This study has been conducted in accordance with CRU’s political economy analysis framework, thus focusing on power arrangements. By analysing changes in arrangements of power one can understand why decisions are made, what incentives play a role, how alliances form or break, and what narratives dominate. In turn, such understanding is key to identifying feasible approaches to conflict resolution. Examining shifts in arrangements of power enables the simultaneous exploration of the perspectives of those that govern and those that are being governed, as power is always relational. Doing so requires the use of three lenses: 1) the power networks and relationships between conflict actors; 2) the power practices and exchanges between them, and 3) contextual factors, such as institutions and ideology, that affect the power distribution underlying conflict.[187]

This political economy analysis is further specified to the private sector, in order to situate the

private sector in the deeper context of the political settlement, in which the most significant power and state connections are understood. The framework combines traditional conflict analysis with elements from social network and power analysis, and draws on recent research across a range of disciplines, namely new political economy, new institutional economics, and conflict studies. It thus brings to the surface the politics and power dynamics that may facilitate or hamper proposed interventions in conflict-affected situations. This way it uncovers hidden stakeholders, the practices and exchanges that facilitate the main actors’ relation to power, and the written and unwritten rules and structures that form the silent backdrop of these relations. This identification of arrangements of power helps to identify potential spoilers and entry points for action by showing which structures might be amenable to changes and which structures might be used to the policy maker’s advantage.

The report supports conflict-sensitive programming, by recognising that ‘[t]he success of most development efforts, including efforts to strengthen the state and build institutions of public accountability, rises or falls according to the degree to which these efforts are aligned with – or at least do not fundamentally threaten – the interests of powerful national and local actors who are in a position to thwart or co-opt those efforts.’[188] Somalia being a case in point, the analysis recognises that ‘many times well-intentioned interventions become ineffective because they reinforce an equilibrium that sustains the outcome the intervention attempted to change. These situations can arise from interventions that do not take into account the existing power balance.’[189]

Research for this report included desk research, a market analysis, telephone interviews and fieldwork, running between September 2018 and March 2019. Desk research included a literature review of academic and grey literature, supplemented with news sources, business literature and Somali news websites, in order to do an initial scoping of economic developments and market structures in Somalia and Somaliland. The market assessment subsequently concretised the initial scoping of Somali markets by establishing the corporate structures of the major business conglomerates and their related entities across a wide variety of sectors. Following cross-validation with some initial phone interviews, these scoping exercises provided sufficient information to guide the selection of interview respondents during fieldwork, ensuring that key actors, interests and interactions between private, government and clan actors would be covered. Additionally, given that transnational entrepreneurship and the wider Somali community is a multi-sited phenomenon, it also informed the selection of fieldwork sites.[190] As such, the United Kingdom, the United Arab Emirates (especially Dubai) and Somalia were identified as key sites in transnational Somali entrepreneurship. Unfortunately, China had to be excluded due to time considerations, and Mogadishu had to be excluded in light of security considerations. Kenya was initially included but was subsequently dropped, as the focus of the research excluded aid-based businesses, and the business activities in Eastleigh have been extensively explored elsewhere.[191] Fieldwork was conducted by Jos Meester (Dubai and Somaliland) and Ana Uzelac (the United Kingdom and Somaliland), and further supplemented by Claire Elder through phone interviews with Mogadishu-based respondents. Overall, a total number of 49 respondents were interviewed, ranging from SME to MTO owners, investors to consultants, and ministers to government representatives, as well as analysts and INGO representatives. The wide range covered allowed the researchers to thoroughly triangulate information and perspectives through cross-referencing information both between sites and between different professional backgrounds. For further details on interview respondents, see Figure 5.

Figure 5
Overview of interviewees
Overview of interviewees

Regardless of the efforts undertaken to cover the breadth and depth of Somali transnational entrepreneurship, and efforts to ensure reliable and valid data through triangulation and other efforts, the research was also subject to a number of limitations. As indicated above, not all relevant sites could be covered in the full depth required due to various constraints. It should therefore be kept in mind that additional research in further depth covering stakeholders in Puntland and Chinese suppliers of the Somali market might provide further insights.[192] It should also be kept in mind that given the covert nature of many of the connections under investigation, and the particularistic or clientelistic nature of a number of these relations, participants are likely to be motivated to misrepresent events.

Insights derived from economic developments in Somalia might also inform developments in a number of other areas going through processes of economic recovery in a precarious environment. ‘Hard-to-tax’ sectors and corporations exist in many other locations, and are especially persistent in those contexts where state authority is limited.[193] Nonetheless, it should be kept in mind that Somali market dynamics are not homogenous across the Somali territories, nor across the transnational community, and are evolving and changing rapidly as the economy develops. While the dynamics covered in this report are likely to be indicative of the Somali business context, and are likely to present in a number of other fragile contexts, they cannot be expected to hold across all Somali communities, business sectors and comparable cases. Dynamics between Somalia and Somaliland vary substantial as a consequence of their distinct clan and historical circumstances, and further deviations can be expected when local political settlements are examined in more depth. As such, insights gained from the economic development patterns in the Somali territories may be informative, but cannot be expected to hold uniformly across the territories nor to be directly comparable to the dynamics in other states. Extrapolations from such dynamics without taking into account the local context may thus obscure important differences.

See Clingendael. 2019. Our methodology for political-economy analysis, The Hague: The Clingendael Institute of International relations for further details.
Parks, T. and Cole, W. 2010. Political Settlements: Implications for International Development Policy and Practice, San Francisco: The Asia Foundation.
World Bank. 2017. World Development Report 2017: Governance and the Law, Washington DC: World Bank Group, 27.
See Falcon, M. 2016. Multi-Sited Ethnography. Theory, Praxis and Locality in Contemporary Social Research, Aldershot: Routledge (especially the publication by Horst, C. in same volume: ‘Expanding Sites: The Question of ‘Depth’ Explored’, 119-134) for in-depth considerations regarding multi-sited ethnography and its application in the Somali community.
See for instance Carrier, N. 2017. Little Mogadishu: Eastleigh, Nairobi's Global Somali Hub, New York: Oxford University Press.
DP World respondents were relatively lightly represented in this study, and not all relevant branches of the company’s operations could be reached.
Cottarelli, C. 2011. ‘Revenue Mobilization in Developing Countries.’ International Monetary Fund.