By Mohamed Osman and Abdelkarim A. Hassan
Private sector investment is paramount to development programs in fragile countries and is essential to stimulate economic growth and to create employment opportunities. Nevertheless, these fragile countries such as Somalia face major challenges in accessing finances and investments due to political instability, mass corruption, poor infrastructure, weak institutions, and poor governance. Thus, attracting private investment has been problematic. Yet Somalia offers a unique business opportunity to private and public institutions alike. Somalia’s pristine coast (the longest in Africa), coupled with its strategic location situated between the Arabian peninsula and land locked Ethiopia, lie some of Somalia’s exceptional business opportunities open to investors with a high risk tolerance.
Al Shabaab controlled most parts of Mogadishu in 2007 and the city was dubbed the ‘most dangerous city on the planet’. It was long before the daily Turkish Airlines flights, long before the UN relocated to Mogadishu, and even long before Turkish involvement. Not too many business minded individuals, let alone an American owned business, would have considered it a good idea to invest in Mogadishu, at that particular juncture in time. From a western business stand point whereby stability is often a prerequisite for business investments, this idea would be considered completely far-fetched and even outright outrageous. It is; however, important to note that one man’s challenge is another man’s opportunity and hence Kofi Annan’s belief that Africa’s profitability is one of the best kept secrets in today’s world economy.
One particular company that was bold and avant-garde in its move in investing in Somalia is Bancroft Global Development, a company with “roots going back more than a century, to relief efforts during World War I and to a team of financiers who helped dozens of countries to prosper in the decades following the war.”
Bancroft, among other investments in Somalia, is keen on luring the international community back to Somalia. In April 2013, Bancroft opened its newest property called ‘International Campus’, within close proximity to Mogadishu International Airport. Sitting on 11 acres of a former rubbish dump, the International Campus is a stepping stone, to help major international organizations reopen a Somali base for their programs rather than remaining in foreign capitals like Nairobi. The demand has been strong. In two years the International Campus (IC) has expanded from 212 rooms to more than 350, while doubling the size of its dining facilities and gym. Unlike a hotel, there are no short-term guests at the IC. Its occupants are foreign embassies, aid agencies, and multilateral institutions like the European Union and the World Bank. Bancroft stated that its projects in Somalia have contributed to nearly $25,000,000 to the local economy. Yet those many millions are only a fraction of the value Bancroft believes it has added to Somalia’s economy by helping bring the international community back to the country’s shores.
Bancroft who also trains AMISOM soldiers, was in the news fairly recently when Al Shabaab militia were able to infiltrate the green zone on Dec 25, 2014 disguising as Somali soldiers, taking the lives of 9 people, among them an American Brett Fredricks, a retired member of Delta Force who was working for Bancroft.
WardheerNews had the opportunity to sit down with Bancroft’s executives, Michael Stock, the founder, Marc Frey, and Gregory Joachim to inquire about their operations in Somalia. Mr. Stock, when asked, “What attracted Bancroft to Somalia?” responded by stating that “Somalia was a good fit for Bancroft in late 2007 because at the time we arrived, the conflict was very severe, yet Somalia’s investment potential was and has always been very special. In addition to the obvious advantages, like Somalia’s strategic location in the Indian Ocean, the country has an enormously valuable resource that is often underappreciated: the Somali diaspora community. We knew there were educated, successful Somali people around the world who felt a very strong connection to their mother country.”
Regarding the question of the existence of two worlds in Mogadishu, those behind the massively fortified green zone and the rest of the ordinary Somali citizens, Mr Frey said “The physical security measures like walls are unfortunate on many levels. Bancroft leads the way in working on both sides of the wall, because we hope to use our relationships of mutual trust with all sides to bridge the divides that can develop between local people and the international organizations that have come to help. However, it is important to understand the true cause of any distance or distrust between the real Mogadishu city and the fortified compounds in the airport: Al Shabaab. A key part of its strategy is to isolate the Somali people, to drive a wedge between Somalis and the international community.”
As the security improves, Bancroft is planning to invest in more projects in Somalia including in the agriculture industry. Howard Buffet, the son of Warren Buffett, travelled to Somalia as a potential investor, after accepting an invitation from Bancroft.
Mr. Stock stated that Bancroft’s success is intertwined with Somalia’s success “What’s good for Somalis is good for us”.
Bancroft’s unique business model, enticed by the returns that ultra-early stage investments can bring, has worked and proven to be successful.
The full interview will be published soon.
Mohamed Osman and Abdelkarim A. Hassan
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