Trust: The driving force behind many Somali traders’ success

The phenomenal growth of Somali businesses in Kenya’s commercial towns and urban centres is an envy to any would-be entrepreneur or business person. From the often frequented restaurants in Nairobi’s Central Business District to well-stocked boutiques their business models have created a massive economic touch, which cannot be overlooked.

Behind this upward curve though is a business based on trust, a character trait that has remained elusive in many conventional entrepreneurs, who find it hard to trust their wealth with others, however creative their ideas may be. Trust, in a good number of the Somali community resonates loudly in respect to raising enough capital among family members and close friends for a profitable venture as well as one that creates an even economic impact in the entire society. Takaful Insurance Managing Director Hassan Bashir agrees that trust in the community has played an incredible role in fuelling success in their business growth.

“Ours is a business model that is based on trust as shown by the community. Such ventures thrive since it’s founded on the human spirit,” he argues. The human spirit, he reckons, is one where both the seller and buyer trust that the product is certified and is of good quality. This is not the practice where Nairobi residents and visitors at times buy donkey meat, instead of beef. Bashir, who is also the chairman to the board of the recently launched Crescent Takaful Sacco, noted that human relationship is largely driven by trust and this is the key concept they hope to build on to grow strong businesses culture.

“I will deal with an individual due to the trust I have and one equally transacts a business with the person he trusts,” he noted. As a pastoralist community, he says, the Somali has a practice where they give some members a cow in the hope that they will return it. “This is where our trust to transfer capital from one trustworthy individual has been inherited from.”

Being a resilient people, Somalis have prospered because they are willing to take risks and accept smaller profits, which is another factor that has seen their business thrive. Abdullahi Dahir, the director at the Imara Daima Gardens, explains that when it comes to trade, “everyone wants to be very competitive in terms of the pricing factor, so it’s the margin that people are looking for.

While other traders are looking for a higher margin, a Somali trader is looking for a lower margin. They’re looking at the turnover.” Dealing in trust is the foundation of reputation – and a critical area in which the business differentiates itself from the competition. As such, “Protecting, deepening and delivering trust through good governance is at the core of this thriving community business strategy,” says Dahir.

Since perceptions about what constitutes a conflict of interest might vary across regions, Somali traders are able to identify any conflicts, potential or real, that could jeopardise their business. Dahir also agrees that the element of trust is common and strong within the community, a factor that has seen business flourish. He says the partnership is a progressive mind able to bring their ideas together to achieve that phenomenal investment. Dahir, upon his arrival from South Africa for example got together with his close family members and pooled resources to construct the estate.

Your are here » Home » Business Trust: The driving force behind many Somali traders’ success Updated Sunday, December 29th 2013 at 00:07 GMT +3 0 inShare While other traders are looking for a higher margin, a Somali trader is looking for a lower margin. They’re looking at the turnover.” Dealing in trust is the foundation of reputation – and a critical area in which the business differentiates itself from the competition. As such, “Protecting, deepening and delivering trust through good governance is at the core of this thriving community business strategy,” says Dahir. Since perceptions about what constitutes a conflict of interest might vary across regions, Somali traders are able to identify any conflicts, potential or real, that could jeopardise their business.

Dahir also agrees that the element of trust is common and strong within the community, a factor that has seen business flourish. He says the partnership is a progressive mind able to bring their ideas together to achieve that phenomenal investment. Dahir, upon his arrival from South Africa for example got together with his close family members and pooled resources to construct the estate. “Inasmuch as they trust me, I also trust them and that is how business grows,” he states.

However, Bashir admitted that in the recent past, incidences of misusing money sent from the Diaspora has made them think of creating institutions so that that trust is founded on it. “What we are doing is to build an institutional foundation to support that trust,” he said. The community has created financial institutions, which aim to pool the resources together to fund key projects.

Trade pillars The institutions, which are Sharia compliant, largely focus on assisting an individual to get out of some financial rut, such as to pay school fees or hospital bills, without any interest. The launch of the Crescent Takaful Sacco is part of that process to institutionalise trust.

Consequently, the ideal of transferring capital from one individual to another is dominated by this character trait. Bashir said: “This is how to make the best of trust by ensuring the money sent from the Diaspora is protected,” he said. It’s true that a good number of the community members in the Diaspora send a sizeable amount of money to their beloved ones, a key seed capital that has helped propel success of this conservative community.

However, other Kenyan community members who equally are based in different parts of the world such as the US, UK, and Canada have not been able to amass such capital towards a given venture apparently because of the lack of trust or suspicion when it comes to pooling resources together.

In their place is an element of mistrust where doubts raised on who benefits from the dollars sent. “It’s a common story you hear that so and so cannot receive a call from the Diaspora, in the presence of a close relative. In most cases, inflow of Diaspora cash tend to divide the family instead of uniting them,” explained Njoroge Kamau who has a number of family members living abroad. For Dahir, there are checks and balances such as getting an auditor to look at the books and a clear mode of payment.

As the community moves to put in place these mechanisms to strengthen their business dominance, Dahir reckons that the next hurdle is to create financially stable institutions to service the business. “Sacco are key sources of income to spur economic growth by financing capital intensive projects and has the potential of formalising the community’s businesses into Kenya’s mainstream business,” noted Bashir. Research on on-going project on Eastleigh by the Oxford Diasporas Programme points out that business success of places like Eastleigh is testament to the ability of people to mobilise alternative sources of funds and play crucial role in overall economic development of a region.

The research by Neil Carrier and Emma Lochery states: “Business people’s capital, augmented by funds from a widely scattered diaspora has been invested along multiple routes strung together by kinship, friendship, and religious solidarity.” Staying together for years to create a business empire without any break up is a rare gem in majority of business partnerships and the Somali community offers vital lessons, albeit in a small way.

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