Thursday October 18, 2018
By Abdi Latif Dahir
Abdi Addow likes to have oodkac for breakfast, the jerky-style beef cubes that Somalis usually eat
with injera flatbread. Addow especially loves his mother’s serving, but
since he doesn’t live with her in the Somali capital, he logs online
and uses a third-party delivery service to bring it to him from her
place.
Long beset by civil war, Somalia was among the last African nations to go online.
Internet penetration still remains low, high poverty levels persist,
there’s lack of a strong central authority, weak regulatory policies,
besides the absence of addresses and well-labeled streets, which is
bound to create logistical inefficiencies for start-ups.
Despite
this, or perhaps because of these challenges, the Horn of Africa nation
is experiencing a strong rise in digital businesses, with local
entrepreneurs building businesses that are disrupting existing trade
models and transforming the way people shop.In
Somali cities like Mogadishu, Hargeisa, and Garowe, there’s an emerging
e-commerce market, with founders establishing consumer-to-consumer,
business-to-business, or business-to-consumer applications that allow
for the purchase and dispatch of products or services. Together, these
platforms are encouraging a budding tech sector,
getting more people online, help to create some much-needed jobs, and
are attracting the attention of local angel investors—even if that’s on a
smaller scale.
Yet the current upswing is a story born out of need: as people flock back into the country following some semblance of order,
many want to enjoy the convenient lifestyle abroad where most
necessities were easily available on demand. Young enterprisers also
want to capitalize on that and provide the allure of immediate service
and instant gratification. The increased ownership of phones as well as a
very successful mobile money market
is also helping spur this nascent sector. As a tech entrepreneur
previously based in Stockholm, Addow says he uses the delivery apps not
just because they are “cheap and faster” but “because it saves time for
me since Mogadishu is getting a bigger population and has more cars so
it’s hard to get anywhere you want on time.”
One of the apps Addow uses is Gullivery,
a door-to-door delivery service launched last year. Its founder, Deeq
Mohamed, says he got the idea after moving with his wife from London to
the northwestern city of Hargeisa and noticed that many of the things
they bought for their home couldn’t be delivered. While hanging out with
friends, he also noticed their families would ask them to buy foodstuff
they would otherwise have ordered themselves.
“There
was no one doing the last mile delivery,” Deeq said on the phone from
Mogadishu. “And my friends and family asked, ‘Why don’t you go into that
business?’” After initially using his own savings, Deeq was able to
raise money from an investor, build an app,
expand to the capital, and partner with businesses looking to keep
their operations smooth, cut on costs, and garner more customers. In the
past year, the platform has signed up 145 businesses and made over
9,000 deliveries, handling anything from groceries and food to laundry
by charging a delivery fee of $1 to $5 depending on distance.
Local chutzpah
It’s
not just diaspora returnees, however, who are establishing these
outlets. After being laid off from a non-governmental organization in
Aug. 2014, Sami Gabas was finding it hard securing a job. Unemployment
is a stark problem in Somalia: 47% of the active population remained unemployed as of 2016, according to the International Labor Organization.
With a laptop, $25 in capital, and no previous experience managing a company, Gabas started Saami Online,
a one-stop shop that sells and delivers everything from books and
cosmetics to clothing and home appliances. Since he didn’t have the
funds to buy the goods at first, he had to show product owners that he
could take their wares and deliver them to customers away from major
cities. Clients were mostly inquiring about electronics and phones, so
Sami started serving underserved cities in Somalia including Kismayo and
Adado, and then went as far eastern Ethiopia and Djibouti.
Saami Online now has eight people working for
it and has five different offices across Somalia. Gabas says social
media has been a crucial part of its success: the company has almost
90,000 followers on Facebook where dozens of people make inquiries about products and deliveries daily.
The
power of social media and its ability to promote bankable ideas and
create a direct impact on bottom line sales is still something new to
traditional businesses, says Khadar Mohamed, founder of home and office
food delivery startup, Dalbo Catering.
Mohamoud Hassan, who heads Geeldoon Online Marketplace
says many businesses still depend on the “brick and mortar strategy,”
and some suppliers still “don’t understand how we do business.” But he
hopes that would change as accelerators like Innovate Ventures and conferences like the Mogadishu Tech Summit hold workshops and engage more people on the role of technology in scaling their businesses.
Challenging ecosystem
Despite
the dawn of this seeming e-commerce gold rush, entrepreneurs face
numerous challenges. Key among them is access to funds, says Gabas, who
while receiving praise from businessmen and government officials is yet
to raise any money even from local banks. “They encourage you but they
don’t take any action.”
Founders also
complained that when they found an investor, it was someone who wanted
to take over the entire business or wanted full-on returns in a year—a
feat they say is impossible.
Generating
traffic to their sites, finding a talented pool of employees, converting
shoppers into paying customers, finding reliable transportation,
insurance, and warehousing are also some of the difficult tasks they
continue to face. Making partnerships is also hard said Deeq, as
business owners “think you are working to undermine them.” Somalia, he
argues, needs what he calls “collaborative disruption”—that is making
businesses understand they are kick-starting something together for the
greater good.
E-commerce in Somalia “will
take a lot of effort to succeed,” Hassan reflects. “It’s important to
think long-term and think of profit in the end.”