Somalia’s e-commerce businesses are rising against all odds

Bring it on
Bring it on
Image: Gullivery
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Abdi Addow likes to have oodkac for breakfast, the jerky-style beef cubes that Somalis usually eat with injera flatbread. Addow especially loves his mother’s serving, but since he doesn’t live with her in the Somali capital, he logs online and uses a third-party delivery service to bring it to him from her place.

Long beset by civil war, Somalia was among the last African nations to go online. Internet penetration still remains low, high poverty levels persist, there’s lack of a strong central authority, weak regulatory policies, besides the absence of addresses and well-labeled streets, which is bound to create logistical inefficiencies for start-ups.

Despite this, or perhaps because of these challenges, the Horn of Africa nation is experiencing a strong rise in digital businesses, with local entrepreneurs building businesses that are disrupting existing trade models and transforming the way people shop.

In Somali cities like Mogadishu, Hargeisa, and Garowe, there’s an emerging e-commerce market, with founders establishing consumer-to-consumer, business-to-business, or business-to-consumer applications that allow for the purchase and dispatch of products or services. Together, these platforms are encouraging a budding tech sector, getting more people online, creating some much-needed jobs, and are attracting the attention of local angel investors—even if that’s on a smaller scale.

Yet the current upswing is a story born out of need: as people flock back into the country following some semblance of order, many want to enjoy the convenient lifestyle abroad where most necessities were easily available on demand. Young enterprisers also want to capitalize on that and provide the allure of immediate service and instant gratification. The increased ownership of phones as well as a very successful mobile money market is also helping spur this nascent sector.  As a tech entrepreneur previously based in Stockholm, Addow says he uses the delivery apps not just because they are “cheap and faster” but “because it saves time for me since Mogadishu is getting a bigger population and has more cars so it’s hard to get anywhere you want on time.”

One of the apps Addow uses is Gulivery, a door-to-door delivery service launched last year. Its founder, Deeq Mohamed, says he got the idea after moving with his wife from London to the northwestern city of Hargeisa and noticed that many of the things they bought for their home couldn’t be delivered. While hanging out with friends, he also noticed their families would ask them to buy foodstuff they would otherwise have ordered themselves.

“There was no one doing the last mile delivery,” Deeq said on the phone from Mogadishu. “And my friends and family asked, ‘Why don’t you go into that business?’” After initially using his own savings, Deeq was able to raise money from an investor, build an app, expand to the capital, and partner with businesses looking to keep their operations smooth, cut on costs, and garner more customers. In the past year, the platform has signed up 145 businesses and made over 9,000 deliveries, handling anything from groceries and food to laundry by charging a delivery fee of $1 to $5 depending on distance.

Local chutzpah

It’s not just diaspora returnees, however, who are establishing these outlets. After being laid off from a non-governmental organization in Aug. 2014, Sami Gabas was finding it hard securing a job. Unemployment is a stark problem in Somalia: 47% of the active population remained unemployed as of 2016, according to the International Labor Organization.  

With a laptop, $25 in capital, and no previous experience managing a company, Gabas started Saami Online, a one-stop shop that sells and delivers everything from books and cosmetics to clothing and home appliances. Since he didn’t have the funds to buy the goods at first, he had to show product owners that he could take their wares and deliver them to customers away from major cities. Clients were mostly inquiring about electronics and phones, so Sami started serving underserved cities in Somalia including Kismayo and Adado, and then went as far eastern Ethiopia and Djibouti.

Saami Online
Sami Gabas outside Saami Online’s office in Hargeisa.
Image: Sami Gabas

Saami Online now has eight people working for it and has five different offices across Somalia. Gabas says social media has been a crucial part of its success: the company has almost 90,000 followers on Facebook where dozens of people make inquiries about products and deliveries daily.

The power of social media and its ability to promote bankable ideas and create a direct impact on bottom line sales is still something new to traditional businesses, says Khadar Mohamed, founder of home and office food delivery startup, Dalbo Catering.

Mohamoud Hassan, who heads Geeldoon Online Marketplace says many businesses still depend on the “brick and mortar strategy,” and some suppliers still “don’t understand how we do business.” But he hopes that would change as accelerators like Innovate Ventures and conferences like the Mogadishu Tech Summit hold workshops and engage more people on the role of technology in scaling their businesses.

Challenging ecosystem

Despite the dawn of this seeming e-commerce gold rush, entrepreneurs face numerous challenges. Key among them is access to funds, says Gabas, who while receiving praise from businessmen and government officials is yet to raise any money even from local banks. “They encourage you but they don’t take any action.”

Founders also complained that when they found an investor, it was someone who wanted to take over the entire business or wanted full-on returns in a year—a feat they say is impossible.

Generating traffic to their sites, finding a talented pool of employees, converting shoppers into paying customers, finding reliable transportation, insurance, and warehousing are also some of the difficult tasks they continue to face. Making partnerships is also hard said Deeq, as business owners “think you are working to undermine them.” Somalia, he argues, needs what he calls “collaborative disruption”—that is making businesses understand they are kick-starting something together for the greater good.

E-commerce in Somalia “will take a lot of effort to succeed,” Hassan reflects. “It’s important to think long-term and think of profit in the end.”

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