Business license. Photo: @ Somalia Open Government Initiative. data.gov.so
Costly Business Licensing: In the Quest for Business Transition from Informal To Formal Trading
Somalia, just like many fragile states which are recovering from long periods of instability, has laid its focus on improving investment laws, streamlining business registration and licensing, establishing efficient tax systems, and increasing access to finance and credit facilities. It is the hope of the government and other actors that such reforms, if well executed, should result in significant benefits in terms of economic growth and stability. However, the high cost of starting and facilitating legitimate business largely characterized by costly business licensing is proving to be a major limiter to registering with the government. This can deny many small and medium sized businesses from making the much-needed transition from trading in the informal to the formal sector.
Shortage of Working Capital Financing for Small and Medium Enterprises in Somalia
Ali, 35-years old, walked into our offices with a food delivery contract award tightly tucked into his hands. His face beamed with excitement and optimism; this was a once in a lifetime opportunity that he had always wished for. In his thoughts, all his hard work was finally bearing fruits. The $37,500 lucrative contract meant that Ali was to deliver food for eight consecutive months without fail. The payment terms as stipulated in the contract would be at the end of every month. The high prospects and optimism notwithstanding, Ali, a highly committed, hardworking, and aggressive entrepreneur does not have the requisite cash reserves and or savings to kick-start his business operations in the first months.
Farm Export: Readiness for Agricultural Transformation in Somalia
Somalia has a rich history in the agricultural export market. Cotton became the first crop to be exported showing good results in 1929, but their value declined after the collapse of the world market in 1937. Between1927 and 1930, banana production in the country increased massively with national plantations increasing 17 times when Italy issued laws imposing taxes on all banana exports, except for Somalia further facilitating the development of the Somali agricultural sector. It, however, proved to be difficult to compete in markets outside of Italy.
Self-sustaining cooperatives can influence sustainable development in Somalia
Cooperatives are not a new phenomenon in Somalia; they date back to the pre-colonial era. Somalis by nature have a cooperative culture because of the harsh climatic conditions they are predisposed to. While herders work together to protect their livestock, farmers work together to safeguard and market their produce. Such cooperation builds resilience among the Somalis by enhancing collective power to tackle challenges in times of distress.
Motor insurance is an important protection for not just the car but for the owner’s financial liability as well. Before 1991, it was a requirement for every vehicle in Mogadishu to possess a road tax certificate, insurance policy, and MOT. Surprisingly, 30 years later, these legislative requirements have barely been adhered to and motorists are seen roaming the streets of Mogadishu
Overview of Mogadishu port. Photo: @Port Mogadishu/twitter
MOGADISHU PORT – port users pay around $1,000 per container besides the statutory taxes!
Over this period, between 1991 and 2006, the port in Mogadishu remained closed; the city had been enveloped in anarchy, insecurity, and civil war. It was 2006 when the Union of Islamic Courts reopened the port. Seven years after the reopening, a Turkish firm, Al-Bayrak, entered an agreement with the Federal Government of Somalia to modernise and manage the port for a period of 20 years. The recent modernization of Mogadishu port and its expanded operations has made it the