Throughout the civil war and the unstable and conflictual developments of the 1990s and early 2000s the majority of productive assets and investment capital that existed under the rule of Siad Barre had been lost: moveable assets had been shifted out of Somalia while immovable assets were either destroyed or looted.[23] The Somali population had also been heavily affected as many fled the country, thus giving rise to a wide dispersal of families and communities that nonetheless strongly identified as Somali. The businesses that arose in this context and subsequently drove the economic resurgence of Somalia were very much a product of these new realities, thriving on the dispersed nature of the Somali community rather than merely coping with it. Thus, in order to understand Somalia’s resurgence, the businesses that drove it, and its impact on governance, it is essential to understand the dispersed Somali community from which the Somali entrepreneurs originated and drew their resources. This chapter seeks to explore what this newly established transnational Somali community looks like, the type(s) of entrepreneurship this community gave rise to and the social significance of this development. Subsequent chapters in turn will explore the functioning of the newly established transnational enterprises and their impact on socioeconomic developments and governance.

The dynamics of a transnational community

Relatively small in size, but economically and socially very influential, Somali communities abroad have been the focus of many studies of Somalia’s economic resilience in the past decade.[24] These studies have generally referred to these communities as the ‘diaspora’. The concept of the diaspora has long been one the main tools in analysing human mobility, used to understand the relation between migrants and their respective countries of origin and settlement.[25] This conventional perspective revolves around migrants’ assimilation in their countries of ‘settlement’ and the impact of their departure on their countries of origin.[26] This dichotomy, however, has increasingly failed to capture the evolving nature both of migrant communities and of their relations with the countries of origin and residence, as it overlooks the increasing mobility and increasing circularity of migrant populations’ movements, instead assuming these populations are relatively static.

The concept of a static diaspora is especially problematic when it comes to the Somali community residing outside of Somalia, whose freedom of movement has dramatically increased throughout recent years, as the first generations of Somali refugees across the global North acquired the passports of their countries of residency and started travelling as they reconfigured their social and economic behaviour to the new reality of the vastly increased mobility these passports allowed (see box 1 for a more detailed history of Somali migration in the 20th century).[27] Rather than acting as a group attempting to settle in a new location, Somali migrants have been noted for their ability to adapt their ‘nomadic’ heritage to life in displacement, maintaining a high degree of mobility and strong social networks that reached beyond the confines of the Kenyan refugee camps (as far as the US and Europe).[28] This phenomenon extends well beyond the refugee communities in Kenya and Ethiopia, with Somali individuals and businesses across the world constantly reconfiguring in complex cross-border patterns of personal and business relations. Recognition of this increasing mobility of many migrant communities has started to shift the policy and academic debate and introduced a more dynamic understanding of these groups.[29] Recent studies have accepted actors’ tendency to operate across multiple borders and the increasingly complex relations across various economic and social spaces. Moving beyond the concept of the diaspora, they instead introduced the idea of an ever-shifting transnational community spanning several countries.

The concept of the ‘transnational immigrant community’ first emerged in the context of the studies of advanced industrial liberal democracies – and specifically in the context of the studies of globalisation and the emerging transnational capitalist class, international non-governmental organisations (INGOs) and think tanks/academia. Particularly influential was the shift towards defining and analysing the transnational social space that emerged at the turn of the century, facilitated by advances in technology that increased ease of travel, communication and settlement.[30] These transnational spaces were defined as being based on social networks and interpersonal relations – ‘relatively stable, lasting and dense sets of ties reaching beyond and across borders of sovereign states’, comprising ‘combinations of ties and their substance, positions within networks and organizations and networks of organizations that cut across the borders of at least two national states’.[31] They are sustained through shared kinship groups, shared circuits and communities of shared values, rather than through the physical proximity of group members.[32]

Theories of transnationalism posit that the existence of communities in transnational social space has been made possible due to the advances in communication and transportation technologies over the course of the past century. Affordable air travel, the availability of money transfer operators and advances in mobile technologies have created the opportunities for migrants to maintain sustained interpersonal contact with people remaining in their countries of origin as well as with each other, transfer assets and retain a level of agency and influence within these countries. All this has contributed to routinised and frequent physical contact between countries of origin and residence, the relative ease of changing or adding multiple residences and the constant circulation of ideas, goods, and services – as well as a possibility of collective or at least coordinated actions of larger groups of migrants or migrant businesses towards their countries of origin.

Box 1
Somali migration in the 20th century
Figure 3
The Somali diaspora across the world[33]
The Somali diaspora across the world


Three waves of migrants from Somalia are generally recognised:

The first wave predates Somalia’s independence. It consisted mainly of seamen from the port cities of the Red Sea, who left Somalia during colonial times and settled predominantly in the UK, in port cities such as Cardiff and London. Tested and challenged, also through high-profile episodes of racial discrimination, those communities have forged a particularly strong Somali identity, and are until this day characterised by strong links with Somalia.

The second wave originates from the Somali labour force that established itself in the Gulf countries during the 1970s and 1980s, but who were unable or unwilling to return to Somalia due to political instability. In the three decades that have passed since, however, the Dubai-based diaspora has grown and become much more than just an outgrowth of the old labour diaspora. Offering substantive business opportunities, Dubai has attracted members of the so called ‘fourth wave’ (see below), who have turned it into a vital business hub for the Somali community and economy. ‘The UAE has emerged as a hub for Somali business and in the post-civil-war era, Dubai has become Somalia's lifeline.’[34] The Somali diaspora – old or new – has insecure legal/residency status in Dubai, subject to annual renewals and with weak protection, even for long-term residents. Yet, these regulations have not prevented Somalis that came to Dubai in the 1970s and 1980s, nor their much more educated children, from integrating into the local economy as professionals, rather than entrepreneurs. They have, as a rule, excellent Arabic skills and as the nationals of an Arab league country have access to jobs in public health (at hospitals or pharmacies) and law enforcement (police). Other jobs include retail businesses or even local media.[35]

The third wave consisted of refugees who escaped from civil conflict and who form the bulk of the current diaspora, numbering around one million. Some fled to refugee camps in neighbouring countries, others had been studying outside Somalia or belonged to the diplomatic corps of the Somali state, and others happened to be outside the country in 1990 at the time of the state collapse. The first refugee flows came out of Somaliland into Ethiopia at the time of the destruction of Hargeisa in 1988. This was followed by a mass movement of Somali refugees into Kenya in the early 1990s, during the period of intense conflict in Mogadishu and violence and famine in Southern Somalia. A third group consisted of the relatives left behind who later benefited from family reunion programmes and joined relatives who had settled in western countries. Many came through different –‍ often irregular ‍– channels facilitated by those established outside the country.

Though not widely recognised, a smaller, ‘fourth wave’ of Somali migration can be distinguished. This wave took place in the mid-2000s: these were EU-based Somali migrants, mainly from Scandinavian countries and the Netherlands, who left under the combined pressure of anti-Muslim discourse prevalent in the national-level politics of north-western Europe until today and due to perceived red tape. This wave migrated to the UK, where they felt they could enjoy more religious and cultural freedom, and set up their businesses more easily. They settled on the basis of their EU citizenship, increasing the strength and the size of the UK-based Somali diaspora.

In their host countries, Somalis are commonly classified into three main groupings, regardless of the wave of which they were a part and despite their different characteristics in terms of age, qualification, livelihood patterns and level of integration into the host societies as well as their relation to Somalia.[36] The first is the generation of fathers and mothers who settled in the host countries as refugees, often having spent time in refugee camps in neighbouring countries. The second category is the children of these families who either accompanied their parents or were born in the host country. The third category is the latest arrivals, the young generation, with or without skills and educational qualifications, who went to the West for economic reasons through family reunion programmes or any other means. Of these three groups, the first and the third are generally considered to be most strongly attached to Somalia – providing help to relatives left behind by either arranging sponsorship to bring them to the West or sending money to support them in Somalia. This group has been described as ‘the centripetal force that constantly maintains and reinforces the bonds with the homeland through marriage, philanthropy and business undertakings’.[37] But this generational divide is fluid, with second-generation Somalis re-engaging with their regions of origin – either temporary or more permanently – as qualified experts or entrepreneurs, carefully balancing this re-engagement with other, often multiple, aspects of their identities.

The emergence of transnational entrepreneurship

Considering the Somali migrant community as a transnational community is key to understanding the way it functions and exerts its (economic) influence. The emergence of this transnational community went hand in hand with the emergence of transnational entrepreneurship: a form of entrepreneurship that includes border-crossing businesses[38] that rely on the existence of dual cultural, institutional and economic features[39] and involve at least the countries of origin and destination, if not more. It is a ‘new economic practice that goes beyond the traditional remittances, since it mobilizes the competencies, skills, social and cultural capitals acquired by migrants during their incorporation processes’.[40] The transnational approach allows for an analysis that encompasses the extent of their circulation across borders and business cultures, as well as the extent to which they have incorporated the political and economic realities of Somalia and Somaliland into their business models – hedged, as it were, their professional bets on it. In practice, transnational entrepreneurship has rapidly become a defining feature of the contemporary Somali economy and state-formation process, as a number of transnational entrepreneurs have become key actors in the Somali political economy.

Since the early 2000s many Somali entrepreneurs have expanded their businesses to include several countries: many businessmen are not based where their family is based, and neither part of the family is static/remains in one location. Numerous Somali entrepreneurs’ careers have taken them through a number of different jurisdictions – leading them, for instance, to change their residence from the UK to Dubai, while maintaining close ties to the community in Somalia and Europe, all the while traveling to Somaliland for sales or to China for their procurement, while their children study in Turkey or Malaysia. Statistics are very hard to come by, but the evidence available presents a picture of a business community that at the top layers exhibits the characteristics of a transnational community and transnational entrepreneurship in an extreme form.[41] At lower layers, the Somali transnational community exhibits different forms of engagement, which are often dependent on individuals’ prosperity, wealth as well as business and personal ambitions, all contributing to the economic dynamics within Somalia. Across the Somali business community, three general modes of economic engagement with Somalia can be distinguished.

The first and widely described form of engagement is through remittances. The economic engagement of the Somali population abroad with their homeland was, in the beginning of the civil war, mainly kinship-based, and built around refugee communities’ provision of remittances. A significant part of the Somali community abroad is still not very well off, and is still mainly engaging with Somalia and Somaliland within this framework, with remittances as the main contribution to the economic development of the country. Somalis abroad are presumed to be remitting around USD 1.3 billion annually to Somali regions,[42] an amount used to boost the purchasing capacity of their families in Somalia and possibly also to help family members start micro-businesses, more for sustenance purposes than as any form of ‘investment’.

A second modality is through the operation of small, medium and even micro enterprises. This modality was made possible as Somali regions stabilised and opportunities for business engagement grew, leading some members of this community to mobilise ‘the competencies, skills, social and cultural capitals acquired’ to re-engage with their country of origin. A lot of Somali transnational businessmen operate at the level of small or even micro business – almost a third of respondents in a survey of Somali diaspora investment identified themselves as ‘owners of a Somali business’.[43] This is not surprising given the low entry barriers to small and micro business across the Somali regions – or the lack of other employment opportunities. Many of these businesses should be classified as ‘enterprises of necessity’ rather than opportunity and also a kind of social investment – as well as an attempt to reconnect with the country of origin, pay a debt to one’s clan/family of origin or create a possibility for a return at some later date.[44] This number also tallies well with the expressed intent of almost three-quarters of the respondents to return to Somalia/land at some point.

The third, and most influential modality, is the role as transnational entrepreneur. The past decade has witnessed the emergence of a transnational Somali business class in pure form – with large-scale enterprises run by Somalis with dual or multiple nationalities, operating across various jurisdictions, albeit firmly anchored in the specifics of the multiple Somali economic realities, and incorporating them at the core of their business model. Somali transnational entrepreneurs running large enterprises most often have at least dual nationality, which allows them to move across multiple borders, select from a range of residences and have footholds in several countries. Somali transnational entrepreneurs are also quite mobile and tend to follow the opportunities that are often transmitted through social networks – although this holds in equal measure for the less-affluent members of the community.[45] The business practices and processes in which the Somali transnational business community are engaged are also often spread through several different countries, with Dubai and to a lesser extend Djibouti, featuring as the main financial and business hubs. Many key Somali businesses, including the well-known money transfer operator (MTO) Dahabshiil, are headquartered in Dubai while their boards of directors are staffed by Somalis with a UK or other nationality. The level of mutual interdependence between the fortunes of these well-off Somali transnational entrepreneurs and the governance systems in Somalia is unprecedented in comparison to other transnational communities, and their interactions significantly influence the political and economic dynamics of Somali regions.

One of the key characteristics of Somali transnational enterprises is that their earning model is built around the Somali markets.[46] The idiosyncrasies of the Somali economy are not just something that these big transnational companies cope with – they are at the very core of these companies’ business models, whether the model is built around the lack of a banking system, ubiquity and the importance of mobile technologies, or even the actual absence of certain market elements, such as for instance insurance. As a consequence, the entrepreneurs managing these enterprises are highly interested in – and likely ready to influence – the developments in their country of origin, and actively engage in domestic political and economic issues in order to steer outcomes. The Somali business class has thus become an important driver of both the Somali economic resurgence as well as political developments (see box 2).

These enterprises also serve as veritable hubs, where exchanges of ‘competencies, skills, social and cultural capitals’ take place, and know-how and practices are transferred. One of the most striking examples of this slow but impactful human and social capital transfer is the fact that the most powerful businesses in Somalia and Somaliland operate as relatively well-developed shareholder companies, not just abroad where they are formally incorporated, but also in Somalia or Somaliland where there is no legal framework to support actual national-level incorporation or financial trading. An especially illustrative case were the entrepreneurs that brought to Somaliland a nascent self-regulating insurance business, even though there are no insurance laws in the country – applying to their operations the legal and business know-how acquired abroad (see box 3).

While donors across the OECD countries have, to different extents, invested in reconnecting Somalis abroad with the economy of their country of origin, this process is by no means donor-driven. Somali transnationalism is very much a grassroots phenomenon and Somali migrants are certainly pursuing ‘border-crossing business activities involving their country of origin and destination’ with vigour and inventiveness. They are pooling and mobilising the financial capital of Somali communities across the world as well as their own social capital inside Somalia and Somaliland and building successful large-scale businesses that now dominate the economic landscape and have outgrown the fledgling public sector.

Box 2
A transnational powerbroker

He left Somalia long before the civil war, to study in the US, where odd student jobs were his main sources of income. When he saw a petrol station for sale, he found a way to up his credit card limit and make his first investment. Several petrol stations and a career in stock trading later, he returned to Somaliland – a US passport holder and with good family ties to local politics. This background allowed him to capitalise on the opportunity to handle the logistics for food aid coming into the country, later evolving into wider port-related businesses and supporting the development of a number of TV channels. His media company now stretches across the region, with stations operating in Ethiopia and Djibouti, allowing him to influence political agendas, and at times present more politically risky stories regarding government mismanagement or corruption. Although these channels risk being shut down, he can still channel through his media companies abroad. His siblings are already in high government posts. He matter-of-factly admits he harbours highest political ambitions: ‘This country is ruled by poor people. But poor people are hungry for wealth, they cannot rule well.

Social embeddedness of transnational entrepreneurship

The links between transnational businesses and governance models will be explored at length in the following chapters, but it should be recognised that in addition to profit and rent-seeking motives, transnational entrepreneurship also has an important societal function independent of the enterprises’ bottom line. In particular, investors in SMEs in Somali territories are often motivated if not by an idealised concept of return, then certainly by an equally idealised concept of contribution to the country’s development. Numerous interviews conducted for this study show that the notion of reconnecting with the country and its society looms large in this group, fuelled in equal measure by a sense of kinship and interdependency at the extended family scale, as well as by the increasing opportunities to play a meaningful role in the country’s development (often through conducting projects rather than paying taxes) and perhaps also gain a kind of social status that may not be available in the country of residence.[47] This also ties into a notion of reconnecting with the society by bringing something to it – be it access to aid money, jobs or ideas.[48] It has by now become a fairly common point that remittances may be an essential obligation among many diasporas groups, but in the Somali context, in order to earn one’s right to be fully part of the community again – e.g. compensate for the absence during the conflict – more than remittances is needed.[49] This commitment goes beyond the business investments – some Somali interviewees insisted that their reconnecting with the homeland was predicated on whether they actually brought their children and families with them.[50]

What underlies these affective and societal attitudes is also a sense of complex societal obligations stemming from the nature of clan ties and customary law (Xeer) that directly or indirectly introduced responsibility of the family/clan for transgressions committed by an individual family/clan member through a system of detailed penalties that often required the social and economic resources of an extended family.[51] While it would be a grave simplification to make a direct connection between the sense of shared clan obligation and today’s societal structure and mechanisms in Somalia, many interlocutors recognised the ongoing pressure of one’s reputation being seen through the clan lens, but also affecting the overall social standing of the extended family/clan. Individual Somali businessmen, working as professional service providers, in SMEs and in large conglomerates, continue to see themselves also as part of a community – and are beholden by it, for better or worse. Community relations are therefore always present in the functioning of transnational businesses, through religious payments such as zakat, but also through elaborate corporate social responsibility programmes that serve multiple purposes, which will be discussed in detail later in the study.

What all Somali transnational entrepreneurs seem to share is a sense of vast opportunities for business growth and recognition of personal importance often denied to them in the countries of settlement but offered by their country of origin. ‘In the West one needs to struggle to come up with an original idea and find a niche in the market here, every idea is new.’[52] This wealth of opportunities they have readily embraced, contributing to a rich and textured economy, although it has also created some potential challenges.

Hansen, S. 2007. ‘Civil War economies, the hunt for profit and the incentives for peace (The case of Somalia)’, AE Working paper 1.
Some notable works include Hammond, L. et al. 2011. Cash and Compassion: The Role of the Somali Diaspora in Relief, Development and Peacebuilding, UN Development Programme (UNDP); Horst, C. ‘The Role of Remittances in the Transnational Livelihood Strategies of Somalis’, from van Naerssen, T., Spaan, E. and Zoomers, A. (2008), Global Migration and Development, Routledge, and more recent Abdi, C. 2017. ‘Elusive Jannah: The Somali Diaspora and a Borderless Muslim Identity.’ Journal of Islamic Studies. 28(2), 261-264.
Tan, Y. et. al. 2018. ‘Transnationalism, diaspora and development: a purposive review of literature’, Geography Compass 12(12), 1-20.
For example, a 2009 UNDP study of the Somali diaspora referred to it as a community ‘still very much on the move’ – with an implicit expectation that the community would at some point not be ‘on the move’ anymore (Somalia’s Missing Million: The Somali Diaspora and its Role in Development, UNDP Somalia). Ten years later, Somalis abroad – and especially the economically most active ones – have become only more mobile, building this mobility into the core of their business model, and challenging this static lens.
Horst, C. 2006. Transnational Nomads: How Somalis Cope with Refugee Life in the Dadaab Camps of Kenya, Oxford: Berghahn.
See Bauböck, M. and Faist, T. 2010. Diaspora and Transnationalism: Concepts, Theories and Methods, Amsterdam: Amsterdam University Press.
Bauböck, M. and Faist, T. 2010. Diaspora and Transnationalism: Concepts, Theories and Methods, Amsterdam: Amsterdam University Press.
Wikileaks. 2008. ‘Somalia - Political Perspectives from Dubai’, 20 November, link, (accessed 20 May 2019).
Abdi, C. 2017. Elusive Jannah: The Somali Diaspora and a Borderless Muslim Identity, Minneapolis, MN and London: University of Minnesota Press.
Zapata-Barrero, R. and Rezael, S. 2019. ‘Diaspora governance and transnational entrepreneurship: the rise of an emerging social global pattern in migration studies’, Journal of Ethnic and Migration Studies.
Drori, I., Honig, B. and Wright, M. 2009. ‘Transnational Entrepreneurship: An Emergent Field of Study’, Entrepreneurship Theory and Practice 33(5), 1001–1022.
Somalia and Somaliland have poor national-level statistics, while in their other countries of residence Somalis are not registered as a separate category nor can they self-identify as such (for instance, in the UK they often fall under ‘other’ or those from the fourth wave under ‘EU migrants’).
Benson, J. et al. 2016. Somali Diaspora Investment Survey Report: Typologies, Drivers, & Recommendations, Shuraako.
For a discussion on necessity and opportunity-driven entrepreneurship, see: Schumpeter, J. 1934. ‘The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle’, Harvard Economic Studies, 46.
Interviews illustrate various examples of the impact of such networks in many different situations – choosing the place of residence, the manner of engagement with Somali regions or the networking that facilitates engagement with economic realities on the ground.
Although some of the more recent ventures in the Somali oil and gas market have somewhat shifted this model by including Kenya as a key market.
Interviews with various transnational Somali actors and entrepreneurs in the UK, Dubai and Somaliland.
Interview with a European academic, The Hague, December 2018.
Returnees seen as not contributing are frequently negatively viewed as ‘Dhaqan Celis’ (culture returnee) or temporary returnees attempting to profit from aid-flows (Interview with a Somali academic, Dubai, December 2018); for a detailed discussion on the affective attitudes towards remittances, see also Mohamud, M. 2014. ‘The “Ideal” Return, Horn of Africa 2012(2), link (accessed 20 May 2019).
Interviews with Somali diaspora professionals, Bristol, December 2018.
For an in-depth description of origins and structure of Xeer, see Mohamed, J. 2007. ‘Kinship and Contract in Somali Politics’, Africa 77(2), 226-249.
Interview with a diaspora entrepreneur, Hargeisa, February 2019.