Transnational capital in Somalia
June 2019
Transnational capital in Somalia
Blue desert strategy
Jos Meester, Ana Uzelac & Claire Elder

This report explores the impact of transnational businesses active in Somalia and Somaliland on socioeconomic development and governance within the territories. The economic resurgence in the country owes much to the sizeable and pioneering role played by these transnational entrepreneurs. Their willingness to invest at even the most difficult times has bridged the Somali population through a range of hard periods that saw other actors withdraw, and has pushed a degree of economic recovery and widened the availability of goods and services. Yet part of the reason that these companies fulfilled this role was that it allowed them to entrench a strong competitive position (mainly through liquidity constraints and clientelistic networks spanning the public and private sector) and allowed them to rapidly develop a range of new markets. Their positioning has hindered competition and entrenched a status quo that benefits certain sections of the political settlement over others. The peacebuilding paradigm employed by the international community, focusing on state institutions to rebuild and stabilise post-conflict states, is brought into question by these dynamics. The transnational businesses act as a stabilising force and manage to provide a degree of governance and public services where (legitimate) governance is lacking. Yet, these conglomerates also interfere with existing political institutions: they affect the outcomes of the representative process that is supposed to deliver credible leadership at national and local level and constrain the ability of existing executive branches to take and implement decisions. Donor engagement through the diaspora suffers from the underdevelopment of the regulatory infrastructure – especially financing – and the interest structure that ensures this situation endures. The challenge in Somali regions is therefore how to engage parts of its transnational community in the creation and stabilisation of the entrepreneurial middle class, in order to stimulate economic and political development.

Figure 1
Map of Somalia and major port cities
Map of Somalia and major port cities

About the authors

Jos Meester – Research Fellow at the Clingendael Institute’s Conflict Research Unit
Jos’ work focuses on the functioning of the private sector in conflict-affected environments. He is particularly interested in supply chains spanning across political divisions, as well as the close relationship of political and private-sector elites and its consequences for the stability of political power structures. Jos previously worked as a management consultant on supply-chain management and market assessments in developed and developing economies.

Ana Uzelac – Former Senior Research Fellow at the Clingendael Institute’s Conflict Research Unit
Both as a policy professional and as a researcher, Ana has maintained a lifelong interest in human mobility, and the ways in which it shapes the world we live in. She is particularly interested in the politics of forced displacement, demographic rearrangements at the root of – or caused by – violent conflicts, and the way in which economic, personal and political interact, resulting in migratory flows. Underlying all of this is Ana’s critical curiosity about state as a model for organising human societies and its challenges, advantages and limitations in the rapidly globalising world.

Claire Elder – Research Associate at the Clingendael Institute’s Conflict Research Unit
Claire is currently a doctoral candidate in Politics and International Relations at the University of Oxford. She is also a consulting political analyst, having previously worked for International Crisis Group (ICG) on Somaliland/Somalia.

Photo credits

Containers sit on a ship waiting to be off loaded at Mogadishu's port in Somalia on September 17, 2015.
© AMISOM Photo / Tobin Jones