Somalilandsun – The level of Avarice (greed) among some of the omnipotent leviathan businesses operating in Somaliland’s free market is astounding, callous businesses operating incessantly with impunity that hoard, collude, manipulate and inflate already artificially-inflated commodity prices. However with the advent of the president’s recent appointment of high level committee, we can hope to ascertain sustainable solutions to the current exigency of the adversarial factors including the exogenous ones affecting Somaliland’s economy, the overall rising inflation, increasing exchange-rate and the depreciating national currency, but more importantly the power and prowess to shape the programs and policies pertaining to the procurement of provisions must come under the sphere of the government’s influence.
President Ahmed M. Mohamoud was right to institute a high level committee to ascertain the determinants of the inflationary pressures on Somaliland’s economy by decree, given the dire situation that businesses in the private sector created in this laissez-faire environment, the president as the highest ombudsmen is exercising his germane role to mitigate the price volatility of the staple commodities in the country, the president must claim the levers of economy, and the government must be able gage the markets, curb, control or put cap on the prices of essential commodities such as staple foods.
This brazen inflation causing havoc in Somaliland is apparent in the country’s economic indicators such as the Consumer Price Index, the weak currency of depreciating Shilling and exchange rate. The most recent available economic data which was of the third quarter for fiscal year of 2015, the aggregate inflation rate stood at 12.5% for all items and a staggering 14.7% for food. The year prior in 2014, the exchange rate went up sharply and the Somaliland-shilling depreciated by 23% this all according to the Ministry of National Planning and Development. The overall Inflation and the constantly depreciating currency wanes the already destitute purchasing power of a considerable demographic of Somaliland’s population.
Somaliland’s current inflation crisis can be attributed to the nexus of business tycoons and large businesses that either hoard the dollar, inflate the prices of commodities including staple foods, and the gouging of fuel prices concomitantly with the operational mobile money platforms that do not utilize Somaliland’s national currency.
The level of Avarice (greed) among businesses in Somaliland is astounding, Somaliland’s poor are net buyers of staple foods and are veritably most susceptible to volatility in commodity prices, which compels them to buy food in ever smaller portions of single-use-sachets, where in the longer run they end up paying more for it since they are unable buy it in bulk. The wanton greed and malfeasance of some of these unethical business groups that thrive in the unregulated, un-transparent and opaque state of commerce in Somaliland have for far too long gone unabated. These callous businesses are reaping profits by multiple folds and continually remain indifferent to the plight of the poor-consumers that are disproportionately burdened and further impoverished by their greed. Somaliland consumers are being fleeced, gouged by powerful businesses that are able to distort the unregulated Somaliland.
Somaliland does not have any more tools in its toolbox to compensate for the structural deficiencies of its undiversified and one dimensional economy lacking domestic production, with exogenous constrains. Our capabilities are limited given our economic outlook, no matter how high essential commodity prices climb, with our conditions there will be no consumer subsidies and we do not have state-owned enterprises (S.O.E) to hedge against these price volatilities.
To stem the high food prices the president cannot look inward to Somaliland’s own domestic production, with no large scale industrial farms in the country and our agricultural production system that is reliant on rain-fed farming where with less than 5% of the total fecund geographical area of Somaliland is only under cultivation. Somaliland imports roughly around four hundred-thousand tons of food annually, as of last year in 2014 food imports was 487,969 tons to be exact.
When it comes to the country’s currency which has been losing value, the central bank with its limited foreign reserves releases the Dollar in Somaliland’s market in an effort to shore up the Shilling, but beyond that the central bank does not have any other mechanism to mitigate the depreciation of the Shilling. Even the central bank’s enforced monetary policy of printing the Shilling and buying and selling of the Dollar proved dismal since without the legitimate commercial banks under its control it cannot deploy a downward revision of foreign exchange capital requirements to give it a bigger bearing, and in the ephemeral existence of the Somaliland Shilling, the currency lost value every year since its creation 1994, and every administration hitherto had a role to play in the currency’s deprecation, this all according to a research carried out by University of Hargeisa.
As much as we wish to be Pollyannaish, the fact remains theses culprits operate in Somaliland’s private sector which accounts for over 90% of the country’s gross domestic product, and for instance the wholesale and retail sector is the second largest industry which employs the most people in Somaliland. For this disparity to be rectified Somaliland must institute or prop-up its regulatory agencies which at the moment remain ill- staffed, trained and equipped and lack the enforcement clout and the impetus to act as the catalyst of change.
In the last two decades, many businesses in Somaliland found their niche in the buoyant private sector, sadly however many more unethical business people under the pursuit of their myopic interest and determined to reach financial apogees at whatever the cost have created the adversarial exogenous factors that hurt the economic and social affairs of people.
In the absence of regulatory institutions, greedy and exclusively profit seeking businesses have run a havoc in every industry, under the façade of working for the betterment of the people. The wanton greed and malfeasance seems to be common among many businesses in different sectors of our economy.
The energy sector is not any different to all the other sectors that gouge and have put profits above the wellbeing of their people, while remaining indifferent to the struggles of their people. Fuel prices have cost-push inflation effect where it increases the prices of other goods and services in the economy, so all the services that have fuel as an input should decrease when oil prices decrease like transportation and electricity, but in Somaliland prices only go up and hardly go down even when fuel prices plummet, and as we speak oil prices are at their lowest prices in over a decade.
Adding insult to injury the public with no consumer protection bear the brunt of expired goods and counterfeit products on top of the inflated prices for the staple-foods they subsist on. In addition to being fleeced the public is further endangered by nefarious businesses driven by greed, for instance the health sector is filled with plethora of obsolete, deficient, fake and prescription drugs. It is harder to comprehend the level of callousness and the despicability demonstrated by the businesses that are flooding the markets with expired foods and counterfeit products which are ineffective and the extremely low quality medicines lacking any active ingredients that they pass on to their brethren as authentic.
In the absence of proper market guidelines and regulations certain companies in Somaliland have ballooned in size with some of them controlling the whole supply-chain, and operating as the distributors, wholesalers and the retailers that also own the storage facilities and the transportation that their goods are stored and transported in. These companies that mushroomed have not only displaced workers and skewed the prices of the goods that they import but they have also encroached and intruded on to other sectors of the economy as well, their overbearing has even reached the small retailers in the informal sector, along with other small retailers that sell directly to the consumers who now cannot compete with these bigger businesses.
Somaliland government must not only be cautious but rather be very wary of the very few large companies that do everything as they will only stifle competition due to the default of their dominant positions and their anticompetitive disposition. It was exactly a year ago, when Ahmed M. Obsiiye member of Somaliland’s upper house of parliament blatantly referred to this new breed of businesses as “Bloodsuckers” (Ganacsigiina inyar oo dhiig miirato ah baa samaysantaye). We must be cognizant of the fact that the poor consumers in Somaliland are the primary beneficiaries of competitive domestic markets since prices of essential goods and services are brought down by healthy competition, and the best way to uplift the poor and ensure inclusive growth in Somaliland is to promote small and medium enterprises (SMEs) since they grow national economies.
These bloodsucking business in Somaliland’s private sector remained beyond the reach of regulations because the governments’ prowess and sphere of influence was solely limited to the security of the country since the onset, with lack of resource hindering the government’s germane role as the astute overseer of the programs and policies pertaining to procurement of provisions. Somaliland’s political predicament as an unrecognized state without sufficient resources forced it to rely on the private sector for the deliverance of the all-important food commodities that it could not provide itself or sufficiently regulate the free markets they operated in.
In all, once the high level committee concludes with their findings, the president must initiate whatever measures that will ease the burden and suffering of his people, even-though we are far from a country where the government has at its disposal the mechanism and the wherewithal to halter the adverse effects confronting its citizenry.
Our economic woes are domestically created by our own business community that either hoard the dollar, inflate the prices of commodities including staple foods, and the gouging of fuel prices concomitantly with the operational mobile money platforms that do not utilize our own national currency- the Somaliland Shillings. So we can be attuned to the needs of our people, we must have properly fully fledged regulatory institutions with the resources to gage the markets and initiate whatever action that will safeguard our own consumers.
Inshallah until the day we have more Investors than Aid-workers in Somaliland.
United we prevail.
Geleh Ali Marshal