Somalis: Masters of Survival
Josephine Hart, acclaimed author, once said “Damaged people are dangerous. They know they can survive.” Given the peculiar circumstance in Somalia, the Somali people perfectly fit the above description. The collapse of any vestiges of a central government in 1991 disrupted all sides of the state apparatus and resulted a prolonged civil war which killed a quarter of a million people and forced many Somalis – almost one million - to seek refuge in different parts of the world. The civil war has debilitated the country, suffocated the economy, incapacitated the public and private sectors, and caused distress and hardship on the society at large. Despite all these, Somalia is now a stateless capitalism and the Somali people are running businesses in a unique way in order to survive under a collapsed economy
Words are not enough to reflect the chaos, hunger and difficulties that Somalis have endured ever since the civil war broke out; however, they have shown an incredible resiliency to survive which even challenges conventional ideas about any economy. It is generally believed, to enhance the economic health of a nation there must be a functioning central authority otherwise, reasonable economic activities cannot take place. Since Somalia does not have the necessary institutions that are necessary for a modern state system to operate, it is forced to resort its own devices and develop an informal economy based on informal finances.
Soon after the violent removal of Siad Barre in 1991, Somalis understood that the world was not coming to their rescue and they had to forge an economic system in order to survive. They had also recognised the importance of restoring the trust needed for the economy to operate. When it comes to trust, Somalia is suffering from a shortage of trust on many fronts particularly the political one. The Somalia’s record speaks for itself - 15 national reconciliation conferences within the last 15 years. Strangely, they have managed to adopt an unconventional economy on the basis of upstanding business ethic. This means economic transactions can actually go on without a regulator so long as they are embedded in a pre-existing web of social networks. Joshua Kleymeyer, Euro-Atlantic Action Commission, Center for Strategic and International Studies, described this “One mistake or abuse, and you loose the honor offered to you by your clientele”.
Trust is indeed the first of all the instrumentalities that facilitate exchange and the first beneficiary of this unique trust is the Somali shilling. Somalis have shown unwavering loyalty to their currency long after the country lost its Central Bank. Even when The Cairo Times said in 2001 “With no government to issue banknotes, every Somali that can afford it prints his own”. Peter Little explained this extraordinary devotion in his book Somalia: Economy Without State “There are some practical factors that help explain the persistency of Somali shilling, even in the absence of a central bank or treasury. These include, for example, the SoSh is:  needed to facilitate transactions in the absence of another widely available currency;  in limited supply and therefore its demand is high; and  well known to local consumers and businessmen.
The trust in the shilling would have been short-lived if the currency could not be moved around. In order to satisfy the money transfer demand, Somalis chose an ancient and efficient system of exchange called Hawala. Wire services, or hawala, fill the role of financial institutions in Somalia, Ahmed Mohamed, a Somali business expert, said, “Currently, there are no banking and regulatory financial institutions to provide the services required by individuals and businesses in Somalia. Furthermore, internal and external investment is exceptionally reduced due to multiple risk factors. However, all is not lost; an expansion of the traditional ‘hawala’ services enables the remittance organisations to act, not only as money-transfer agents, but also as conduits for trade and as quasi-banks. These remittance organisations currently are the lifeline for a significant portion of Somalis and form the backbone of the economy, bringing close to US $1 billion annually from over one million Somali migrants living abroad.”
Earlier Hawala service providers used to arrange for a trusted individual to deliver the money by hand. In order Hawala to be competitive and cheap, Somalis realised the limitation of the delivery process and sought other ways to overcome. Anna Lindley, University of Oxford, wrote “After the government collapsed, there was no longer control of the radio system and by using high-frequency (HF) radios; it became possible to communicate cheaply with many places in Somalia.” Since the Somali society has essentially been globalised, HF is not a useful tool for a global remittance system. Again Somalis chose Hawala to run on modern gadgets like computers and satellite phones. The growth in information and communication technology enables Hawala to become a quick, competitive and cheap way to transfer funds.
The aim of the above discussion is not to present the Somali economy and society with an overly rosy picture. On the contrary, Somalia is the poorest country in the world. A report published by the UNDP in 2002 depicts the poignant realities in the country, “In Somalia, life expectancy is 47 years, almost one out four children dies before the age of five, and less than a third of Somalis have access to health services. Only one out of every five Somalis can write and read, and only 14 percent of children are enrolled in primary schools. More than three-quarters of the Somali population has no access to clean water, and almost half of them have no access to sanitation”.
Whatever the circumstances, there is one undeniable fact about this unique nation. Somalia is a nation where survival is around the clock occupation and Somalis are now masters of survival. They have shown an incredible capacity to withstand hardship and challenges using their entrepreneurial skills, and that they can even compete with neighbouring countries that have functioning governments. Little also noted this “with inconsistent and minimal international assistance, there were few options but to develop a ‘second economy’ based on cross-border trade and smuggling, informal finance, and a global system of remittance that has allowed the territory to maintain a level of economic welfare comparable to some of its neighbors”.