The Horn Of Africa States: Potential Investment Opportunities – OpEd


The Horn of Africa States is only known for its conflicts and instabilities that have marred it for quite so long, but as one looks into the region, in a more independent way and not in the way foreign media makes it to be, one would discover that it is a region of firsts and an origin of so much. You would also find that it is a region of contrasts with rich and poor and highlands and lowlands, plateaus and valleys, volcanos and caves, beautiful beaches and forests and peaks and mighty rivers and numerous lakes. 

It is a culturally rich region, with its own foods, folk dances and home to the main three monotheistic faiths of Judaism, Christianity and Islam, in the order in which they came and hence pointing to its attraction as a religious destination. All three religions came to the region from almost their beginnings, again denoting the ancient history of the region.

The region offers beautiful natural ecological systems including a wide variety of wild life – birds, mammals, fish, forests, savannahs, deserts, volcanoes and caves and pristine valleys and beaches. It, indeed, owns mighty rivers that descend from the high plateaus of the region including the Blue Nile, the Shabelle, the Juba and the Tekeste. The region is not known for its elephants, lions, leopards, cheetahs, differing gazelles and antelopes and others, but these abound in the region and others.  The region also owns salt lakes and rock salt in abundance and other minerals that include among others gold, platinum, silver, iron ore, potassium, cobalt, lithium and others. The region is, indeed, a land of breathtaking contrasts and extremely rich biodiversity.

The region owns archeological sites dating back to over five million years, which as we noted earlier, makes it the cradle of mankind, as many affirm it to be so. It is a region which owns many other firsts such as rock churches, first mosque in Africa, many UNESCO heritage sites and a network of historical sites that makes it unique in the African continent.

The region is the original home of coffee, and ensette, and it is where camels were first domesticated. It owns, indeed, a large livestock population, even larger than its human population including sheep and goats, its own indigenous cattle, camels, horses, donkeys, some of them unique to the region and many other assets that would normally attract most investors and tourists. 

The region is emerging from a long period of instability and internal strives of ethnic and religious nature and the leaders of chaos are fast disappearing. There are, indeed, pockets of conflicted areas, but peace and security seems to being reassured once again, as exemplified by the countdown to the withdrawal of the peacekeeping forces in Somalia – the ATMIS. The ethnic unrest in Ethiopia is also calming down and the region is becoming a favorable environment for investments.

It is, in this respect, that we need to explore what the region offers to potential investors, both from within and from without. First, one must note that the region was traditionally liberal in its economic behaviour except for a three-decade period in the last century, when socialism was imposed through the cold war era. It is healing from that period and re-emerging as liberal as it could be with its trading background taking the lead through a dynamic private sector. The old legal legacies, still linger, in the systems but the governments of the region all promote private sector leadership of the economies of the countries. Accordingly all governments have installed legal infrastructures and other infrastructures, promoting incentives to facilitate investments in the region, which owns among others substantial natural resources, a sufficiently large population i.e. labor force and government willingness. 

The investment opportunities of the region include among others food production in terms of agriculture (farming and livestock) and fish and other seafood, agro-processing and fish processing/packaging, energy, banking and finance, construction and real estate, tourism, education and health services and, indeed, human capital. There are also opportunities in transport and infrastructures, telecommunications, technology and innovations, hospitality and tourism and many other opportunities.

Looking at the food sector, one would note the expansive opportunities therein, which among others include production of wheat and other grains, sugar cane and production of raw and refined sugar, bananas, mangoes and other fruits, including citrus fruits, melons and others. The food production possibilities include Investment in marine cold storage, marine resource processing, boat building and repairs, marine skill development centers, marine equipment and supplies Investments in marine product packaging, and other marine opportunities. Food production opportunities would also include investments in Milk Processing, investments in Meat processing plants, livestock vaccination and treatment processes, investments in poultry Farms, veterinary schools and technical support services for livestock, and others.

Investment opportunities in the region in the energy sector, would also be a major profitable sector. The region is currently energy deficit and imports most of its fuels and energy from beyond the region. The region owns substantial reserves of fossil fuels in terms of coal, oil and gas. But it also owns a large solar exposure, winds, geothermic and other renewable energy possibilities, such as hydropower, where potential investors can take advantage of. Energy is, indeed, a priority sector for the region and investments in this sector would present a welcome relief. Note the region owns a multitude of rivers which can be dammed without stopping the flow of water and investments, therein, would be good for the intrepid investor.

The banking and finance sector of the region also presents potential investment opportunities. Note the region is moving away from the controls of the old socialist approach to business and investments where government controls, literally, starved freedom of investments. The opportunities in this sector include online payment systems, independent ATM operators, microfinance and rural credit opportunities and especially for farm production, investments in the insurance and leasing activities, investments in fintech and investments in risk management, audit and financial control services.

A growing economy would always need an empowered and skilled labor force. The region liberated its education services from the old command economies of the region which stifled technology, skills and generally education. It has opened many universities and colleges across the landscape of the region. But opportunities still abound in developing a skilled labor force capable to competing with their counterparts in many other regions of the world. There are needs for technical, vocational and training systems where internships are institutionalized, and apprenticeships are attached to industries and labor market information is strengthened and mobilized effectively. 

In this respect, there are opportunities in the region for investments in technical schools and training centers. There are also opportunities for training institutions for upgrading skills with the support of the governments of the region and indeed, creation of early-stage entrepreneurs to develop innovative business models.

No economic development would make great strides if the necessary infrastructures for moving both products and services are not in place. Thus the region needs development of large networks of rail, road and river and marine transport infrastructures. It also needs efficient telecommunications systems not monopolized by one party but at least able to accommodate a number of competing corporations in the private sector. The region thus offers investment opportunities in rail and road transport, marine transport, telecommunications companies beyond the currently operating companies in the region. The best should survive. Of course, regional interest would have to be protected in the establishment processes. Technology would be a determinant factor in the competition among nations in the future and investments in technology in the region offers many opportunities. They may include data processing and storage, mobile payment systems, enabled IT service for businesses, software and hardware development, investments in R & D and investments in science and technology learning centers.

The region is known for its athletic prowess, and indeed, sports is how peace, education and general wellbeing of a society is promoted. The region thus offers opportunities in investments in the sports sector such as educational sports centers, investments in health clubs, investments in sports apparel and development of regional leagues and teams. It offers construction and development of sports arenas across the region, which currently seem to be concentrated in the capital cities of the SEED countries. These centers could be football stadiums, field hockey stadiums, running tracks, swimming pools an many other sports facilities such as cycling and motor sports. There are investment opportunities for developing coaches and trainers, which is vital for any sport.

An excellent health service is important for any thriving society and economy and accordingly, the region needs to develop healthcare systems that are able to take care of the populations of the region and visitors. The region has suffered in the past from a long-conflicted period where development of healthcare services has mostly stayed at rudimentary levels, at best. The region thus offers vast opportunities in development of a healthcare system designed to take care of the mother and her children, the old and the young, investments in drug and medicine production and supplies and hence storage, investments in e-health services, investments in pharmaceutical manufacturing industries. Note there are many indigenous drugs and medicines that the pharmaceutical industries can harness, investments in the manufacture of health equipment, furniture and other paraphernalia. The region, indeed, offers many opportunities in the world of health and medical services.

As the region settles down, the region would require a whole new building infrastructure. A housing boom would occur, and business would abound, and the region would require accommodating, not only those settling down or returning from the diaspora but also the large tourist population that would no doubt visit the region. Thus the region would require investments in architectural services, urban planning and consultancy services, investments in property management, investments in manufacture of interior décor, paints and glass manufacturing, cement plants, aluminium and related construction materials. Indeed, there would need for investments in architectural colleges and trade institutions for training and developing plumbers, electricians and landscaping. 

The region would need to develop a hospitality and hoteling industry to accommodate visitors to the region, which may include investments in services apartments, business hotels, conferences and convention centers, development of tour services, and airport hotels. 

The region would need to upscale its manufacturing industries and in this respect, there are opportunities in almost every field of need from shoemaking to textiles, needles, polishes and socks, to cars and aeroplanes, ships and yachts and many others.

The region still follows foreign directed concepts of development that may not be applicable to the region. It is the region’s entrepreneurs and governments who need to lay down their own thought processes and work towards achieving them, instead of blindly following general thought processes of others. The region needs to act and not talk as to what it would do. Walk the walk and walk the talk. It is the best it can do for itself.

Dr. Suleiman Walhad

Dr. Suleiman Walhad writes on the Horn of Africa economies and politics. He can be reached at [email protected].

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