Issue No. 789

Somalia Inc.: The Business of Corruption

Last week, Transparency International released its annual Corruption Perceptions Index (CPI) for 2024. Once again, Somalia remained mired at the bottom of the table, alongside Venezuela and South Sudan. Only the latter ranked lower than Somalia, which scored just 9 out of 100 in the rankings-- a drop of -2 from 2023. Despite promises of reform, Hassan Sheikh Mohamud's administration has again become notorious for its corruption, as was the case during his first term between 2012 and 2017.

2025 has already seen several corruption controversies erupt in relation to the federal government. Last month, parliamentarians accused Villa Somalia of signing a secret deal with Abu Yasir, a controversial Yemeni-born Gulf businessman, to establish a monopoly on livestock exports from the country. After two weeks of delays, the federal parliament is soon expected to reopen, and lawmakers are anticipated to grill ministers about the status of the purported deal with Yasir. It was simply the latest, though particularly egregious, attempt to weaponise and monopolise sovereign rents as well as import/exports based on the federal government's flimsy juridical sovereignty. The furious reaction in Puntland highlighted why these attempts have been an enduring discord between the centre and peripheral administrations. 

But in the capital, the scale of corruption, as well as economic exploitation, arguably dwarfs all else in the country. The 'Mogadishu Rising' narrative has been partially framed around the new skyscrapers being slung up in the city's wealthier neighbourhoods, used as evidence that Somalia's chronic instability and divisions are in the rearview mirror. Less considered is how many of these buildings have been constructed on public land, where thousands living in informal settlements were forcibly displaced for work to begin. In the first 6 months of 2024, nearly 40,000 people were evicted in the capital alone, according to the Norwegian Refugee Council, the overwhelming majority being women.

The latest controversy that has engulfed the government in recent weeks relates to the Qaad (khat) or miraa trade from Kenya. Import of the mildly narcotic leaf from Kenya, chewed socially by many, if not most, Somali men, had been banned under the former Mohamed Abdullahi Farmaajo government in 2020. The ban came amid a dive in Nairobi-Mogadishu relations over several issues, including over contested maritime territory in the Indian Ocean. The move also allowed the then-president's family to consolidate its grip over the profitable Ethiopian Qaad trade. The return of Hassan Sheikh Mohamud to power in May 2022 saw a general improvement in Kenya-Somalia ties, and as part of the initial detente, Mogadishu lifted the ban on the major Kenyan export. It was also believed that lifting the ban was part of the negotiations for Kenya's support for Somalia joining the regional East African Community bloc.

Since the ban was lifted, Kenyan Qaad cultivated predominantly in Meru has flowed into Somalia again. But it has not been without controversy, with Qaad exporters repeatedly raising their frustrations with the taxes and commissions being imposed upon them. After the resumption, senior Somali government officials charged a USD 4 commission per kilogram of Qaad alongside the official import duty. President Hassan Sheikh Mohamud's family-- much like Farmaajo's-- is believed to have significant vested, highly profitable interests in the import business. In 2022, Kenyan farmers would sell one kilogram of Qaad for just USD 3, but after all costs, including export brokers and transport, distributors would sell the same kilogram to street traders in Somalia for around USD 35-40.  

These long-standing tensions came to a head at the beginning of this year when the charges imposed on both Kenyan exporters and Somali traders became unsustainable. Hidden taxes at export from Nairobi's Jomo Kenyatta International Airport and new restrictions on those importing, allegedly restricting those permitted to only a handful of Villa Somalia-connected businessmen, have proven highly controversial. In mid-January in Mogadishu, female Qaad traders protested the new taxes and the government's attempt to monopolise the imports. Then, in February, Kenyan Qaad exporters imposed a sudden ban on shipping the leaf to Somalia.

Any new tax collection spree by the federal government is not going to be carried out in Puntland or Jubaland– or indeed the overwhelming majority of the country. Instead, it will have to occur in Mogadishu and the limited areas under the government's control, where the overwhelming majority of the tax burden inevitably already falls. This will cause much consternation– again– and follows a multi-day closure of Bakara Market in Mogadishu in protest at excessive taxation from security forces. Over the weekend, traders at the capital's Banaadir Junction reported armed men with AK-47s extorting them despite having paid the official levies to trade there. Consequently, the promise of further taxation in the capital is astounding when residents face such extortion and have so little to show for it. Nearly every service in Somalia that the government should arguably handle is privatised, ranging from health to water.

Another thing that the federal government does not intend to stump up the cash for is its electoral agenda. Unlike Puntland and Somaliland, which have largely independently financed their own one-person, one-vote (OPOV) elections, the federal government has attached an eye-watering price tag of USD 200 million to the international community for its electoral plans. The first set of democratic OPOV elections in a conflict context is a costly business, as evidenced by a comparative set of polls in Afghanistan in 2004 that also budgeted USD 200 million.  Although the two countries are almost the same territorial size, Afghanistan’s population in 2004 was estimated to be around 23 million, requiring a far higher number of polling stations and electoral officials than for the just 400,000 Somalis estimated to be able to participate in the upcoming polls. Regarding Somalia, much of the international community appears likely to baulk at stumping up such significant cash for such a compromised and politically unworkable set of elections. However, some senior diplomats remain committed to the unilateral constitutional and electoral agenda of the federal government. The latest report into the scale of corruption in Somalia alone should give any capital with a chequebook pause to consider whether this is a worthwhile use of funds.

Last August, during one of Hassan Sheikh's Friday sermons in the presidential palace's mosque, the president criticised the practice of 'Shixaad,' where individuals ask for support on the streets or the hotel lobbies. Amid a cost-of-living crisis in the country, the practice has swelled but has remained overwhelmingly respectful. The federal government, on the other hand, has established itself by every metric as resource-orientated, whether it is requesting new funding from the international community, attempting to control the import of Qaad, or now attempting another tax spree. Pledging to arrest those evading a few USD in tax when senior officials in the federal government have quietly reaped immense profits from oil deals and Qaad imports sticks in the craw. Last week's Transparency International report simply confirmed what is already widely known by all Somalis– that their government’s appetite for acquisition far outstrips its interest in governance or development.

The Somali Wire Team