Despite setbacks, Somalia begins to pick itself up and looks at bringing international bandwidth to Mogadishu

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It may be two steps forward and one step back but Somalia is beginning to pick itself up off the ground after years of civil war. In the absence of regulation, a telecoms sector has developed. Now the new Government must put in place regulation and start to focus on connecting the disparate parts of the country. Russell Southwood spoke to Tim Kelly, World Bank about what’s been happening there.

In political terms, there are three parts of Somalia in which it’s possible for the telecoms sector to develop: the area controlled by the new Government around Mogadishu; Somaliland (which has declared independence); and Puntland (which has not declared independence).

Security issues make it difficult for even outside investors with strong nerves to get involved. International business in Mogadishu is still either conducted in a compound at the airport or in a protected central zone called Villa Somalia. Somaliland is considered much safer but Puntland is not as safe because of the sea pirates who base themselves there. Despite the security issues, diaspora Somalis are coming back to Mogadishu and setting up businesses like cafes, restaurants and hotels.

In the absence of tax and regulation, the mobile sector has flourished and penetration is just under a quarter of the population, with around 2.3 million subscribers at the end of 2012. Mobile communications is a vital lifeline between Somalis across the country and the Somali diaspora who provide much of the funding that keeps the country afloat.

There are five main players in the mobile market: Hormuud Telecom (HorTel), Somafone, Telesom, Nationlink and Telecom Somalia. HorTel is by far the biggest player out of all these with a market share of just over 40%. Some operate only in Somaliland and Puntland, whereas others provide something approaching a national service. Some part of these networks offer GPRS/EDGE and 3G.

There are several mobile money services, the most popular of which seems to be Telesom’s Zaad service. This was banned by Al-Shabab when it controlled Mogadishu but is now functioning again. In the absence of a banking sector, these services are vital for transferring money into the country from the diaspora and around the country.

Mogadishu’s Transitional Federal Government (which has been replaced by the current Government) set up a Ministry of Information, Posts and Telecoms and it adopted the 2012 Telecoms Act, which sets out the setting up of a regulator to be called the National Communications Commission. Once this gets off the ground it will be a converged regulator dealing with both media and telecoms. The World Bank is providing training for regulatory officials.

However, the reality is that the Government has bigger concerns than trying to get this kind of legislation implemented and the operators have campaigned vigorously against it. From their perspective, more regulatory control and taxes are not a happy prospect and it’s fair to say that there’s a connection between high levels of competition, the absence of taxes and low user prices. Nevertheless, for a state to function it needs revenues and the telecoms operators are the most successful businesses in all parts of the country.

As Tim Kelly sees it:”The telecoms sector is vital to the recovery of Somalia. International call income is the biggest source of foreign exchange revenue after diaspora remittances. None of that revenue benefits the Government. It needs some of that revenue without taxing the operators to death.”

Somaliland is currently connected to international fibre via Djibouti but Mogadishu does not yet have such a connection. Currently all international communication to Mogadishu is by satellite that is very expensive. Inevitably given the security situation, there are issues around power supply.

The World Bank is negotiating to bring international bandwidth to the capital. They want to set up a series of video/Skype rooms in Ministries and leading agencies so that the Government can communicate effectively with the outside world.

One of the returning diaspora Somalis is Omar Osman who set the ISP Somalia Wireless that has around 100 subscribers including UN agencies, hotels and private residences. It wants to do a “Super Wi-Fi” network using TV White Spaces spectrum.

But what about the future? Tim Kelly summarises what may happen:”There is great interest from the diaspora. But understandably people are hedging their bets until security has improved. But development is happening in both Somaliland and Puntland and this is an indication of what will come.”

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