THE ROLE OF SOMALILAND BEVERAGE INDUSTRIES (SBI) ON EMPLOYMENT CREATION IN HARGEISA SOMALILAND
CHAPTER ONE:
1.0 Introduction
Although Over two decades, Somaliland has built a successful market economy with rising GDP, Somaliland’s private sector has enjoyed sustained growth including a thriving services sector, which hosts a number of major international businesses, catalyzed by low levels of regulation and a comparatively small government bureaucracy. (Johannesburg: The Brenthurst Foundation, 2011)
In fact Somaliland has a few employment creations opportunities on desk, some expert or government officials argue this happen our hands because they said no one ready for hard work or manual working while they seek modern jobs with office and computer. Other expert argues this is the responsibility of government because it has no policy for employment creation, there is no technical schools supported by government and also it hasn’t a visible role for employment creation.
The Coca-Cola was founded in May of 1886 and continues for more than a century through the times of war and peace, prosperity and depression and economic boom and bust. As late as the 1990s, Coca-Cola was one of the most respected companies in the world, building and known as a very successful management team. Also Somaliland beverage industries is a factory which produce non-alcoholic beverage with the name of Coca-Cola Company in Somaliland, In 2010, Somaliland Beverage Industries made the country’s single biggest investment to date – opening a $17 million Coca-Cola production facility to supply the region. The factory has plans to expand into producing Dasani water and Minute Maid juices by 2013.
1.1 Background of Somaliland beverage industries (SBI)
The coca-cola company is an American multinational beverage corporation and manufacturer, retailer and marketer of non-alcoholic beverage concentrates and syrups which is headquartered Atlanta Georgia. (Colacompany.com. retrieved Dec 19 2 2012). The company is best known for its flagship product is coca-cola invented in 1886 by pharmacist John Stith Pemberton in Columbus Georgia. The coca-cola formula and brand was bought in 1889 by Asa Griggs Candler who incorporated the coca-cola company in 1892. company operates a franchised distribution -system dating from 1889 where the coca-cola company only produces syrup concentrate which is then sold to various bottlers throughout the world who hold an exclusive territory.
The coca-cola company owns its anchor bottler in North America Coca-Cola Refreshments, its current chairman and CEO is Muhtar Kent. (Whoinvented.net. retrieved Nov 2 2012). The company has a long history of acquisitions, coca-cola acquired Minute Maid in 1960, the India Cola brand Thums up in 1993 and Barq’s 1995. In 2001 it acquired the Odwalla brand of fruit juices; in 2007 it acquired Fuze Beverage from founder Lance Collins and Castanea Partners. In 2009 the company bid to buy a Chinese juice maker.(fundingunirse.com. retrieved jully 29 2012)
In Africa on November 2014 the coca-cola company and GFI announced they had come to terms on a merger, the merger would be two phases; phase one taking 6-9 months while phase two taking 12-18 months after the completion phase one. The merger deal would make coca-cola beverage Africa the largest bottler in Africa and 10th largest in the world, coca-cola Africa will serve 12 countries. (matinson, Alec, Nov 27 2014, thegrocer.co.uk)
The Coca-Cola Company is the world’s leading beverage company and perhaps the most recognized brand name in the world. Operating in 200 counties with a diverse product range consisting of an astounding 500 brands and 3,300+ beverages, the company considers the “Coca-Cola” name itself worth billions of dollars. Protecting its brand image and reputation, therefore, is a key priority for Coca-Cola management. Coca-Cola’s mission is stated simply as “At the Coca-Cola Company, we strive to refresh the world, inspire moments of optimism and happiness, create value and make a difference. (the Kenan Institute Asia October 2010)
Also Coca-Cola is the world’s largest soft-drink maker, plans to set-up a bottling plant in the breakaway republic of Somaliland, saying its stability and economic growth provide conducive conditions for investment. Somaliland declared independence from Somalia two decades ago, after the fall of Dictator Mohammed Siad Barre. While no country officially recognizes Somaliland’s sovereignty, it has remained largely free of the clan warfare, kidnappings and assassinations that plague Somalia, to the southeast (By Balishire in SAFF-somaliland australian foundation friendship June 2011).
The investment was put up entirely by SBI, part of the OGF group, and a conglomerate with interests in shipping, construction and property founded in 1949 by Osman Guelle Farah in Djibouti, where he used traditional routes to ferry goods between Djibouti and the Ethiopian town of Dire-Dawa. SBI’s day-to-day operations are run by Moustapha Osman Guelleh, one of -six brothers who are continuing their father’s work after his died. (According Bloomberg 31 may 2011).
Ahmed guelleh Somaliland business man and the owner of SBI had the franchise to Somaliland after 26 years ago when he lost the license in the war and he won back in late 2010 an production is due start in that year, he said My 28 years dream became a reality today (According financial times 2010).
According ILO-Somaliland in 2012 employment creation in Somaliland has no clear background because since 1990s, Somaliland has seen remarkable progress on many fronts, not least in a unique reconciliation process, the creation and implementation of functioning governance, judiciary systems, and democratization process that has led to free and fair elections and multiparty legislative systems. However, the government lacks resources to fully develop the administration; this has led to poor service delivery as many employees do not have required qualifications for the service delivery need.
President Silanyo said that the plant will not only create employment opportunities and refresh consumers with cheap and locally produced beverages but will place the country in the regional economic map. While promising the two companies 100% government support and cooperation president Silanyo asked other local and international investors to have confidence in the country and invest (Somaliland-sun may 22 2012).
Inaugurated in May by Somaliland’s president, Ahmed Mahamoud Silanyo, the plant has been described as a diamond in the desert. It lies an hour’s drive from the capital, Hargeisa, travelling along the two-lane road to Berbera – much in need of repair – then along a bumpy track that runs past spiky acacia trees, swaths of aloe vera plants and the occasional darting dik-dik, a tiny antelope (Guardian Global development 20 july 2012).
On a recent visit, the production line – manned by Somalilanders who had been trained by workers from Kenya, South Africa and elsewhere – was turning out bottles of the plant’s most popular drink, strawberry Fanta. It is a cloyingly sweet red drink especially favoured by Somaliland women. The plant also produces orange Fanta, Sprite and, of course, Coca-Cola (Guardian Global development 20 july 2012).
Addressing the employment issue in Somaliland requires a comprehensive approach that will reform the labor market regulations and specifically desingn a Somaliland employment strategy. The program intends to enhance workers’ employability, productivity, competitiveness and income generation through employment intensive schemes, business development, and skills development, while strengthening awareness of core ILO labour standards, and safety at the workplace (Employment and Poverty Alleviation, Burkina Faso 2004).
The key to equitable economic growth will be to support and expand the already vibrant Somali private sector, increase productive capacity and increase employment opportunities. Specific areas to be developed include value-addition to traditional agriculture products; the livestock and fishery sectors; to support public investments for an enabling infrastructure; support for other existing productive sectors and the exploration of new opportunities for private investment in terms of value addition to production and opportunities for import substitution. At the same time, livelihoods of the poorest strata of the population require additional support in order to reduce food insecurity and prevent them falling into destitution as a result of external shocks (Third Extraordinary Session on Employment and Poverty Alleviation, Burkina Faso, (2004).
The bottling plant with the bright red logo SBI (Somaliland Beverage Industries) is just beyond the Russian ruins. Three thick breeze blocks lie outside the entrance, which is protected by armed guards. Inside the gate, the 6,000 square meter bottling plant/warehouse, complete with a set of solar panels, dominates the compound. But just as striking are the manicured green lawns watered by sprinklers outside a row of white flats that house 60 of the 100 staff. The lawns on the 150 hectare (370 acre) site, some of which will be used for a game park – provide a surreal contrast to the dun-desert landscape outside.
Anyway In 2010, Somaliland Beverage Industries made the country’s single biggest investment to date opening a $17 million Coca-Cola production facility to supply the region.
The factory has plans to expand into producing Dasani water and Minute Maid juices by 2013 (The Guardian, M.Tran, Berbera port and pastoralism prove livestock’s worth in Somaliland, 26 July 2012).
The reason for the plant’s isolated location lies beneath the ground. There was not enough water in Hargeisa, and SBI, using Chinese hydrological surveys done in the late 1970s and the advice of village elders. Dug boreholes over replenish able aquifers underground rivers that refill with rain, “That’s why we located here it’s the most isolated Coke bottler in the world,” said Guelleh.
Coca-Cola’s decision to award a franchise to SBI amounts to a vote of confidence in Somaliland, a land in relative peace compared with Somalia, which has been a broken state for the past 20 years. But although it may have peace, Somaliland lacks international recognition, which keeps international investors away, insurers will not cover companies investing in a place that has no legal identity (The Guardian- Global development 20 July 2012).
“An oil company such as Shell will operate in Nigeria where workers get kidnapped but it won’t invest in Somaliland even though it is much more stable,” said Guelleh ruefully, but he does not blame foreign investors for staying away. “If I was a foreign company investing $17m here, I’d be crazy,” guelleh said.
According guardian development 2010 Guelleh believes that the SBI will make its money back in five years, said international isolation has forced Somalilanders to rely on their own resources, and he sees the bottling plant as a huge opportunity for the company despite all the obstacles.
May 22 2012 The nation celebrated in style, the opening of its first industrial plant from Coca-Cola Company which today opened a new state-of-the-art bottling plant in Jalelo village 35 kilometers North of Hargeisa which has the capacity to produce11,000 bottles per hour and 18,000 crates of assorted beverages daily. The grand opening of the Coca-Cola bottling plant which was officiated by the president H.E Ahmed Mahmoud Silanyo saw over 2000 people in participation including 5 cabinet ministers from Djibouti, Senior Coca-Cola co executives, members of parliament, cabinet ministers, Political & Traditional leaders, ordinary Somalilanders as well as local & Djibouti based business tycoons (According Somaliland sun may 22 2012).
According to the Coca-Cola president for Central, East & West Africa Mr. Nathan Kahumba, the US $15 million investment by the global beverage maker and its local partner, the Somaliland Beverage Industries, is part of the Coca-Cola system’s commitment to invest US $12 billion in the African continent by 2020, starting in 2010.
Now that production is up and running, it is counting on Coca-Cola’s marketing clout to push sales in Somaliland and Puntland, an autonomous region of Somalia, and the Galmudug region of Somalia. In September, there are plans for Coca-Cola to supply coolers and fridges powered by solar panels to selected mini-markets and shops. Guelleh foresees 2,000 to 5,000 entrepreneurs starting up in Somaliland to sell drinks produced by the plant. (The Guardian- Global development 20 July 2012)
56.4 percent of the population, between the age group 15 – 64 is estimated to be working or available for work. Total employment (comprising self employment, paid employment, unpaid economically productive family work excluding normal household chores) among the economically active population is estimated at 38.5 percent for urban, 59.3 percent for rural and nomadic and 52.6 percent for the country. Unemployment is prevalent among the youth and their -frustration is compounded by their exclusion from decision-making bodies. In liaison with the Somaliland government, the international community needs to promote economic development through the creation of employment. Intervention measures include employment intensive investment programs; provision of further skills development; creating an enabling environment for small and medium size enterprises (SME); enhancing the productivity of existing SMEs and assisting in the establishment of new businesses. This results some investment including SBI. (Decent work programme for Somaliland 2012-2015, ILO)
Despite the impressive achievements in achieving a lasting peace and good governance, Somaliland is still struggling to make the final leap from economic recovery toward sustainable development and poverty reduction, development is unequal across sectors and regions and still below the African average for many key social and economic indicators. The foundations for further progress remain fragile due to the high prevalence of poverty, low income levels, high -rates of unemployment, weak production, the depleted natural resource base and lack of excess to finance and external assistance. Giving the prevailing significance capacity and institutional -constrains, the government should be supported in taking forward the private sector into reconstruction and development to instigate economic growth and expend employment and income-earning opportunities (United Nations Treaty Collection, 29 March 2012).
4.1 CONCLUSION
The objective of this study is to assess the role of Somaliland beverage industries on employment creation in Hargeisa region. So my research leads to conclude that the Somaliland beverage industries (SBI) have a positive role for employment creation for these current years. With the objective of better understanding how the SBI affect employment creation, the Hargeisa Study analyzed a data that was collected from a survey of 60 deferent individuals.
This study found that 53 (88.3%) of individuals out of 60 respondent said Somaliland beverage industries (SBI) has positive role for employment creation in Hargeisa, 60% of responses indicate that the rate of employment creation on SBI has continuously increasing. Most employment positions that SBI offers are technicians as shown chapter three (55%); workers that Somaliland beverage industries recruit are both youth and elders 27 (45%) respondent out of 60 said, also SBI promote its workers by providing better salary as we presented 51.7% out of respondent agree us for this option.
In this study we summaries that the Somaliland beverage industries it has not only profit maximization but also it provide positive externalities to the society this include it affected village it locates for employment creation (40%) and village expansion (28.3%) and other benefits, SBI do other activities rather than production mostly both free and charged activities. Also SBI has a future opportunity for employment creation by expansion of current production and creation new plants.
This paper found that the largest employment creation in Hargeisa Somaliland is private institutions, so Somaliland beverage industries become under this study the largest private investment in the country. According Guardian Somaliland Beverage Industries made the country’s single biggest investment to date opening a $17 million Coca-Cola production facility to supply the region. The factory has plans to expand into producing Dasani water and Minute Maid juices by 2013. As President Silanyo said “that the plant will not only create employment opportunities and refresh consumers with cheap and locally produced beverages but will place- the country in the regional economic map”, While promising the two companies 100%- government support and cooperation president Silanyo asked other local and international investors to have confidence in the country and invest (Somaliland-sun may 22 2012).
According Somaliland-sun may 2012 Guiles said “This investment will create an estimated 135 direct jobs and 2,500 indirect ones, and will contribute to a healthy distribution and retail sector in Somaliland” also the regional Coca-Cola president stressed the company’s commitment to the continent of Africa saying that it remains enduring and unshakeable. For that purpose this study shows us the industry through its path on step by step.
Finally in conclusion that the increase in either or both production or related activities from this industry positively increases the rate of employment creation in Hargeisa Somaliland both direct and indirect jobs, but it depend a several factors such as the gender, age, education and technician of workers as we presented and interpreted in previous chapter.
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