Donor programming that does not take into account the interests of the major business conglomerates it affects, especially if it affects one of their core markets but also if it affects one of its related entities, risks deadlock, capture or other unintended consequences. Given their economic, social and political influence, the corporations can act as major supporters or spoilers. They are a force that by default neither supports nor challenges the state. Instead, they are powerful and resilient stakeholders largely independent of the state, with positions and interests in a variety of areas – including programming on peacebuilding and institution building. Stakeholder analyses should therefore include them in their mapping, and engagement strategies should actively consider engaging them where prudent and limiting their influence where necessary. This requires an understanding of these companies’ intended growth model, as well as their current key markets, other interests, and channels of influence. In most cases, it may be prudent to ensure communication with a number of corporate stakeholders, although any engagement strategy should consider what forms of engagements are appropriate to address such a disproportionally influential stakeholder next to a range of other relevant stakeholders. Additionally, given the long-term aims of many governance and statebuilding projects, specific efforts may need to be made to relate these to more immediate commercial objectives. It should also be kept in mind that the conglomerates’ legitimacy partially relies on avoiding visible association with the political sphere, instead engaging the political sphere in more covert channels and the public on its own terms through its CSR programme. Bridging this gap may be an essential but difficult step to take.
Profitable business opportunities are readily available in developing markets such as Somalia. Yet in a market mostly supplied through imports, the lack of access to substantial capital (in hard currency) is preventing small-scale start-ups from growing. Given a scarcity of affordable loans, existing SMEs are required to rely solely on organic growth. As the conglomerates captured the main liquidity generating markets and raised entry barriers, liquidity constraints form an artificial limit to the development of the SMEs. This, in turn, particularly limits the emergence of medium-sized enterprises able to compete with the conglomerates, thereby also limiting the demand for a more transparent and level playing field that medium-sized enterprises require to compete with larger competitors. Clientelist ties between private and political actors are thus allowed to persist. In order to overcome this constraint, new sources of funding will need to become available to smaller entrepreneurs. These new sources should be able to cover larger loans, be paid in hard currency (rather than goods), and be provided at competitive rates. Given the lack of strong ties between existing actors providing finance and other large business interests, changes will likely have to come from new entrants into the market that may be able to force an opening for new or foreign commercial banking entities. Opportunities like the entry of DP World in Berbera port might be leveraged to create the space for the introduction of such new entrants, as a sizeable multinational entering the market will most likely need to open up previously closed business networks to ensure access to the services and supplies it needs itself (for example, DP World may need access to international banking to transfer funds between assets and to pay local salaries).
Ample opportunities are available in the Somali market, and they are frequently seized by local and diaspora SMEs. As noted before, these small enterprises face significant constraints in their operations. Numerous markets do not allow for equal competition, loans allowing a company to scale up are scarcely available, and there are entrenched clientelistic networks seeking to capture the profits of newly established businesses. Additionally, the skills required to scale a business, such as the ability to define a growth strategy, manage larger projects, financial management and marketing skills, are relatively rare. Technical skills are also poorly available due to the relatively weak system of formal education, making it difficult to recruit additional staff (especially given the high salaries paid in the telecommunications sector). While many start-ups might be able to overcome some of these obstacles, few have been able to navigate all of them successfully (save those supported by existing economic elites). Nonetheless, the presence of new and growing enterprises may be a key catalyst to create more space for new entrants in a variety of markets, speed up economic development, which tends to stagnate in monopolistic situations, and provide new avenues for social advancement through new job opportunities. Incubating and/or supporting enterprises that may serve this role may thus be a more effective approach to stimulate economic development than promoting the creation of additional start-ups. Granting scalable businesses the support they require to carve out their own niche, be it through business skills training, running on-the-job vocational training, financing, protection from predatory practices, or support acquiring relevant licences or certification, would help the establishment of such enterprises and grant them the space to develop new markets. While this would not and should not seriously threaten the business models of the major conglomerates, it could establish some boundaries on their influence – creating some space in which other players could compete.