Devastated at home, Somali businesses thrive in Uganda

Their history is knit with episodes of devastation – war and hunger. They have been accused of offering a safe haven to Al Qaeda terrorists. And recently, they have redefined the art of piracy, in which large ships have been captured and released after huge ransom payouts.
Yet, despite their shattered hopes back home, the Somali community in Uganda has taken the economic landscape by storm, enjoying a commendable share of the country’s fuel industry, among other sectors. DEVAPRIYO DAS looks at this business community. GOOD SOURCING
Hassan Ahmed, a Ugandan Somali, and Director of the prominent Somali-owned City Oil franchise, hints at the secret behind Somalis’ success in business. “Somalis have always had links to many areas of the world”, he says. “With that link, they are able to have very good sourcing. Every time you source well, it will result in benefitting the consumer, because you are able to bring the costs down.” That strategy bodes well with Uganda’s consumers who depend heavily on imports but whose purchasing power is low. It also explains why Somali businesses have become an accepted part of Uganda’s commercial life, covering essential services like fuel stations, foreign exchange, money transfer, and supermarkets. FUEL STATIONSAhmed reveals that City Oil was formed in the 1980s as Mandela Auto Spares, and started by selling spare parts. The company then graduated to selling tyres, before realising it could capture a larger market by setting up fuel stations. “If you look at our stations, they are not your typical stations”, says Ahmed. “They are giving auxillary services that complement fuel.”Today, there are various Somali owned petrol station chains, including Hashi Empex, Hass Petroleum and Hared. It is a competitive market, especially as global oil prices have followed no perceivable logic in the past 18 months; which also means the auxillary services provided by chains like City Oil have not automatically led to more customers in these difficult times. “The public has been very sensitive to price,” Ahmed remarks. “We find that it’s very difficult to sell fuel if you don’t have the right price at the pump.”Following the liberalisation of the fuel market in Uganda, Somali fuel enterprises have helped make prices more competitive. “Right now the (profit) margins are at their lowest point”, Ahmed observes. ..more..http://www.observer.ug/index.php?option=com_content&view=article&id=5042:-devastated-at-home-somali-businesses-thrive-in-uganda&catid=79:businesstopstories&Itemid=68