Find the full issue of Horn of Africa Bulletin here

     2,000 Views

Eastleigh ‘Little Mogadishu’ and its traditional integration into the East African economy: The secret, challenges and opportunities

Since the collapse of the Somali state in the early 1990s, the Somali people have been forced to navigate a very volatile landscape; within Somalia and beyond, from the east and Horn of Africa sub-region to the Gulf and way beyond, for example, in Europe, North America, and in Asia. The country produced millions of internally displaced people (IDPs), refugees and asylees many of them turning themselves into diasporas; having both positive and negative effects on the general welfare and life of the Somali inside and outside the country. Kenya was not spared either. As of September 2015, almost half a million refugees were registered in the Dadaab refugee camps in Kenya; most of them Somalis. Also, the Somali people have historically inhabited the North Eastern part of Kenya.

Many Somalis, including a large number of refugees – mainly those in Nairobi and Mombasa – are involved in innovative commercial ventures.[1] They have also become established in various Kenyan towns and cities and are now engaged in a range of business activities. The success of Somali businesspeople in Kenya has also attracted new investment from Somalis in the Middle East and further afield. However, the vigorous booming- and somehow unregulated-economy which flourished in post-1991 Somalia has been exported to various parts across the globe, including Kenya.

This article aims to provide an overview of Eastleigh also known as ‘Little Mogadishu’ or ‘Muqdisho Yarey’ in Somali as an instance of bottom-up regional business integration. The study is not exhaustive. Instead, it takes a holistic approach meant to give the bigger picture on- and in answering the questions – what is there? Why and how did Somali businesses integrate? In other words, what is the secret? What are the challenges and opportunities facing the Somali business community in Kenya? The overall objective of this article is to showcase the business hub of Eastleigh as an instance of economic-commercial integration in the East African economy.

Eastleigh ‘Little Mogadishu’ and its traditional business integration: The secret

There are about 200,000 Somalis in Nairobi’s Eastleigh estate. These include Somali-Kenyans, refugees and Somalis from Somalia- both legal as well as illegal immigrants – almost all of whom are involved in business. According to the Eastleigh Business Community (EBC), Somali businesses and trade volume accounts for over Ksh 2.9 billion per year; almost one-third of Nairobi’s overall economy.[2] Most Somali business activities in Kenya are centred in Nairobi’s Eastleigh neighborhood.

The economic transformation of Eastleigh has brought a new level of competition to Nairobi, substantially reducing the cost of goods and services. This uniquely, growing Somali investment in Nairobi has also attracted banks and other service-providers, demonstrating that urban refugees are not necessarily a burden on the State; and that instead, they can also become an economic asset. Remittances from the Somali diaspora also boost Somali businesses.[3]

Eastleigh also oversees Somali business – and other – developments in the east, central, and the Horn of Africa sub-region as it provides technical support and back up: From start-up to sustainment. After Mogadishu, and to some extent Dubai in the United Arab Emirates (UAE), Eastleigh is probably the epicenter of Somalia’s informal economy and still remains so. For example, airlines such as East Africa, African Express and Juba, all owned by Somalis, offer transport links and connections across the world. Different bus companies such as Maslah, Ocean Bus Services, and Gateway- also owned by Somalis- link Eastleigh and its residents to different parts of the country: Garrissa, Wajir, Mandera, Mombasa as well as the Dadaab and Kakuma refugee camps.

Eastleigh’s commercial sector is dominated by Somalis, with most if not all, businesses owned by members of the Somali community. According to the local Member of Parliament, Yusuf Hassan, Somalis have invested heavily in the enclave, contributing over $1.5 billion in the neighborhood alone. As of September 2015, Hassan further argues that Eastleigh accounted for around 25 percent of the Nairobi City Council‘s tax revenues.[4] Members of the wider Somali business community are involved in almost all sectors of Kenya’s economy, ranging from the informal hawala banking and forex sector to the real estate and construction sector, to the energy sector,[5] to general trade. These businesses extend from Kenya’s borders to the east and Horn of Africa sub-region and with import/export trade links with countries outside the Africa region and beyond; expanding all the way to the Far East Asia.

There are a number of factors that explain the success of the Eastleigh business hub and its traditional integration into the east African economy.

Firstly, since the early 1990s, Eastleigh has developed dramatically and, shaped by its growing population, it has become a major business and shopping district in Nairobi and in the east African economy. Businesspeople, including incoming refugees, have invested in import and export businesses, retail outlets, chemists, property letting and real estate development, hotels, lodges, cafés and restaurants, long-distance transport companies, taxis, phone/internet bureaus, and international money transfer and exchange services.[6]

Secondly, the collapse of the Somali state led to a new, out-of-the-box thinking; hence very enterprising Somalis businesspeople. As a result, the pre-war, formal Somali economy was turned into a communal, trust-based informal economy. This, coupled with the enterprising nature of Somali business people, was also a key factor to make and succeed even in difficult situations and times.

Thirdly, in Kenya, there exists a Somali (Kenyan) community and the Somali kinship system facilitated the process of Somali business enterprises.

Fourthly, Kenya already had a large informal economy of its own. The livelihood of most inhabitants of Nairobi depends on this due to the increasing decline of wage employment in the public sector. As a result, integration was also much easier since the Kenyan economy is penetrable.

Finally, Islam also did play a major role in the trust concept of Somali business dealings: from Hawalas, to the provision of interest-free credit facilities (both individually and in groups), to the crafting of business partnerships based on profit/loss sharing.

Challenges

There are a number of challenges facing business enterprises Eastleigh’s business enterprise. One could mention; the effects of 9/11, the operations of the Kenya’s Defense Forces (KDF) in Somalia, business infrastructure in Eastleigh, and the identity of the Somali and police brutality.

Since the early 2000s, 9/11 has been a landmark moment for the Somali people and their businesses. The 9/11 attacks led to a fundamental shift in international relations and the new ‘Global War on Terror’ (GWOT). The Somali crisis was a defining moment for US foreign policy in the post-Cold War era. It created what is called ‘the Somali syndrome,’ a risk-averse approach to civil conflicts in conflicted areas.[7] However, the onset of the GWOT coupled with the intensification of the battle against terrorism- as well as counter-terrorism- has also affected Somalia and Somalis, and economic enterprises have been impacted. This period, for example, saw the forceful closure of operations of Al-Barakaat, the biggest Somali remittance company in Somalia at the time.[8]

Life has not been the same in Eastleigh since the KDF crossed into Somalia in 2011 in their fight against Al-Shabaab; and later on joining the African Union Mission in Somalia (AMISOM). Somali economic enterprises, Kenyans of Somali origin and migrants from Somalia have increasingly been viewed with suspicion and as a source of threat. Al-Shabaab operations in Kenya have further exacerbated this situation.[9]

Despite its fast-growing economic and business activities, Eastleigh suffers from a lack of basic public services and infrastructure such as clean water, sewage system and safe, usable roads. There is also the question of perception vs. misperception. For example, many Kenyans consider Eastleigh to be a centre of illicit trade and corrupt business dealings and practices.

One other major security-related problem is also that of the double identity of the Somali (Somali-Kenyan, Somali, or Kenyan) and the increasing police brutality that is enmeshed with the Somali region’s history vs. past Kenya-Somalia relations. Many observers attribute this identity problem to the neglected state of infrastructure, the dangerously-constructed buildings in Eastleigh and the inability of Somalis to demand or assert their rights on account of their politically-dented refugee population.

Opportunities

Other than the many challenges Eastleigh faces, there are also many opportunities. For example, the growth of Somali businesses in Nairobi has attracted banks and other service-providers; thus creating more jobs for Kenyans. Such service-providers have adapted their business behaviour and working hours to accommodate the demands of the Somali business community in Kenya. Examples include the introduction and application of Islamic banking system, respect for the Holy month of Ramadan, the Islamic dress code among other issues. Somali-owned businesses have also created jobs for local unskilled workers. Somali employers also tend to pay more for similar work than non-Somalis and many Nairobians increasingly turn towards Eastleigh to earn a living.

As part of the Somali network, business operators have expanded onto the east, central and Horn of Africa sub-region; hence facilitating regional integration by other means: informal, non-traditional, regional economic integration.[10] Additionally, the proximity to Somalia and integration of businesses in the two countries (eg, Somalia as the centre and Kenya as the base for logistics and liaison) has further enhanced integration.

The enterprising history of Somalis in Kenya and beyond has also played a key role in the establishment of and the successful maintenance of their businesses. Despite the negative perceptions, sometimes deployed by the Kenyan press, the reality is that these enterprises offer much that is of benefit to Kenya. Eastleigh also acts as a central point for the distribution of goods around the east African sub-region.

Conclusion

Although not as scientific, the article provided an overview of Eastleigh as a business factor in Kenya and beyond: the east/Horn of Africa sub-region, and as a subject in driving bottom-up business integration in the region. It briefly discussed the secret of this integration, the challenges and opportunities. Finally, it has showcased that Somalis use their clan-based, mutually trusted traditional, business networks to create geographically-dispersed trading networks as they seek new markets and partners.

There are a number of challenges but also opportunities for Eastleigh and its model of integration in the east African economy. However, the lesson to be drawn from the business experiences of Somalis in Eastleigh and beyond is that entrepreneurs need an enabling environment. Somalis in Kenya have created such an environment by circumventing formal structures, and states in the eastern Africa sub-region should therefore seek to build formal structures that do not drive entrepreneurs to confine themselves to the informal sector.

Finally, the secret behind this uniquely traditional and at the same time novel model of Somali business in the sub-region and how best it can be of more benefit for the new Somalia and its formal integration into the east African economy also calls for further research.

 

Ibrahim Farah is a former lecturer from the University of Nairobi and founder of the Mogadishu-based Justice & Peace Network (aka Maandeeq—JPN), heads the Somali Academy, which is the research arm of the Network. His areas of interest include foreign policy analysis and conflict studies in Africa and the MENA region; with emphasis on Somalia and the eastern Africa sub-region. He may be contacted at farahiq2002@yahoo.com

Valentine Opanga is currently doing an MA degree in Environmental Policy. She is a Research Associate at the Somali Academy. She may be reached at valentine1989@rocketmail.com

Saadia Abdishakur is finishing a BA degree in International Studies at the University of Nairobi. She is a Research Associate at the Somali Academy. She may be reached at azizacadey2011@hotmail.com

 

References

[1] See Oduor Kenneth, Kenya/Somalia: Somalia community doing booming business in country, Norwegian Council for Africa, 19 May 2008; See also Carrier, N. and E. Lochery. (2013). ‘Missing states? Somali trade networks and the Eastleigh transformation.’ Journal of Eastern African Studies 7.

[2] Business Daily, Somalis Create their Global Commercial Hub in Nairobi’s Eastleigh Estate Retrieved from www.businessdailyafrica.com Accessed on12/12/2015; See more Abdulsamed, F. (2011). Somali Investment in Kenya. Africa Programme Briefing paper, Chatham House.

[3] Ibid.

[4] MP Hassan, a second term parliamentarian from the Somali-Kenyan community is an advocate for the commercial hub and the enterprising nature of the Somali. Eastleigh is part of his Kamukunji constituency and he has introduced a number of development projects since he came to office. See also the series “Kamukunji Outlook Newsletter.”

[5] Hass Petroleum if a one of the best Somali-owned companies in the energy sector in the east and Horn of Africa sub-region. Not only in Somalia and Kenya, Hass Petroleum is also operating in Tanzania, Uganda, South Sudan, Rwanda, Burundi and the Democratic Republic of Congo (DRC). Rooted in the family name (Hass for Hassan), Hass Petroleum was founded in 1997 by two Somali brothers, the late Abdirizak Ali Hassan and Abdinasir Ali Hassan, The company recently won major agreements with the Government of Kenya.

[6] Ibid.

[7] See Patman Robert, The Roots of Strategic Failure: The Somalia Syndrome and Al Qaeda’s Path to 9/11, International Politics, 52, 89-109, 2014, (Accessed on January 2015)

[8] See for example Business Daily, Somalis Create their Global Commercial Hub in Nairobi’s Eastleigh Estate Retrieved from www.businessdailyafrica.com Accessed on12/12/2015

[9] See more in Mwaura Samora, The Somali Question, World Policy Institute,2013

[10] See more Campbell, E.H. (2005) Formalizing the informal economy: Somali refugee and migrant trade networks in Nairobi, Geneva: Global Commission on International Migration Global Migration Perspectives No. 47.

Leave a Reply