of change. “People go in without knowing what’s out there. They see TV or hear friends and family have done it,” says Liban. “I know people who have taken their family with them before doing any research and ended up losing a lot of money.”

It also does not mean that all of Somalia or Somaliland’s problems have been solved and the area is now a shining beacons beckoning home prodigal sons after 10-20 years away. “There are many challenges,” says Liban. “It took me two years of going back and forth to get set up, it’s not something that happens overnight and any investor will require patience.”

Diaspora without money or the patience to invest directly are still getting involved in the opportunities that the country could provide. Growth and change is leading to greater demand for a variety of skills. “Everything from engineers to MBAs are needed,” says Bowden.

But despite the opportunities returning diaspora are creating in the region, it also must be acknowledge that their departure has hurt growth. Braindrain has hit the country hard, adds Liban. In many ways, it would have been better for many to stay, he says. “They’ve not made any difference coming, either for themselves or the people they leave behind.”

Remittance has also been something of a problem. “It’s become a major part of the Somali economy and personally I do not agree,” he says. “It’s created a dependency on diaspora and people abroad, an expectation of money at the end of the month. Instead they should have been encouraging people to set up businesses, be creative and create new business opportunities themselves.”

No matter how much quicker the pace may have been if more people had stayed at home, progress is being made throughout the Horn of Africa. As the port of Berbera announceslong-sought after investment, interest from the diaspora and other businesses will continue.

Next steps and more information

1. Investment in the Somaliland Port of Berbera

2. Somali agricultural opportunities 

Somali disapora - The African Diaspora Institute

WLSC Recognises Guul Group as its 2013 Business Category Achiever

 

LONDON (Somalilandsun) – Guul Group a UK and Somaliland registered company has been recognized as the 2013 achiever in the business category by the West London Somaliland Community-WLSC.

The 5th Somaliland Community Achievement business category for 2013 was presented to the Guul Group Chief Executive officer Mr. Mohamed Guleid at a colourful and high profile event hosted by WLSC at Brunel University in London

Speaking to Somalilandsun after the receiving the award the youthful Guul Group CEO said,

“I was absolutely delighted to have received this award as part of an important ceremony in which many had been recognized for individual accomplishments and contributions to the Somaliland community globally”

As their CEO received the business category achiever award for 2013, his team in Hargeisa who thanks to modern technology were following events live through Skype failed to hide their exuberance and visibly over the moon for the consideration and recognition of their company’s work not only in 2013 but way back since inception in London especially taking into account the number of knock-backs, barriers, challenges, set-backs; the biggest been that Guul Group is run by a young team.

Back in London the Guul Group chief honcho who was himself basking in glory for the recognition which comes a short while after managing to spearhead the public issue of Pontus Marine Ltd shares worth $5m which was and remains the first of its nature in Somaliland at the very short span of less than four months.

According to Mr. Guleid the entire process of the Pontus Marine ltd share issue, novel in Somaliland, the main query of each and sundry was ‘how can you possibly raise $5m when you are this young, you don’t have a beard or big belly’

Said he, This and similar remarks went a long way in creating a defying and determined team of youngsters from the Diaspora and inside Somaliland intent on success thence become a role model for others”

While thanking the WLSC for its recognition of these efforts amid insurmountable hurdles Mohamed Guleid said the Guul Group achievement could not have been realized without the dedication and commitment of a number of team players among them Hassan Ahmed , Daud Ibrahim Haruun Baby Guul and d Kayse Mohamed

“My greatest appreciation is to the Pontus Marine Ltd team that showed confidence in the youth led Guul Group and gave us the contract to spearhead its unique public share issue in Somaliland” said Guleid who also acknowledged Yusuf M Hasan and his Somalilandsun team for helping Guul Group then UK based only find its footing in Somaliland

The youthful Guul Group CEO who is expecting his first child any time now also recognized his mother and spouse for believing in his dream of shifting base from the UK to Somaliland that resulted in them supporting and standing beside him during a turbulent time in Hargeisa whilst setting up.

Envisaging 2014 to be an even better year for his fledgling youth led and managed company the Guul Group founder and CEO who emphasized the importance of supporting and encouraging the youth of Somaliland said “it’s imperative that we give the youth a chance, promote entrepreneurship, create platforms in which our youth can come together, generate ideas, share ideas, craft businesses with support, guidance as well as investments. Our youth need to be nurtured and pressed forward to take risks and not conformed to status quo.

High profile guests such as the Mayor and the Mayoress of the London Borough of Hillingdon Councilor Markham and Mrs. Markham, the Minister of Investment and Commerce of the Republic of Somaliland H.E. Dr Mohamed Abdilahi Omar, the Head of the Somaliland Mission in UK Ambassador Ali Aden Awale, Councilors, traditional leaders and representative from a wide range of organisations were present at the ceremony.

As per his business inspiration Mohamed Guleid says it emanates from a report by a university lecturer from Chicago US, which read ‘Somali people are born entrepreneurs’ which he agrees with 100% saying “we Somalilanders are all over the world initiating ideas, businesses and investing; logistical companies, hotel chains, mining as far as Angola thus competing in a vast region like the Horn of Africa through innovation, ideas, leadership and drive”.

Urging the youth not to be cowed by remarks about age, inexperience or lack of beards or big bellies the Guul Group chief gave gthe example of the 12 years old. Hanad Ali, a 12 year old who has already published his first book published now available on Amazon and Water Stones and Mohamed Haruun who has graduated considering his inability to see making him one of the most deserving of the awards tonight.

On being awarded by the WLSC Mr. Haruun said ‘Anything is possible, I want to achieve more and I can’.

For 2014 Mr. Guleid had set a challenge for all Somalilanders to sit down and actually write some goals, number 1 may be “turning up on time so that the next award ceremony could start on time”

The West London Somaliland Community based in the UK whose mission is to empower Somalilanders in West London to enable them to participate meaningfully in the society as confident citizens which is presenting the Somaliland Achievement awards in various categories for the fifth year running.

By: Latifa Yusuf Masai

Untapped Investment Opportunities in Africa

The raggedy cargo truck drives onto the ferry which immediately sinks deeply into the water, only seemingly buoyed by the grace of mother nature. The truck appears misplaced on the ferry, but locals assure me that this is the cheapest and quickest route to the final destination. “This is Africa” is often an overused phrase, but this truck is a microcosm of the continent’s transport and logistical challenges (and subsequent investment opportunities).

It is an often overlooked fact, but only about 30% of African roads are paved, and 50% remain in “poor condition,” according to the United Nations Economic Commission for Africa. It is this reality that makes shipping cement from Shanghai to the shores of Djibouti about 60% cheaper than shipping from Ethiopia’s capital Addis Ababa to neighboring Djibouti by road. This statistic does not indicate better things for ports. The same UN report estimates that Africa’s ports productivity is mere 30% of the international norm. This is logistics in Africa. But why?

Trade With Africa is Booming 

Sub-Saharan African trade volumes are expected to quadruple by 2030, according to a Frost & Sullivan report, increasing from 102.6 million tons in 2009 to 384.6 million tons by 2030. Intra-regional trade volumes, according to the same report, will grow just under 345% in the same period. In 2010, however, Africa’s intra-trade only accounted for about 10% of its total trade, according to a report by the Brookings Africa Growth Initiative, compared to 17% in developing Asia and 60% in the European Union. Simply put, Africa exports relatively cheaper unprocessed (and often raw) materials to the world’s developed economies, and largely imports more expensive finished goods from the same countries.

The effects of these numbers cannot be ignored. A recent survey by ECA International placed Angola’s capital Luanda as Africa’s most expensive city (yet again) and 2nd most expensive for expatriates globally. It would be unfair to ignore the effect of currency appreciation in Angola due to a commodity boom, but the lack of internally processed goods and transport are the greater culprits in the equation, similarly pushing other African cities – Juba (4), Brazzaville (13) and Libreville (17) – up the list of expensive cities. The consumer is not the only one suffering.

It takes nearly double the amount of days and more than 10 times the price to move a 40ft container from Kenya’s second largest city, Mombasa, to Rwanda’s capital Kigali, than it is to move the same container from Shanghai to Mombasa, according to a local shipper in Kigali. An observer to our discussion says that may be an exaggeration, but not by much. These transport costs and delays – irrespective of the debate of how ‘extreme’ the numbers may be – perplex the most financed and prepared business manager. Shipping costs that average $1,974 per container are high compared to the median estimate of $732 for Asian countries, according to the consultancy firm KPMG. Lead times are more than double in sub-Saharan Africa at 30 days, compared to 13 days in developed nations.

Moving agriculture products from Ghana’s capital Accra to Burkina Faso’s capital Ouagadougou is a messy constellation of customs and bad roads that sees transports costs range from 3 to 4 times that seen in Europe. Conflict in Mali only further enriched those transporting products from Dakar in Senegal, to Bamako in Mali in 2012, with some producers in Senegal claiming transport costs jumped as high as 50 to 60 percent. In Tanzania, according to a local trader, outsourced transport costs can add 15% to the price of meat and, in certain instances, north of 20% to certain home and personal care products.

transport and logistics

Log truck in Central Africa Republic (CAR) / Photo credit: JG Collomb, World Resources Institute

Central Africa generally sees the worse effects from transport costs. Impassable roads and dilapidated transport facilities disconnect countries such as the Democratic of the Congo (DRC). The goods traded with the DRC on its eastern coast by Burundi traders can, at times, bear little resemblance to goods traded in Kinshasa from neighboring Angola and the Republic of the Congo.

It is hard to numerically calculate the drastic effects that logistics can have on African business. The experiences of Anglo-Australian mining company Rio Tinto in Mozambique may be our best example. A recent $3 billion write-down by Rio Tinto on its purchase in the Moatize basin in Tete province was due to its inability to overcome logistical challenges. The company scrapped two previous shipping schemes, including the Zambezi project, and has been relegated to sharing the 580km Sena railway – a very aged, single-track line from the Portuguese colonial era – with other mining companies and passenger trains.

This year mining companies paid an estimated $49 per ton to ship by rail in Mozambique. This price accounts for: 1 – the floods that put the Sena rail offline earlier this year, 2 -he mandatory 3% royalty to the government (irrespective of profits), and 3 – the bump in freight charges associated with the country’s Beira port’s inability to accommodate large freight ships which could lower overall costs.

The all-in logistics costs component of a Free on Board (FOB) per ton coal price needs to be below $35 per ton, according to Henrique Pinheiro of Ariy Consulting and Advisory, which would indicate most companies are, at the very least, struggling this year. Still, the Mozambique state-owned railway company Portos e Caminhos de Ferro de Moçambique (CFM) stands to earn north of US$60 million from coal shipping on the line. Brazilian mining company Vale’s best response to low capacity and high prices at Beira is its investment in the longer 912km Nacala line to the Nacala which will be able to accommodate 18 million tons per year (nearly more than 5 times the amount shipped by CFM this year).

A Boom in Investment

The Nacala line is one in a myriad of investments in transport and logistics across the continent. A near $37 billon is being invested in current road infrastructure projects in sub-Saharan Africa, while more than $57 billion is being invested in current rail infrastructure projects, including a recently approved 525km rail line connecting a new port at Macuse on the coast of the central province of Zambezia in Mozambique to the Moatize coal basin.

Logistics spending in Africa by manufacturers and retails will increase, according a report by British researchers Analytiqa, from $128.5 billion in 2012 to $157.3 billion in 2016. They further predict that the size of the outsourced logistics market will expand by 38.4% in that same period.

Africa is home to several of world’s fastest growing economies thus the numbers are not hard to imagine. Competition accordingly continues to skyrocket and push investors to more untapped parts of the continent. Bolloré Africa, one of the largest port operators in Africa, recently secured a deal to invest over $680 million to upgrade the port of Berbera, which could be key to transforming trade for landlocked Ethiopia.

berbera port somalia

Berbera port, Somaliland / Photo credit: Brian Dell (CLICK IMAGE FOR VIDEO)

Anxious French and Portuguese investors await anxiously as Société Nationale des Chemins de Fer du Congo (SNCC) and Caminhos de Ferro de Benguela (CFB) continue to comb through the details of a deal to boost the Lobito corridor, which will connect the Congo, the world’s eighth largest producer of copper, to the rehabilitated Benguela railway line and port. Rio Tinto plans to invest up to $1.5 billion in transport infrastructure through 2018. And private equity giant Carlyle Group appears close to securing a deal to boost transport capacity in the Mozambique and Tanzania logistics corridor.

Still, the sector is starved for cash. New infrastructure funds come and go with the wind, says the Managing Director of a major African advisory firm, because many fail to raise the capital. The African Development Bank, under the auspice of Donald Kaberuka, has made infrastructure deficiencies, including transport, a leading issue in its labors in Africa. The Bank and its partners in African and non-African national governments should change help the Director’s perspective and the many who agree with him. While a new push for capital in this sector will greatly benefit the continent, challenges persist beyond financial constraints.

The Challenges

High custom fees and periodical bribe demands undercut African logistics. The port in Durban, South Africa – sub-Saharan Africa’s busiest port – charges double the global average to dock a ship, ensuring its place as the most expensive major port in the world. The costs due to business delays further aggravate the situation. Delays can be up to 3 times as long in sub-Saharan Africa compared with other global regions. A spat earlier last year between Ethiopia and Djibouti over custom fees delayed certain goods beyond 4 months at the port, frustrating local producers and reducing potential revenues up to 20% for certain companies. Greater capacity and private investment cannot change this factor.

The continent requires increased government efforts in boosting economies of scale and lowering production costs in order to realize growth potential. Certain countries, including Rwanda and Mauritius, are examples of best efforts in Africa with their decreased costs and vastly improved road networks over the last five years. Despite the national achievements in these and other countries, the intra-trade links remain relatively underdeveloped.

mauritius port Mauritius port / Photo credit: iblmaritime.com

The transfer of goods, technology and knowledge still flounder on the continent as leaders struggle to find ways to share. Tower and network sharing bewildered the African mobile industry (and still does in specific pockets on the continent). But large economic gains and spill-over benefits have drastically changed the perspective of telecom operators and government officials on the continent. A similar transition is very much possible for the logistics sector. Developing specific corridors and special economic zones has proved successful in Ethiopia and Mozambique. Tanzania is also seeing great benefits under these schemes.

Logistics is a Sexy Buzzword in Africa

The continent provides some low-hanging fruit in terms of investment. Bringing transport in-house was easiest way to reduce costs and boost revenue, says Chief Operating Officer of Afri Tea in Tanzania, Surajit Sarma, and it reduced business delays and concerns. All new cement companies in Ethiopia are employing a similar model to both lower cost to the end consumer and boost revenue. Slow government processes and efforts literally force mining companies to finance their own transport infrastructure, as seen in West Africa. This model is drastically changing.

An increasing number of governments are displaying the capability to change the transport landscape and the business environment. Railway projects and airport upgrades in Ethiopia, Uganda and Kenya embody the rapid change in East African corridor. Their governments are pioneering renewed efforts to boost infrastructure sharing and cooperation and general open dialogue. The results are growingly silencing dissenters and buoying local confidence in the ability of African governments to grapple with market deficiencies and gaps in the economy. Increasing efforts in West and Central Africa should further boost confidence and, more importantly, results.

The mobile revolution taught us how connecting Africa can be a game changer to its growth. Savvy, agile and increasingly educated entrepreneurs utilized mobile expansion to forge a lioness economic boom. Transport will have the same effect. Today a more advanced and larger group of entrepreneurs, if anything, could lead transport to possibly having a more significant impact than mobile phones. .

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From: http://www.africa.com/blog/untapped-investment-opportunities-in-africa/

Why Invest in Somaliland?

Dr M A Omar Trade & Foreign investment Minister Dr M A Omar Trade & Foreign investment Minister

“Because Somaliland is open for business as well as its well-established peace and stability as well as its economic potentials that remain untapped thence very lucrative for investment both foreign and local” Trade and foreign investment minister

By: Yusuf M Hasan

HARGEISA (Somalilandsun) – Somaliland is signaling to all potential investors that it is “open for business,” having progressed from a post-conflict situation to a state of political stability and sustainable economic development. Underpinned by this transformation, Somaliland is now firmly in a period where it is able to encourage foreign investment.

“Doing business in a new market always presents numerous challenges. This is particularly the case in Somaliland because it is not a recognized country, and investors might think that doing business in such a place is going to be a difficult and daunting task”

Says the minister of trade and foreign investment Dr Mohamed Abdilahi Omar as he elaborates on the new developments that are fast-tracking local, Diaspora and foreign investments in various sectors of the country that remain untapped then lucrative.

According to the Trade and Foreign investment minister Dr Mohamed Abdilahi Omar whose ministry has put in place an investment guide to the country that is also easily available for download at the ministry’s investment portal guide http://www.somalilandinvest.com says there are many reasons to invest in Somaliland but singles out six namely Security and Democracy, New Foreign Investments , Sound Regulatory Reforms and many untapped sectors like Natural Resources /Livestock/Fisheries /Agriculture and Services .

“The main obstacle to major foreign direct investment has been the ignorance on the part of potential investors about Somaliland’s well-established peace and stability as well as its economic potentials” Said Dr Omar as he informed of the establishment of a foreign investment board that shall facilitate ease of foreign investment as well protection of subsequent investment.

The Somaliland Beverage Industries Franchise saw Coca Cola Invest millions of Dollars in its Hargeisa bottling plantThe Somaliland Beverage Industries Franchise saw Coca Cola Invest millions of Dollars in its Hargeisa bottling plant

The trade minister adds that apart from the six reasons detailed below other incentives for doing business in Somaliland include

  1. Investment Protection,
  2.  mechanisms for Legal and Dispute Resolution,
  3. Guarantees against Expropriation,
  4.  Labor Regulations and Work Permits,
  5.  tax Exemptions and
  6.  Land ownership and property leasing regulations among others

Six reasons to invest in Somaliland:

1. Security and Democracy

Somaliland has witnessed a great deal of progress over the last 20 years of self-governance. Peace and stability has been restored through the efforts of the people of Somaliland. Democratic systems have been established and have continued to evolve after five successful elections at the presidential, parliamentary and local government levels. Well trained and professional security forces protect the population from terrorism and organized crime. This means that the foundations are now in place to build on these achievements to attract foreign direct investment and strengthen local capacities to promote sustainable employment and economic development.

2. New Foreign Investments

Somaliland has extended its economic engagement with foreign governments within the region and beyond. It is engaged in negotiations with Ethiopia to finalize the first official bilateral strategic cooperation agreement. Djiboutians have invested heavily in Somaliland’s economy, including about $15 million in a Coca Cola factory which opened in 2012. Somaliland has used diplomacy to help explore recent efforts to attract FDI from Turkey, Malaysia, the UAE, Kenya, Egypt and China into Somaliland’s key sectors such as livestock and fisheries. In addition, a great deal of Somaliland Diaspora investment is coming from the UK, Norway, Finland, Denmark, German, Canada, and the United States.

3. Sound Regulatory Reforms

Somaliland is reforming its once cumbersome regulatory framework to better promote investment. An Investment Climate Unit has been established within the Ministry of Commerce to streamline business registration. Important legislation—such as the Foreign Investment Law, the Islamic Banking Law, the Central Banking Law, the Electrical Energy Act, and the Commercial Banking Act—has either been passed or is making its way through Parliament.

4. Natural Resources

Somaliland’s deposits of oil, gas and coal are attracting the attention of international investors, and agreements have been reached with Genel, DNO, Ophir and others over exploration and production rights. These contracts show investor confidence in Somaliland’s stability. Somaliland also has large proven deposits of minerals including gypsum, gold, iron, lead, and quartz, as well as gemstones such as emeralds, rubies, garnets, sapphires, aquamarines and opals. Furthermore there is a huge potential for renewable energy. Pilot projects in wind and solar energy are underway, and the legal environment is being reformed to better regulate the sector and protect investors.

5. Livestock, Fisheries and Agriculture

Exporting livestock at Berbera port Exporting livestock at Berbera port

Livestock exports, chiefly to the Gulf Arab countries, account for about 60% of Somaliland’s national income, but great potential exists for Somaliland to capture further global market shares. In addition, Somaliland has a fishery sector whose potential annual sustainable production is estimated at 40,000 tons. Agriculture is another sector with significant production and investment potential. With the introduction and trials of improved technologies, drought-resistant crops and better practices and research, the industry has the potential to be extremely successful.

6. Services Sector

Telecommunications services will be enhanced by the new fiber optic cables which are being laid to connect Somaliland’s major cities and towns and establish links to the outside world. This new infrastructure will revolutionize the way in which business is done in Somaliland and provide new opportunities, including support to the financial services sector. Although financial services are not robust, prospects for improvement are increasing. Other business development services (BDS) are also increasing, and this promises to save investors the trouble and expenses associated with bringing in expat labor to provide such services.

Other potential sectors for investment include tourism, infrastructure and social sectors. With the support of this Investment Guide, the people of Somaliland are welcoming investors to come and see for themselves the unexplored and untapped opportunities that the country has to offer in all the sectors of its economy.

For more details peruse the ministry of trade and Foreign Investment http://somalilandinvest.net  an Investment Guide Web Portal that provides an important clearinghouse of economic, legal, regulatory and investment information for local, Diaspora, and foreign investors.

Somaliland is open for business! http://somalilandinvest.net