Archive | January 2013

Attracting foreign investors – Residential and commercial real estate booms in Hargeisa

 

Despite the investment opportunities, many international investors remain hesitant to enter a market that has witnessed instability for so many years. But for local investors, construction is the safest and best proven way to make a profit, said real estate agent Nassir Hussein.

“You see we do not have Citibank or Barclays and the only safe venture for locals to invest in is land and property,” he told Sabahi.

Ahmed Abdi, an economist who teaches at the University of Hargeisa, says Somaliland provides a multitude of opportunities for any foreign investor armed with the right information.

The region is blessed with natural resources such as coal and raw materials to make cement, yet the outside world is unaware of the substantial profit margins that could be gained, he said.

To woo investors, the government should publicise these opportunities and Somaliland’s trade policies more aggressively, Abdi said.

“[For example], all cement currently used in Somaliland is imported from Asia and Middle East countries and it is becoming expensive because of the boom,” Abdi told Sabahi. “If an investor revives the cement factory in Berbera, he will be guaranteed of recouping his investment and making profits because the demand for cement is so high and he will not face competition locally.”

But Salad Abdi Ige, director general at the Ministry of Industries, said the administration has already embarked on a number of measures to attract investors, including targeted tax breaks.

“We have eased the process of obtaining licences to invest and all the paperwork involved,” he told Sabahi. “We will also help the investor find land to build a factory.”

He said the administration is targeting investors from the Middle East because of their geographical proximity, which can facilitate the transport of any needed equipment or labour force.

Ige said new foreign capital could help expedite the creation of new jobs and ease the unemployment rate, which is especially high among youth.

Guul Group is a corporation that has a sizeable portfolio and is operating across a range of sectors that include agriculture, livestock, and consultancy. It has striven to establish and bolster trade within Somaliland, Somalia and the rest of the Horn of Africa. The company will stand to earn from the recent push that the region has made in attracting global investors and strategic partners (which have been hesitant) on projects in Somaliland and potentially other Horn of Africa markets, whilst provide employment opportunities among the youth and women. www.guulgroup.com

 

SOURCE: http://sabahionline.com/en_GB/articles/hoa/articles/features/2012/11/05/feature-01

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Somaliland administration to simplify business regulations

Merchants display their wares in Wahen Market in Somaliland's Gaan Libah district. The Somaliland administration is working to make it easier for entrepreneurs to start businesses there. [Barkhad Dahir/Sabahi]The Somaliland administration is working to simplify policies governing investment and business creation as part of its efforts to strengthen trade and attract foreign and local investors.

The Somaliland Investment Guide, developed in partnership with the Somaliland Ministry of Commerce and the Chamber of Commerce, Industry and Agriculture, will be a clearinghouse of economic, legal, regulatory and investment information for local, diaspora and foreign investors.

“We will create a website to collect information about investment, available opportunities, where to invest and pertinent information so foreign and diaspora investors and citizens can easily obtain information to help them make decisions any time,” said Mohamed Saleban, director of planning and statistics at the Somaliland Ministry of Commerce.

The website will also provide information about Somaliland, licensing procedures, visas needed for foreigners and all associated information, he said.

Work on the Somaliland Investment Guide started in August and will be completed in January 2013, with funding from the US Agency for International Development.

In addition, the government has created a “one stop shop” to ease investment. The initiative, funded by the World Bank, will create a single office that brings together various agencies –including the Ministry of Commerce, the Chamber of Commerce, Industry and Agriculture, the Ministry of Finance, and others — to simplify licensing processes and provide investors with all the information they need in one location.

This project, which will be implemented in January, will help investors save time by streamlining the registration process, he said.

“It is a good opportunity to get rid of all barriers,” said Abdirahman Ismail, head of the sales department at Telesom Company in Hargeisa. “To have one location for licencing systems will eliminate the frustration over the time lost trying to get licenses through the various agencies.”

“We welcome its improvement,” he told Sabahi. “It will enable any interested individual to easily start working in Somaliland and undertake the long process that was once insurmountable, which will increase the capacity of investors.”

Removing barriers to economic growth

Store owner Asha Yusuf, who sells construction materials in Hargeisa, said simplifying the rules and making information more accessible is a step in the right direction, but much more needs to be done to encourage local residents to open small businesses.

“Their number one need is access to loans that follow Islamic law and do not impose interest,” she said.

Some privately owned banks have started to introduce small loans but require borrowers to have 30% of the loan amount as a down payment, a requirement that most prospective business owners cannot meet, she said.

The government must bring forward policies to help businesses access funding for start-up costs, she said. It must also provide guidance and other needed support so that new business owners do not feel alone as they venture into a big investment.

Saleban said the Ministry of Commerce is working on programmes to provide micro-financing for public-private partnerships and will continue to work to ease barriers that hinder economic growth.

“[The government’s] aim is to increase investment, which will in turn increase jobs and improve the country’s economy,” he said. “Once we attain that, the public standard of living can increase.”

Recent reforms were prompted by complaints from the business community and preliminary findings from the 2012 Somaliland Business Confidence Survey, which was presented publicly December 18th at the first annual Somaliland Business Conference in Hargeisa.

The survey solicited feedback from investors and the business community on their perceptions of the Somaliland business environment and impediments to investment, and was conducted in November in Maroodi Jeeh, Awdal, Sahil, Togdheer, Sool and Sanaag.

The survey received responses from 273 businesspeople — 236 from Somaliland and 37 from the diaspora — including 72 women.

The survey showed that 43% of respondents had invested less than $10,000 to start new businesses in Somaliland and only 2.2% had invested more than $1 million.

Investments were concentrated in Maroodi Jeeh, Sahil and Togdheer, where more than 20% of businesses surveyed invested over $100,000. In Sool and Awdal, however, that figure dropped to less than 8%.

In addition, 58.5% of respondents said the process of registering a business and getting a license is difficult, 43% said business start-up legislation would have a positive effect on future investment decisions, while 21% said it would have a negative effect.