In Somaliland we have succeeded in many of the aspects of self-governance and power sharing where other African nations failed
By: Hassan Abdi Yousuf
In Somaliland we have succeeded in many of the aspects of self-governance and power sharing where other African nations failed. We mastered the art of collective action and conflict resolving and overcame the recurring Third World political disputes to certain extent. We have also managed to conduct several fair and free elections in a systematic and world renounced manner in a country yet to be recognized by the international community as sovereign and independent country. The traditional leaders, the NGOs, and the local Media played commendable roles in this regard. Gone are the days when a disadvantageous politician would stir divisions among his constituency and other members of the society.
On the Judiciary front, we are still way behind but the steps taken us far are great achievements. Hats are up to the Judges of the Supreme Court in resolving the disputes between political leadership of UCID and UDUB political Parties. We look forward to the day when the common man in the street will be convinced that justice will be serviced and he can get his legal rights through the legal channels rather than resorting to tribal affiliation, violence and other uncivilized means.
However, we observe that transparency and accountability are neglected. In particular, there is a growing rapprochement between the Capital and Politics in an environment of total lack of transparency and accountability. We also observe mounting greed among certain wealthy individuals who in collaboration with leading politicians are engaged in illegal Mega projects in the absence of the legal check and balances and the watchdogs that would safeguard the interest of the populace.
First and foremost, the Cement Factory in Berbera was awarded to certain investors without any tendering or competition. Secondly, the same project was once again awarded to another group of investors. The criteria for awarding this project to certain and specific persons were never disclosed. The project was not publicized to potential bidders and it is unclear why these persons and not any one in the street. The coal deposits of Erigabo, the Gemstone mines in West, the Oil exploration in Odwayne to name just a few are all being handled in clandestine, middle of the night deals. Even the oil exploration projects awarded to international investors are not free from seemingly dubious transactions.
I am of the opinion that with the exception of Oil and Gas exploration projects which should be owned and managed by the respective government institutions, all other natural resources should be handled in accordance with National Natural Resources ACT as recently proposed Mohammed Hashi Elmi. What is happening now would lead to irresolvable conflicts, particularly given the tribal structure of our society. The current state of affairs and the Modest Operandi of our leaderships since the inception sound to be a recipe for the common notion that Oil and Natural Resources prove to be a curse to African nations and we are pursuing that dark path.
In Somaliland, certain politicians and businessmen are engaged in discussions related to Mega projects on self profiteering intentions with total disregard of the competition, Law of Land, and transparency. Consequently, the interest of the common man in the street is being compromised. These men and probably few women are derived by greed and tend to forget that these natural resources are the property of entire population. These illegal profiteering schemes will eventually create a system similar to what happen in Egypt under the ill-fated privatization programs. In the end, a situation will develop where the poor gets yet poorer, while few will hoard the wealth of the nation and that is where the Mother of All Diseases starts.
In Egypt, the Bank of Egypt which was originally owned by the government for some 100 years was offered for public ownership. However, the shares were sold to foreign and local businessmen and only very small number of shares was offered to the public. The prices that these foreign and local tycoons paid for the bank’s assets were less 10% of its fair value. The bank owned and operated more than 400 braches across the nation and the land on which these branches were constructed exceeded the prices offered to these tycoons. How could this happen? It is very simple; the local politicians including Murarabk and his family members were paid large bribes and they agreed to sell the public property to small group of greedy businessmen. The same scenario was repeated in the all sectors of the government owned institutions that were privatized or more correctly looted like factories, telecommunication, large agricultural projects etc. In the agricultural front, vast areas of land were developed with full and mechanized irrigation systems and sold to wealthy Gulf businessmen and others. This happened at a time when the poor Egyptian farmer could not get water for his farm and the production of Egypt’s main crops like cotton dropped to record lows. Water channels from the Nile River were routed to the Mega projects owned by healthy foreign “investors” whereas the farms of the common Egyptian people were kept dry. After more 20 years of this systematic looting exercise, the outcome was a huge gap between the income of the local population and small wealthy local and foreign tycoons until the entire economy failed to operate, unemployment soared and poverty became wide spread.
On the contrary, what happen in Saudi Arabia was just the opposite of the Egyptian Scenario and the outcome was a classical example of nation-wide wealth distribution scheme.
For instance, in Saudi Arabia, privatization sector started in 2002 when government owned institutions were offered in Initial Public offerings (IPO). The entire population takes part of an open and equal share purchase of government owned businesses. Even private companies that are offered for public ownership are sold on equal footing to the rich and the poor. For instance, a small investor with SAR 1,000 and the multi-Millions investors with SAR 1Biillion are each given the option to buy the same number of shares. The small investor as well as the multi-millionaire is awarded or allocated about 100 shares at a price of SAR 10 per share (total price of SAR 1000). Later, the smaller investors would normally sell their shares to the larger investors but at a price. In 2002 as a small investor, I bought few shares for 276 per share and sold the same shares at SAR 1,200 per share few months later. That was profit margin of 335%. Millions of citizen made the same profits in matter of few months. That is a classical example of public wealth sharing and it should be applied to all public property being sold and even private companies going public. In this manner, the smaller investors were offered their share of the national wealth. This has crated an atmosphere of equality among the citizens of the nation. Similarly any company that goes public should sell its shares in the capital market is required by law to distribute the share among investors on equal footing. This is a typical share selling methodology:
• Assets sold: SAR 10,000,000,000
• Selling Price per share: 100
• Note: The government knows the price is much higher but is selling the share at low prices to the poor and rich at equal prices and by equal numbers i.e. price of SAR 10 and 100 shares each.
• Number of share sold to each wealthy or common citizen: 100 shares
• Later, the common citizen would sell to the wealthy at say SAR 200
• Profit of common citizen is SAR190 per share or 1900% ( buying at SAR 10 and sell at SAR 200)
• Note: 6 millions common citizens each bought about 100 shares at SAR 10 and sold at say SAR 200. In other word, SAR 1,140,000,000 ( 1.14 Billion ) moves from the rich the not-rich in a matter of months
• This sounds dramatic but it happened and continues to happen
In Tanzania the local farmers were left to own their farms. The international investors would approach the Tanzanian local farmers with proposal to grow certain beans. He will offer the farmer assistance in the form of seeds and working capital input like tractors and labor costs. The framer will cultivate the land and grow the beans as agreed. After the crops are harvested, the profits will be shared at pre-agreed rates and it’s a win-win situation.
In Somaliland the economy is still fragile and the resources are meager. However, unless strict and transparent wealth share mechanisms are put in place and necessary legislatures are passed by the Parliament and adhered to by all players including the government , politicians , the business community and local communities, we could end up in situation where conflicts , wastage and social unrest will be the ultimate outcomes. To sum it up, the following are key aspects of any wealth sharing scheme that should be adopted in respect to projects aiming at utilization of Natural Resources and public property before its too late and today rather than tomorrow:
- Natural Resources Act should be enacted and passed by parliament
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National Capital Market Authority should be set up to manage and control sales and public offering of shares in Natural Resources and public property sales schemes.
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National Capital Market Authority should control sale of private companies going public to ensure the common man is not looted in dubious share schemes.
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Before a natural resources project is offered to the public , the National Capital Markets Authority should review the projects feasibility studies ( normally prepared by the founders) to ensure the price that the common man on the street is being offered is fair depending on the project total cost and future cash flows etc.
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For instance, a group of investors intend to invest in Berbera Cement Factory, they will first prepare feasibility study which would show the project total cost , Pay-Back and IRR etc. They will also propose the price of the company share that the man in the street (small investor) will be offered. The National Capital Market Authority will review these documents to ensure that the price offered to the public is fair and not overstated.
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The business groups who intend to invest in natural resources projects , should form Joint stock companies as founders – not family businesses
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The founders of the projects investing in natural Resources should not own more that 20% of the interest in any project. The rest should be offered to the public. This will ensure two things: A) the company will not be automatically controlled by the founders. B) The small investors would benefit from the chance of buying the share at low initial offering stage and later sell their shares to the larger investors at a profit or keep the sharing as form of long term savings.
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No single legal entity or natural person or family members (man, wife {wives} and children) should own more than 5% of any natural Resources project.
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Regional sensitivity should be carefully and equitably handled. At the current stage, we can agree that each regional investors should develop the natural resource of their areas. Otherwise, nation-wide laws should be adopted by parliament to encourage movement of capital across the regions. However, it is not acceptable that certain regions will be open for all ( Gold’s land) , while others are reserved for the local communities ( Men’s Land)
Hassan Abdi Yousuf
Riyadh
Saudi Arabia
