The Rise of a Somali Capital by Parsalelo Kantai

Article Brief

Two Somali diaspora business ‘models’ have developed in the shadow of globalisation and the aftermath of the collapse of the Somali economy.

The first is licit and involves a global trading system controlled and operated by the Somali diaspora (in East Africa, the East and the West). Based on a clan honour system and driven by collective interest, it has managed to replicate the immediacy of global capital movement through its own money transfer system – hawala.

Mostly as a result of the efficiency of the hawala system (mimicking the Pakistani/South Asian model), the Somali community has managed to establish a vast global trade network. Originally conceived to deliver khat to outlying diaspora communities in Europe and the United States, this trading system has evolved, over the last decade into an almost purely mercantile network that now delivers textiles and electronics (both real and counterfeit).

As a further consolidation, members of the community have also set up a seaport clearing and forwarding network that once again sits in the shadow of established shipping networks. Walking the line between licit and illicit; this network thrives on port corruption to deliver goods cheaply and efficiently.

As a result, over the past decade the Somali business community has become the foremost entrepreneurs in the East African region. Having supplanted the Asian community as the predominant East African traders, Somali capital has of late diversified into real estate and the hospitality industry.

These essentially legitimate activities have gentrified a pastoralist community long considered (by both the colonial and independence establishments) as rebel outsiders.

Within this context, the spectre of ‘Somali piracy’ emerges as a disjuncture. In much the same way that Somali nationalism of the pre-independence and immediate post-independence era existed within official discourse, ‘Somali piracy’ asserts itself as a disruptive idea, much misunderstood for all its nomadic underpinnings and therefore instinctively rejected.

Like Somali nationalism, Somali piracy, has once again produced regionally disruptive outcomes, threatening the very global economy embraced and mastered by the legitimate Somali trading system.

We assess the effects of the breakdown of the Somali state; examine the inner workings of the Somali diaspora economy; and compare and contrast the two radically different Somali global business models.

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One Response to “The Rise of a Somali Capital by Parsalelo Kantai”
  1. Peter 9 March 2011 at 10:38 am #

    Where can I read online this excellent piece of investigative journalism ?

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