Magazine article African Business

Khat in Somaliland: Economic Cure or Curse? in Somaliland the Narcotic Plant Khat Forms the Basis of an Industry That Generates Jobs, Income for the Government, Export Revenue for Ethiopia-And Much Criticism

Magazine article African Business

Khat in Somaliland: Economic Cure or Curse? in Somaliland the Narcotic Plant Khat Forms the Basis of an Industry That Generates Jobs, Income for the Government, Export Revenue for Ethiopia-And Much Criticism

Article excerpt

The sun-blasted streets of the Somaliland capital, Hargeisa (below), are inundated with stalls selling the narcotic plant khat. It's estimated that 90% of Somaliland's adult male population, as well as 20% of its female population, chew the bitter leaf.

Khat is so enmeshed in daily life and culture that it has become an important import tax earner for the government, generating 20% of its $15201 budget in 2014 and providing valuable jobs. "Khat is the number-one employer in Hargeisa, generating between 8,000 and 10,000 jobs," says Weli Daud at the Somaliland Ministry of Finance.

Those involved in the khat trade are part of a strong entrepreneurial tradition in Somaliland, a tradition that arose in part following the country's declaration of independence from Somalia in 1991. Without formal recognition from the international community, the country had to go it alone and rebuilt itself after a devastating war with Somalia, a process in which private business and entrepreneurs played a critical role.

"In 1991, Hargeisa was totally destroyed, it was rubble, wasteland," says Saeed Mohamoud from Horizon Institute, a Somaliland consultancy firm helping communities transition from underdevelopment to resilience and stability. "The first people who brought vital life back to the place were local entrepreneurs who took dhow boats to Dubai to get supplies."

The city and Somaliland's economy were rebuilt by such entrepreneurial energy. But today, still cut off from global financial systems and investment, there is a limit to the scope of business opportunities. In such a context, khat provides an obvious viable and sustainable commercial opportunity.

Khat has a long history in the Horn of Africa and surrounding region, including the likes of Yemen. Its leaves were viewed as sacred by the ancient Egyptians, while Sufi religious men chewed khat to remain awake to study the Quran late into the night. Today, khat is very much in the mainstream, an established and lucrative industry.

"It's better than alcohol as you can still function normally afterwards --it helps you get more focused," says Abdul, a journalist in Hargeisa, who previously lived in the US and chews khat when on deadline. "It affects people differently, it depends on your personality. After khat some like to read, others to work."

Chewing customers

According to Zahre, a so-called 'khat mamma' of 22 years who runs a stall beside a dentist in central Hargeisa, "Business is good." She originally owned a shop and small cafe but decided to enter the khat trade as a way to expand her business prospects. Many others, however, ended up in the same trade through necessity.

"Many entered the khat business after the civil war as the only way to earn money to provide for their families," says Zahre.

"After they started doing it, they knew how to do it well so they continued. An unaccountable number of women now sell khat."

Many khat stalls display a colourful number incongruously emblazoned against a bright pink heart shape, signifying a particular supplier--and hence the type of khat from Ethiopia on sale--to cater to customers' preferences.

"There are about 5,000 numbers," says a customer at a stall selling khat from supplier 725. Every day trucks loaded with khat, grown in northeastern Ethiopia, cross the shared border into Somaliland and hurtle along rough roads through the desert to make their deliveries.

There are three types of khat: low, medium and high quality. Lower-quality khat costs about $12 a kilo, rising to $26 for medium quality, and $58 for high quality. The majority of customers typically spend between $6 and $10 for a day's worth of khat, which amounts to a national daily spend of $i.i8m according to Daud, a sum from which the government receives important import tax income.

However, critics warn that the flipside to this economic uplift is that Somaliland's fragile economy loses a large percentage of its foreign currency through this trade. …

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