SOMALIA - AFRICA’S NEWEST MARKET IS TINY AND AWAITS A FULL PEACE

2 February 2001

Top Story

For the optimist, Somalia is nearer to being busy reborn than busy dying. In these circumstances it’s hardly surprising it has been one of Africa’s last countries to get connected. Abdi Mohammud describes the currently tiny size of the market, the fierce competition for it and the prospects for future growth.

The new millennium has brought Somalis two things: One, an interim government, known as the Transitional National Government, which was formed in exile in the neighbouring Djibouti. The country has been without a central government since the overthrow of President Barre in 1991. Secondly, the introduction of the internet. Apart from linking Somalia to the rest of the world, it has made Somalia notable as being among the last of the countries in Africa to go online.

It is against this background that the three major telecommunications companies headquartered in Mogadishu ­ Barakaat, Telcom Somalia and Nationlink Inc. ­ chose to form a joint Internet company ­ Somali Internet Company (SICO). The company is currently operating in Mogadishu and the outlying regions of Somalia as a fully-fledged ISP.

Prior to the formation of SICO, Telcom Somalia was the only ISP in Somalia. Telcom Somalia’s services remained a preserve of a few because it was expensive to ordinary Somalis. In order to get connected, one had to generate an international call to access a server in Norway (the national telco is part Norwegian-owned).

SICO has put up a local server in Mogadishu that has a bandwidth capacity of 128 Kbps with a VSAT link that connects to Etisalat (Emirates Telecommunications Corporation), its gateway to the rest of the world.

SICO has a dialup system with an access mode that connects the major telecommunications companies in Somalia and thus reaching their final subscribers. Presently, the company’s 325 subscribers, emanating from the three major telecommunications network operators, can access the server through the telecommunications companies’ access phone lines. SICO’s server has been configured in a manner that it can allow future expansions in case the current limit is exhausted.

In order to minimize technical hitches and perfect its delivey of quality and affordable service to its customers, SICO has entered into a contract with a UAE-based company that provides it with online technical support and assistance through Remote Access Services (RAS). In addition, the company has a qualified team of both managerial and technical staff.

Although the company enjoys the largest market share in Somalia ­ especially southern Somalia ­ it does not mean that the market is free from competitors and other upcoming ISP’s. There are other two independent ISPs that are fully operational in the cities of Bossasso in the north-east (now Puntland) and Hargeisa in the north-west Somalia (now Somaliland) respectively.

Even in Mogadishu where SICO enjoys almost a 100% monopoly, there are other upcoming companies, like NetExchange, that are planning to offer Internet services.

SICO started offering its service at a fee of US$ 6 per hour for surfing including the PTNS charges. Three months ago, the company reduced the hourly charge for surfing by half to US$ 3. This new rate has attracted many customers.

The major users of internet in Somalia include community-based organizations, diplomatic missions, UN agencies, a few academic institutions, the business community and a very limited number of Internet cafes. With peace in the country, it is expected that their number will go up dramatically. According to Mr. Mohamed Jama, a former consultant of SICO, the company will review its pricing policy to a more affordable rate once its subscribers numbers 1000.

On the future plans of SICO, Mr. Jama said, " the company aims at expanding its network and build a national data management backbone that will cover all the regions of Somalia."

SICO intends to embark on a programme of designing and developing value-added Internet services including e-commerce, teleconferencing, telemedicine, telecentres and even introducing to its customers the idea Virtual Reality (VR) among many others.

The present circumstances prevailing in Somalia, by and large, threatens the very existence of a technology that is currently in its infanthood. First, the absence of a lasting peace and the issue of political instability have scared away both local and foreign investors from pumping their wealth into the Somali economy. The impact of this situation negatively affects the Internet market.

Awareness on Internet usage and the role this powerful technology can play in communication and development is still at a low level among the Somali public. It will take some time before the general public come to appreciate the presence of Internet in their immediate environment.

Inadequate skilled manpower, insufficient supply of quality computer hardware and half-baked computer training skills offered by some of the private learning institutions in Somalia are among the obstacles that blocks the way forward for Internet.

In a nutshell, the expansion and performance of any one ISP in Somalia largely depends on its ability to provide quality, safe and affordable Internet solutions in a completely free market environment. The competition in Somalia is cut-throat and the market is unregulated. Where these two factors collide the first casualty is monopoly ­ a condition that has partly led to poor performance of many state enterprises and parastatals in Third World countries, especially those in Africa.

CORRECTIONS: Eagle-eyed Rob Lith of UUNet spotted an error in last issue’s On the Money section. Metropolis Transactive Holdings’ claim to fame is that it is owned by Primedia. It is not the owner of M-Web. A pure case brain slippage on our part. Nina Chachu, Director of the Kumasi British Council office wrote in to point out that the British Council web site for Ghana can be viewed at: http://www.britishcouncil.org/ghana