Money man serves the Somali diaspora
By Katrina Manson
Aged eight, Abdirashid Duale would rush back from school to take his place in the family’s small shop in Burao, a dusty livestock trading town in Somaliland, selling everything from clothes and shoes to flour and sugar.
Today he divides his time between London and Hargeisa, the capital of Somaliland, an autonomous region of Somalia that declared independence in 1991, and is the chief executive of Dahabshiil, a global money transfer company that operates through 24,000 outlets in 144 countries. Dahabshiil also offers debit cards, reward points and SMS notification services and, soon, Somaliland’s first fully operational bank which is currently under construction in the capital.
“From a very early age I got used to talking to adults … while other friends or even my brothers used to play football, for me my fun was to stay in the store, and sell people goods,” he says. He even drove his father’s car, at age 13. “I was in competition with other people who were working for my father, so I wanted to be useful and serve him,” he says, speaking in the garden of a Nairobi restaurant.
In four decades, Dahabshiil has evolved into an international business that uses the most modern technology. However, working in Somalia, a failed state, means danger has never been far away: in 2009, two workers were killed in an attack by al-Shabaab, an Islamist group, forcing the business to close half its 50 or so Mogadishu outlets. To this day, the company sometimes transports cash hidden in cars. Mr Duale thinks the company’s best protection is its local approach: “We are ‘money without borders’ – people need us. Customers see us as a part of them. We’re bringing money to them, not guns, so they will look after us.”
The business was transformed from the shop of Mr Duale’s 1970s childhood into a global business by finding opportunities in a string of calamities that have befallen Somalia – from poverty to war and terrorism.
For the family’s story is also the story of the Somali diaspora. Poverty and trade first sent Somalis to Yemen, Dubai and the Middle East. In 1991, the capital Mogadishu was overwhelmed by fighting between rival groups, earning Somalia its label as a failed state. Perhaps 1m Somalis scattered throughout east Africa but also to the Middle East, Australia, Europe and North America. “After 1991 all the Somalis were displaced in a way,” says Mr Duale. “I’m one of them, so we know where they live, how to communicate with them and serve them.”
Mr Duale says his company handles remittances of $200m a year to east African countries outside Somalia, and that the company also remits a large proportion of an estimated $1.6bn sent back to Somalia every year, making it the largest money-transfer service in the Horn of Africa.
Yet Dahabshiil started by default, a device to overcome one of many challenges in running a business in Somalia. In order to stock the latest shoes from Milan, Mr Duale’s father, Mohamed Saed Duale, needed hard currency for purchases from the trading hub of Yemen. Meanwhile, the Somali diaspora was keen to send money home, so Mr Duale’s father would collect hard currency from them in Yemen to buy the shoes, then hand the money over to the “lenders’” family members in Burao in local currency, making an additional cut on the exchange rate. Remarkably, rather than pay interest, he had found a way to turn a profit on borrowing.
That sideline would become the heart of the business. But it was not always clear it would be that way. Mr Duale can still remember when a liberation force invaded one day in 1988, and the defending regime responded with bombs: “There was blood everywhere – we couldn’t stay. We left our car, our shop, our house, everything.”
The family fled to live among nomadic herdsmen and eventually his father reached the Ethiopian border, found Somalis in desperate need of sending and receiving money, and set about making it happen. The business model soon changed, as no one wanted rapidly depreciating local currency. Instead, the company made a double cut by charging a commission and operating a currency exchange service situated in its outlets, a model it keeps to this day.
Getting money back to Somalia was often risky and, in some countries, restricted. “You can manage to hide $200,000 yourself if you know the technique,” says Mr Duale of people’s efforts to secrete cash.
Another hurdle to expansion was regulations. When Mr Duale registered as a teenage sole trader in London’s East End, home to waves of immigrants over centuries, to set up the first European branch of Dahabshiil, he met an alien way of doing business: “I knew Somalis, I knew how to serve them, but I did not know about formality – in Burao you don’t need accountants, lawyers, a bank.” Despite his unsteady English, he found an accountant, bought a guide to doing business in 12 European countries and began unravelling the red tape, working seven days a week.
Dahabshiil has been so good at complying with host countries’ regulations that it won customers when al-Barakat, one of its Somali competitors, was shut down by the US after the September 11 2001 terror attacks. Mr Duale insists that no money within Dahabshiil funds piracy – another Somali blight – or terrorism, and regularly co-operates with international agencies when asked.
The father-and-son team plays to its strengths, especially when it comes to understanding the culture in which the company operates. Mr Duale looks after the western side of the business and his father, now chairman, looks after Africa. The strategy has helped the company keep up with developments: today, funds can be transferred online in minutes, and it uses Facebook and Twitter, alongside developing its banking and telecoms operations as part of Dahabshiil’s expansion.
Although they work as a team and, as a boy Mr Duale hankered to be like his father, relations are not always straightforward: “Sometimes you don’t know – are you talking to your boss or are you talking to your father? When he tells me my mistakes is he talking to his son or to his staff? Sometimes you would like things to be a little bit separate.”
Doing business in hard places
Abdirashid Duale learnt how to expand the family business amid war, poverty and even the strictures of doing business in the west.
● Start young. “In Burao [town], you can take more responsibility from a very early age: you become more mature by doing this kind of activity. It was job training from a very early age.”
● Serve your community. “Without knowing your people as your customers and your staff, and them trusting you, you cannot be in business. I knew Somalis, I knew how to serve them, so it was not some sophisticated customer I had to find.”
● Adapt. “I could have said ‘I don’t want to expand in Europe – it’s too much, it’s not easy to be in that field with a different language’ but I didn’t. I said: ‘I have to get used to it.’ And then I came back to Somaliland … and I had to re-educate myself.”
● Market yourself. Dahabshiil took on a UK public relations agency to deal with international press interest when the company issued its first debit card in Somalia, which was – and remains – a failed state.
● Do what you love. “It’s by feeling passionate about it that you expand your business.”