This article was first published in www.chimurenga.co.za , and in Voices Awaaz Magazine, and is an excerpt from ‘Trade Routes in The Chimurenga Chronical’ for which acknowledgement is made.
One night in December 2000, a fire razed down Garissa Lodge in Eastleigh, Nairobi, about 2km east of the city centre. Millions of shillings worth of goods were destroyed. Arson was suspected.
The biggest two national newspapers, The Nation and The Standard, gave the story prominent coverage, with on-site photos of the building and interviews with traders. The fire appeared to be part of a pattern. Nairobi had begun to establish new trading markets, ‘exhibitions’, in which cheap textiles, leather and electronics, all imported from Dubai, Istanbul, Thailand, Indonesia and China, were sold in giant markets – usually on properties with dubiously acquired trading licenses – around the city. A few months before, FREEMARK, another exhibition centre, this one started by a big-city evangelist, had been burned down in the night. The City Council would later say that the structures there had not been approved.
So there was a pattern. The police faithfully promised to investigate, a pledge that was rightly taken with a dollop of skepticism. Media investigations similarly disappeared in the pursuit of the next big story. The question of who was starting fires and why was never answered.
If the media did not know, the street did. This was a war, it was whispered, among the trading class. It pitted the old Indian mercantile elite, which had dominated the East African hinterland trade for almost a century, against a plethora of newcomers. Much of the new capital was disorganised and itinerant; Dubai-bound flights were an increasingly profitable route for Kenya Airways and others – filled with traders, mostly women, headed to buy clothes and textiles. But East Africa’s South Asians had long ago learned the value of organised ethnic capital. It was the secret to their success. Now they were being challenged from an unlikely quarter: the Somali community of Eastleigh.
“Tamarind Market had been sacked in 1991 when Mogadishu fell. A few years later, it had been reborn in ‘Little Mogadishu’, Eastleigh.”
This, then, is the long backstory of the Garissa Lodge fire, and the rise of Somali capital. But there is another worth telling.
Eastleigh has always been home to an immigrant trading community. In early colonial Nairobi, a city whose racial apartheid was successfully conducted primarily through ideas of racial hygiene and the associated fear of physical contamination – three bouts of bubonic plague had convinced the authorities of the wisdom and efficacy of such – an emergent Indian trading class had settled east of the city, on the upper edge of the dusty plains near the Nairobi River. They ran the bazaar in the heart of the city, where the first outbreaks of plague had been reported. A filthy market, scratchy with rats and bleeding open sewers, the city’s public health officials deemed that it was an innate disinterest in hygiene among Indians and Africans, rather than their own failure to institute appropriate clean-up measures, that was responsible for the plague. And so the Indians were sent to the River and the Africans to the plains, while the whites occupied the cool, forested suburbs west of the railway.
Eastleigh, then, was literally a settlement on the other side of the tracks. As racial restrictions on settlement were gradually lifted toward the end of colonial rule, the Indian traders were allowed, and could afford, to move west – to Parklands across the river, which still remains a predominantly South Asian neighbourhood. Eastleigh, with its dusty unpaved streets lined by rows of tin-roofed wooden bungalows, became home to the emerging class of the African employed – the tai tais, clerks and office workers.
Among them, however, was a small community of Somali traders. Predominantly from the old NFD, they were mostly truckers who provided the transport supply link to the Indian trading communities now scattered across the East African hinterland.
It was this community that provided the base for the avalanche of Mogadishu merchants and their families who arrived in the early 1990s when Somalia imploded. In a few short years, the population of Eastleigh, previously home to a few thousand mainly Kikuyu small traders and businesspeople, and Kenyan Somali traders, now needed to accommodate 100,000 Somalis.
At the time, Garissa Lodge was a cheap establishment frequented by Somali journeymen. Legend has it that it was built by a Swahili businessman. With the new immigrants, Eastleigh was flush with cash. The Mogadishu merchants had liquidated their assets in the twilight of Siad Barre and arrived with their pockets full. Many regarded Nairobi as a transit station on their way abroad – a notion, ironically, that was the original idea of Nairobi, the station at Mile 327 on the railway line, that accidental settlement by a river that grew as the railway engineers and labourers paused briefly to ponder how they were going to construct a line up the vertiginous Kikuyu Escarpment.
The merchants had neither the requisite papers nor the facilities to set up businesses. Many of them had already begun using Garissa Lodge as both a hotel and a market. They would put their beds against the wall during the day and turn the tiny rooms into stalls selling whatever they could get their hands on: khat, leather goods, second-hand clothes from the Gikomba Market on the eastern bank of the river. A Somali businesswoman saw an opportunity and bought the building. She kept the old name but turned over the rooms into business stalls. Which is how Garissa Lodge, the first shopping mall in Eastleigh, was born.
That was circa 1995. And then Garissa Lodge burned down. It was quickly rebuilt. It was renamed Bangkok Shopping Mall, a four-storey glitzy complex sagging with the weight of its goods, imported mainly from Bangkok. In the press of commerce, Eastleigh’s pothole-cratered streets clogged with cars, mkokoteni hand-carts, lorries, buses and matatus, their diesel thickening the air, and textiles and trinkets literally spilling into the street, Bangkok Shopping Mall is indistinguishable from the other shopping complexes surrounding it.
When it was razed in December 2000, there was only one other shopping complex. Today there are 40. There is also a crush of residential apartments, a business investment park (where the old Kenya Bus Service depot used to be; Somali investors bought the land a few years ago); countless hawala money transfer outlets; and, clustered like kiosks at a highway junction, 11 banks, including all the major local retail ones, a couple of Islamic banks and the multinationals. Most of the banks long ago adapted to Eastleigh’s 24-hour economy; they open at dawn and close well after sunset.
It was not until I read ‘Of Tamarind and Cosmopolitanis’, Nurrudin Farrah’s essay about the destruction of Mogadishu’s most famous market, that I understood the vision behind the transformed Eastleigh. The conversion of the little rooms in Garissa Lodge into stalls, the thousand-fold replication of that model across this new commercial district – none of this had happened arbitrarily.
Farrah describes Tamarind Market thus:
One of Mogadishu’s best-kept secrets was the shopping complex locally known as Tamarind Market. This was always abuzz with activities, its narrow alleys filled with shoppers. You could see entire families pouring into its alleys and plazas soon after siesta time, some shopping for clothes, others wishing to acquire what they could find in the way of gold or silver necklaces, many made to order. Stories abounded in which you were told that some of the shoppers came from as far as the Arabian Gulf to strike bargains, well aware that they would pay a lot more for the same items in their home countries in the Emirates or Saudi Arabia. In those days, no bride would get married without a collection of custom-made gold and silver items bought from one of the artisans there. And, for your tailoring needs, you went behind the market, where you would be fitted for your shirts, dresses, trousers, caps, jackets or a pair of leather boots, all to be had at bargain prices.
Tamarind Market had been sacked in 1991 when Mogadishu fell. A few years later, it had been reborn in ‘Little Mogadishu’, Eastleigh. What makes this incarnation so uncanny is that, like the ancient Tamarind Market, Eastleigh was now the centre of a trading system that stretched from North America to the Far East. And its market was the East African hinterland.
Eastleigh relies on four categories of goods: ex-warehouse textile and fabric from the Far East; fake leather goods, mostly handbags, shoes and jackets; gold and silver jewellery and watches; and fake designer gear and electronics. All this was now available at cut-rate bargains in Eastleigh’s maze of malls. Traders from the East African hinterland were flocking there to buy in bulk. It was cheaper than going to Dubai.
Mohammed, a tall, skinny, somewhat distracted man with the hoarse voice of a market trader who looked like he had recently recovered from a long illness, is showing me around. He had been one of the stall owners in the original Garissa Lodge. Now he was a real estate agent, representing shopping mall owners looking for new clients for their stalls.
‘We were making a lot of money in those days,’ says Mohammed. He had specialised in fabric. ‘I used to have a line in front of my shop even before I arrived. We would sell and sell. Without looking up. And then you realize it is evening. My clients would come from Rwanda, Uganda, Eastern Congo, Tanzania, Mombasa – everywhere.’
Mohammed says he would make as much as Ksh 200,000 (about $2,000) a day. In order to source his textiles cheaply, he had a cousin stationed in Java who was able to source and buy his product at ex-factory prices. That was in the late 1990s. Margins have pared down considerably since then. One of the problems with the Eastleigh model, a shopping mall manager tells me, is that everybody is doing the same thing. There is no diversity.
‘We all buy the same things from the same places and sell them at the same price,’ he says.
Eastleigh, then, is a giant clearing house of imported Southeast Asian goods – the cheap facsimiles of designer items in which ordinary East Africans, bred for a decade and more on second-hand items, now outfit themselves. And though this is potentially a weakness, eating into individual profits, it is precisely what makes Eastleigh so successful.
‘We do volume business here,’ says the shopping mall manager. ‘You make a small profit off one shirt. If you sell 1,000 of them, you’ll make some money.’
It is this approach that began transforming the pecking order of mercantile trade in East Africa. The South Asians had dominated it through a low volume, high mark-up model. Its logic had been an exclusive knowledge of source markets (domestically, the textile industry mostly South Asian-owned; abroad, family networks across the South Asian diaspora). But the mercantile trade in East Africa had developed at a time of African deprivation. This meant that imported goods especially had been regarded as exclusive, which in turn justified high mark-ups.
Market deregulation and liberalisation had sounded the death-knell for the South Asian model. Now, another trading diaspora operating on an entirely different sensibility, is taking over.
The anthropologist Paul Goldsmith who has closely followed the rise of Somali diaspora capital, attributes the expansion of Somali mercantilism to what he refers to as segmentary lineage – the tracing of generations-old family and clan links across Somali society. Once those links are established, individuals are bound in an obligatory system of reliance and responsibility. This honour system, aamano, is what explains, for instance, how payment of an old debt owed to a Somali man in Manchester, England becomes the responsibility of an entire clan, wherever its members are to be found. In a sense then, it is a kind of sovereign debt: it must be eventually repaid.
Under the pseudo-socialist rule of Siad Barre in which his Marehan clan was unduly favoured, it can be said that segmentary lineage fuelled complex antagonisms across Somali society. In the post-Barre diaspora, it is paradoxically this honour system that has galvanized Somali capital and invested savings and wealth along communal lines.
Perhaps one of the most striking examples of the honour system playing out in the diaspora is the case of Al Barakat. Established in Mogadishu in the mid-1980s as a hawala money transfer operation, it had a turnover of $140 million a year by the turn of the century and was operating in more than 40 countries. Then, after the 9/11 terror attacks, it was closed down by US authorities. Its financial network was suspected of being one of the principal channels of Al Qaeda money. No links between Al Barakat and Al Qaeda were ever established. Regardless of the fact that its finances were not re-insured, Al Barakat’s owners spent the next seven years tracing and repaying anybody whose money had been stuck in the system when the hawala bank was forced to close down.
Osman Moalim, a businessman and Mogadishu-based political activist, had $5000 held up in Al Barakat. He was finally repaid in 2007. Today, Al Barakat has diversified into the mobile telco industry. Ormud, its telecommunications arm, is the biggest service provider in Mogadishu.
A large chunk of the new Somali capital has come from war profiteering. Moalim, whose father was a major politician in Mogadishu in the immediate post-independence era and later a vocal critic of Siad Barre, was the only member of his family to remain behind when Somalia imploded in 1991. The last of his siblings left in 1988. He remained and witnessed the horrific drama of the civil war from the capital, its epicenter.
The civil war was accompanied by famine. Moalim, who had grown up alienated from the clan system, found himself in a part of Mogadishu cut off from his relatives.
‘I decided to use my little knowledge of medicine to try and save people,’ he says. He has a degree in biology. ‘We took over the abandoned houses of the rich and converted them into makeshift clinics.’
In the midst of it all, the aid industry was arriving with food and drugs. With no knowledge of the local factionalisms, they depended on local militias to distribute aid. In the process, the militias-turned-merchants made a killing. There were other sub-contractors: the US company Kellog Brown and Root was a major sub-contractor for UNOSOM, says Moalim. Their philosophy was ‘to keep things moving’ regardless of the obvious wastage and pilfering that was taking place.
This was good for the militias. And with the monies generated, they invested in Eastleigh. At first, much of the money went into the khat business. There were 10-15 flights every day leaving Nairobi for Mogadishu and Djibouti. The operators depended on aamano to guarantee shipments. Profits were huge. And with the khat market investor-saturated, these profits were increasingly turned to other trade.
It is this rapid evolution and the constant re-deployments of Somali capital that has baffled many outsiders. When the Kenyan government recently announced that it was embarking on a property audit in Nairobi, the intent was obvious: to establish a link between piracy and the expansion of Somali capital. Ignorant and more than a little envious of the sudden growth of Somali businesses, the Kenyan establishment suspected that much of the money coming into Eastleigh and dispersing into Nairobi real estate, as well as other sectors, was laundered pirate money. None of the studies and investigations subsequently conducted has confirmed such a link.
There can be little doubt that a certain amount of proceeds of piracy have also been invested in Kenya and other places in East Africa. Any audit, however, will have a difficult time proving that piracy is the bedrock of Somali capital’s expansionism. By this year, piracy proceeds amounted to less than $100 million. This is a fraction of what is generated across the spectrum of Somali business activities in Kenya. Moreover, it simply cannot explain the expansion of Somali capital before the boom in piracy ransoms began last year.
Furthermore, with stable Western diasporas, many individual Somalis living on the dole in Europe and the US or having generally prospered in the diaspora, regard Eastleigh not only as a centre through which to route remittance money, but also as an investment centre. It is cheaper, say, to buy a building in Eastleigh than in St Paul, Minnesota or Toronto. There is also a faster return on investment in Kenya.
What makes Kenya attractive is its legal porousness. With few restrictions on capital inflows, little scrutiny of imports and few requirements that could restrict an investor in the money-transfer business, Somalis (legal and illegal) regard the country as a comfortable investment destination.
More than anything, then, Somali capital flowing through the hawala system allows it to be more mobile than other forms of ethnic capital. And because it is communal, it can be quickly mobilised to take advantage of new investment and trading opportunities. Similarly, because Somalis rely on family networks for their labour, they are able to keep recurrent costs at a minimum while extending a trading network across the diaspora. Today, remittances to Somalia are estimated at $2 billion. This, more than anything else, explains the growth of commerce in Eastleigh.
None of the shopping malls in Eastleigh are individually owned, I am informed by the shopping mall manager. People, mostly in the diaspora, pool their resources and make an acquisition and share out the profits.
‘Our people in the West now no longer feel obligated to support family in Somalia by constantly sending money,’ says Osman Moalim. Instead, they have created investment vehicles in which relatives can make a legitimate living.
Moalim attributes the rise of Somali capital to a simple principle: ‘We are risk takers. We don’t fear new opportunities or new places.’
Written by PARSELELO KANTAI