NDEMO: In Somali business success, trust plays a vital role

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Eastleigh, Nairobi, was established in 1921 by the colonial government to settle the Somali community.

Somalis, alongside Nubians and some Swahili, were then being used as colonial orderlies and askaris and the colonial government needed to settle them within the proximity of the town.  

Under the colonial cultural rule, the suburb became predominantly Asian.  The Asians were later shifted to create room for Africans working for the colonial government. 

Today, the suburb is predominantly settled by Somali immigrants, which is why it is referred to as ‘Little Mogadishu’. 

Eastleigh was in the news earlier this year for the wrong reasons. Somali and local entrepreneurs are tussling over business activity in this vibrant suburb. While non-Somali entrepreneurs primarily hawk their goods on the streets, the more established Somali entrepreneurs occupy virtually all the shops.

It is not by coincidence that the Somali are taking up many lucrative business districts including South C, Lavington and Parklands. 

In Parklands, just as Asians had replaced the Somali in Eastleigh a long time ago, the Asian community is systematically being edged out by the Somali from a suburb that they have occupied predominantly for almost a century.

Studies reveal that the core of immigrant entrepreneurial success is the reciprocal relationship, networks and trust that they build.

This change of fortunes is reminiscent of the success by the Asian community in East Africa and the indigenous success of the immigrant Kikuyu, Kisii, Arab, European and businessmen from other communities in Nairobi and other areas. 

A case in point is the Kikuyu group from Rwathia in Murang’a. In colonial times, the Rwathia group were virtual immigrants in Nairobi building social relationship (social capital), trust and the networks that saw them succeed. 

Written records show that in the early days they spent a great deal of time together strategising on business ventures. 

If they needed to send money back home to Murang’a, they would send one of them to transport the money and distribute it to their respective families without fail.

In my view, and from my observations, social ties, trust and networks are waning among indigenous communities in Kenya.

Although political activities strengthen indigenous social ties, economic activities puts them asunder. This is the cause of entrepreneurial failure, which we often blame on others who are doing it right. 

Here is why I hold that view. Many of the traders in Kenya import their wares from China, Turkey and Dubai.  These destinations have become the most lucrative airline routes.  Why? Because every trader travels to these destinations to buy a few goods. 

The Somali however, rely on their global networks and a well-established informal value transfer system, hawala (also known as hundi or xawala system that is largely based on the performance and honour of a huge network of money brokers of “Hawaladars”), thus using the fewest resources to buy and ship their wares in bulk to different destinations, including Nairobi. 

Sometimes, they hire a cargo plane to drop their supplies at cheaper airports like Eldoret.  Operating as a team, they can retail their wares in the city at half the cost price of lone ranger importers. 

Once their luggage is here, the distribution networks follow their social networks that can reach virtually every corner of the country, and even neighbouring countries. 

Other Kenyan importers, however, have no honour system and cannot trust their colleagues. They are happy to travel together to buy similar goods from the same supplier and travel back together, spending a lot of money on a journey that could have been made by one person. 

Their failure to leverage aggregation and social capital to buy and sell through formal distribution networks is a puzzle that costs them dearly, yet Kenya’s advances in cooperative movement especially, chamas, is notable globally. 

Instead, the lone ranger mentality is destroying them and forcing them to result to desperate measures to dispose of their imports on the streets.

When the history of Kenya’s internal migration is written, the Somali, both from Somalia and the indigenous Kenyan Somali, will stand out as the most widely spread ethnic group in Africa.  The Somali live harmoniously in virtually every city in East Africa and are indeed more dispersed than either the Kikuyu or the emergent Kisii émigré. 

Their willingness to live anywhere in the world and their social capital in spite of sharp differences in their places of birth has made them reap the benefits of being away from home, which is often a factor of success in enterprise and the opportunity to create massive wealth and a huge real estate portfolio across the region.

The Somali success in social and economic networks has been noted in the political spheres where they have built massive capital.

In Kenya’s fractious politics, the Somali stand tall. Indeed whenever there are two candidates from the competing predominant ethnic groups for any position, the Somali have always emerged as compromise candidates. 

In politics, they are great at deal-making, sometimes quietly to benefit their region that has been hitherto marginalised by previous administrations.  

With strong statistical significance, three social capital factors – networking, interpersonal trust and institutional trust – provide an explanation for variations in immigrant entrepreneurship across countries.

The nexus between immigration and economic growth created by immigrant entrepreneurs is strongest in America and Europe. 

Immigrants created virtually all the global ICT giants. It can be said, therefore, that the rise of US entrepreneurialism resulted from immigrants. 

The open borders of American states have also made it possible for internal immigrants to succeed.  This is Kenya, where internal immigrants are being urged to return to their “home areas.”

It is not clear why people succeed when they are far away from home but the history of successful immigrant entrepreneurship is long and growing. 

The Jews in Europe and the United States, the Lebanese in West Africa, the Indians in East Africa and now the emerging Somali success, are good examples.

With this body of knowledge, it can be argued that if Africa had open borders, immigrants would help create jobs and boost economic growth.  As stated earlier, no one can quite explain why you can do better entrepreneurially in a foreign land than in your home. 

Perhaps we may not be the only ones with such habits because it is often said that “The grass is always greener on the other side of the fence.”  Indeed, whenever I travel to other parts of Africa, I see more opportunities than I see at home. 

Already, we are seeing this phenomenon take root in Africa. Nigerians are succeeding across Africa.  In East Africa, there is an emergent reciprocal success in the region through cross-border migration and entrepreneurship.

However, it is also true that problems often engender entrepreneurialism.  The common thread in all cases where immigrants have exceedingly succeeded is an underlying problem: the discrimination against Jewish people, the Asian displacement by Europeans, as well as the conflicts in Somalia, Nigeria and in Lebanon.

Locally, the displacement of the Kikuyu by the colonial government and the lack of land in Kisii are undeniable factors in the success of their immigrants. 

Entrepreneurship is perhaps the silver lining in every cloud of discrimination, isolation and displacement. Overall, immigrants have become the critical cog in economic progress globally. 

In Kenya, some of the fastest growing enterprises like Craft Silicon, Radio Africa and Twiga Foods are immigrant owned. In Uganda, some of the best companies are Kenyan-owned and so are some of the best companies in Rwanda. 

The people have set the pace. It is the policymakers’ turn to help Africa itself grow economically and create wealth.  Perhaps the Africa Union’s Vision 2063 should aspire to make the United State of Africa with wide open borders.

While it can be argued that Africa’s social capital is waning and that we cannot trust each other and develop beneficial entrepreneurial networks, there is opportunity in opening up African borders to internal migration, which is promising to re-energise economic growth, wealth and employment creation.

As for trust, perhaps we should borrow from Ernest Hemingway’s words that “The best way to find out if you can trust somebody is to trust them.” 

Let us learn to trust and that is the only way they can learn to trust too.

The writer is an associate professor at University of Nairobi’s School of Business. Twitter: @bantigito

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