Contributions to Economics
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Donatella Strangio
The Reasons for Underdevelopment The Case of Decolonisation in Somaliland
Prof. Dr. Donatella Strangio Sapienza University of Rome Faculty of Economics Department of Methods and Economics Territory and Finance via Castro Laurenziano 9 00161 Rome Italy
[email protected] ISSN 1431-1933 ISBN 978-3-7908-2777-4 e-ISBN 978-3-7908-2778-1 DOI 10.1007/978-3-7908-2778-1 Springer Heidelberg Dordrecht London New York Library of Congress Control Number: 2011940162 # Springer-Verlag Berlin Heidelberg 2012 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable to prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Printed on acid-free paper Physica-Verlag is a brand of Springer Springer is part of Springer-ScienceþBusiness Media (www.springer.com)
Preface
In the general oblivion of Italian colonial history, each scientific contribution that returns to investigate the meaning, terms and consequences of Italy’s presence in Africa adds a piece to the mosaic. The late, and in many ways inconclusive, colonial history of Italy developed along the axis running from Tripoli towards the Horn of Africa. And Somalia takes up a central position in the African continent in Italian historical revisitations. In fact, it is in this country, along with Eritrea, that the Italian colonial imprint was the greatest and most constant, because here, more than anywhere else, the dross of history has shaped a territory, a people, a present and a future that still bears the signs of the encounter with Italy’s search for a “place in the sun.” It is therefore important to start from Somalia for a historiography that is cleared of any remaining elements of the anachronistic propaganda of “Italians – nice people”, so that the colonial relationship, made of lights and shades, encounters and clashes, dreams and hopes, but also failures and violence inflicted or endured, can be investigated in depth by looking at situations and archives that have not yet been analyzed with care and rigour. Professor Donatella Strangio opens up new perspectives on African historiography and the economic history of Somalia through sources that, hitherto, have been explored very little or not at all. She has immersed herself in the archives of the Bank of Italy to tell of the Bank’s efforts to set up a “Cassa per la circolazione monetaria della Somalia” and establish the National Bank of Somalia (NBS), explain the strengths and weaknesses of the transition towards independence and highlight the continuity between the substance of the colonial economy and the management of the post-independence African e´lite. With great intellectual honesty she has also focused on and recovered scattered fragments of the shared history of Italians and Europeans, whilst skillfully integrating the points of view of the colonizers and the colonized. It is a story that tells of macroscopic errors and the improper transposition of Italian institutions into the Somali context: excessive bureaucracy, the Somali constitution written by Italian jurists, the imposition of a monoculture of bananas, the indefiniteness of the border with Ethiopia. It also tells of the incomprehensible and artificial
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opportunism of the African e´lite, who were incapable of rethinking the politics, economy and society of Somalia autonomously to give real meaning to the newfound independence. Perhaps the political chaos and the resounding failure of African independence originate in this colonial usurpation of space and time and the lack of political imagination among the African e´lite. Contemporary Africa is the result of this double original sin. Yet, even in its tragic failure, this common history holds, like all great stories, the seeds of hope. One of these rests in the European desire to know Africa and in the African awareness that it has become, in spite of itself, a little European. Hence the search for a new way of meeting that can transcend the paradoxes of a common history. This research calls for cooperation, which can be a great mutual building site in which to find the political routes, economic formulas and cultural bridges for a common project for Italy and Somalia, Africa and Europe. And we will create the new Euro-African space by searching for a new way of producing and reproducing wealth, defining identities and making them mutually fruitful and in keeping a watchful eye on history. Immigration from Somalia and the Horn of Africa asks Europe to look at itself in the mirror and piece together both fragments of history and promises for the future. Jean Leonard Touadı` Professor of Geography and Economic Policy, University Tor Vergata Rome and Member of Italian Parliament
Donatella Strangio The reasons for underdevelopment The case of decolonisation in Somaliland
Introduction The history of Italian colonial affairs has recently attracted renewed interest from historians and economists. It is a complex and involved question. Traditionally, colonial historiography has studied the reasons and the political and economic means by which Italy had tried, from the end of the nineteenth century onwards, to enter the colonial race that had been under way from the time of the second industrial revolution. Attention has focused on the expansionary policy of Italy, firstly within the more general context of the great European expansion of the second half of the nineteenth century and then within the framework of the “imperial” strategy of the fascist regime. Over the last few years, though perhaps slightly later than the more mature historiography of other European countries, the work of some important scholars has opened up new fields of investigation and research. Recent studies have tried to
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analyse in greater depth the working mechanisms of the colonial system, broadening the field of investigation also to the perspective of African countries and the political-economic equilibriums of the second half of the twentieth century. This study fits into this area of research and analyses crucial aspects of the decolonisation of Somalia, in which the monetary question, as the author capably explains, became one of the main, and in some ways decisive, transitional phases which occupied the Italian trust administration between 1950 and 1960. A number of very interesting points emerge from the detailed and careful analysis of sources in the Historical Archives of the Banca d’Italia: the history of the presence of Italian banking in Somaliland; relations between Italian and Somali institutions; Italian political-monetary policies during the reconstruction and the first economic boom; the vital role played by the Italian Central Bank which, as at other delicate moments in the country’s history, fulfilled its leading institutional function.
Methodology and Sources This book grew out of the desire to continue a research which had culminated in the publication of Decolonizzazione e sviluppo economico. Dalla Cassa per la circolazione monetaria della Somalia alla Banca nazionale somala: il ruolo della Banca d’Italia (1947–1960). This has prompted me to investigate further an extremely fragmented situation, which is still torn internally by a dramatic civil war. Tribal divisions continue, as in the past, to compromise the formation of internal unity and peace which are essential conditions to enable the country to get out of the dangerous impasse in which it is trapped. Last, but not least, the presence of foreign powers, rather than protecting the country and improving conditions, has actually increased the level of poverty. To understand why Somalia finds itself in the headlines today, we have to take a jump back in time and analyse the events that led up to “independence”, which was achieved more at a juridical than at a political-economic level. This analysis will focus in particular on the relationship established with Italy, which worked initially as a colonizing power and later as an international body that was to accompany the country towards independence and assist it afterwards. The earlier study tried to assess to what extent this Italian-Somali cooperation was successful during the Trusteeship, by trying to identify what it represented and the results obtained. The documents in the Archivio Storico della Banca d’Italia (ASBI - Historical Archives of the Bank of Italy) have shown that there was one positive note among the many signs of a general lack of interest in Italy to bring about a real improvement to the conditions prevalent in the country. This was the coining of the currency, the “somalo”, which was supervised by the Cassa per la circolazione monetaria della Somalia s.p.a. that had been set up on April 18, 1950 as a private institute to be administered by the Banca d’Italia. The currency continued to circulate after the independence of Somalia which took place on July 1, 1960 until it was replaced by a new currency in 1967.
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In this book, however, the intention is to focus on the economic role played by the agricultural sector in the attempt to reach a level of self-sufficiency for the country as soon as possible. The analysis will dwell in particular on the importance of banana plantations and the companies and firms managed by Italians that emerged in the period from the early 1950s through and beyond the period of the Trusteeship and try to understand if and how they contributed to the independence of the country. The first part of the book provides an analysis of the country’s complex history which covers thousands of years and will highlight its deeply-rooted weaknesses. From the era of colonisation onwards Somalia has been the target of expansion by foreign countries which has deeply undermined the internal and external stability of the country. Their presence, especially Italy’s, has had, and still has a political explanation, which in many cases has hindered the development of the country. Italy, a middle power, has always shown particular interest in international organisations in the hope of easing its structural problems as an overpopulated nation with a shortage of raw materials, but also of regaining prestige after the loss of its colonies between 1941 and 1943. At the end of a long difficult period, the question of Italian ex-colonies was solved in 1949–1950 with the Trusteeship of Somaliland being granted to Italy. The first and most formidable difficulty to tackle in the attempt to create a solid social and democratic base for the country was the social structure of the population. Its tribal organisation began with a very small group of families with a common ancestor, called rer, building up to the cabila, that is, a set of rer. In 1953 there were 15 political parties, which were mostly founded on tribal affiliation and present only in very local areas. The Italian administration, for convenience and as a deliberate strategy, had adopted tribalism as governmental practice and as a form of control, making it compulsory to state clan affiliation as part of an individual’s personal identity. Once independence was declared on July 1, 1960 attempts were made to consolidate the concept of national unity by discussing territorial differences between the north which was less developed and the south rich in resources. The first decade after independence was marked by divisions and fragmentation in the social fabric of the country and efforts to promote national unity made little progress, as there was still a heavy dependence on foreign aid. It was in this climate that Siad Barre forced his dictatorship on the country. His government was inspired by the doctrines of socialism and Marxism in its administration of the public good, thus distancing itself from any conservative or antirevolutionary cliche´. During his first decade in power Barre designed the rebirth of Somali nationalism. His second decade at the head of the country, however, marked the decline of the progressive and innovative drive, giving way to a dictatorship, the consequences of which are still evident today. The second part of the book will analyse the economic history of the country, showing not only the difficulties originating in the territory itself, but also underlining the many hopes pinned on the economy of the banana plantations. From their arrival in the country, most Italian interests had concentrated in the central-southern part. Italy supported a form of capitalism based on agriculture for
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exports and subsidised its countrymen to set up modern agricultural companies along the Shebelle River. Banana and cane sugar plantations were developed mostly. However, there were immediately problems with the work force, as Somali herdsmen refused agricultural work because they thought it was degrading and farmers preferred to work for themselves. From the 1930s onwards bananas became the main crop and leading export product and their importance grew during the Italian Trusteeship. The Italian authorities were convinced that by giving great freedom to private investment in those sectors that a survey of the general situation in the area had indicated as the most appropriate and profitable, they would create healthy economic development and avoid vain attempts to direct investment towards areas that did not need it. On the other hand, it seemed that traditional agriculture was going to act as the driving force in the development of Somalia, as resources, organisational skills, credit and specialised labour, whose scarcity actually prevented development, could be mostly easily deployed there. This did not prevent attention from being directed at other sectors. For example, great importance was given to the founding of the Azienda Monopolio Banane (A.M.B. – Banana Monopoly Company), which ran a state fleet for the transport of bananas and thus established Italian sovereignty over Somalia in this field too. The maximum level for the production of bananas was reached in 1963, when it became the leading crop. However, Italy bought Somali bananas at a much higher price than from other places which raised a number of criticisms. The problem has to be seen from a different point of view though; Italy’s interest in purchasing bananas should not be viewed in relation to the profits made by the Monopolio, but in a more general framework. Whilst Italy admittedly conceded a great advantage to Somali bananas, it is also true that Somalia conceded a much greater overall advantage to goods bought from the Italian market. The negative side of cultivating this crop lay in the difficulty of finding the necessary factors of production, such as fuel, fertilisers and skilled labour, in Somalia; furthermore, this crop, which is largely seasonal, required great entrepreneurial ability and working capital, which was diverted from sectors that needed greater and more urgent attention. This led to doubts about whether the plantation sector could stimulate solid general development, in view of the modest possibilities of creating local value added. The exported good was produced mostly by foreign operators with foreign factors of production and therefore the absorption of local underemployed factors of production was minimal. Things changed slightly between 1964 and 1965 when 350 of the 450 banana plantations passed into Somali ownership. In spite of this numerical superiority, however, Somali firms had much less land than the Italian plantations. The crop continued to be successful even after the end of the Italian mandate, recording a net decrease in production only between 1978 and 1979 followed by a good recovery in 1983, which coincided with the setting up of Somalfruit, a joint venture managed by the Italian group De Nadai. This recovery, however, did not produce the expected results for the population, because the greatest benefits from the agricultural areas went to the elderly members of the old regime, the Italian firm and fewer than 200 Somali owners.
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The third part of the book will examine the role played by the Italian firms and companies that were set up in the colonial period and were to continue their operations until Siad Barre’s takeover, when he immediately nationalised all firms and replaced them with cooperatives in the name of scientific socialism. From the very beginning private enterprise was considered to be of fundamental importance in the attempt to set in motion the economic development of the country. Entrepreneurs were encouraged to invest in those sectors that were considered most appropriate and profitable. In fact, the Duca degli Abruzzi immediately recognised the opportunities available whilst travelling in Eastern Africa in 1918. He settled in Somalia and set up an industrial agricultural firm of a considerable size, capable of permanently employing large numbers of Somalis. Once again the problem arose of having to rely on a mass of workers who could not adapt to a regular job. Most of them, once they had scraped together sufficient savings, tended to return to their home village and take up their traditional nomadic way of life or simply abandon their job, even at the time of greatest need. Between highs and lows the firm’s activities went ahead until the early 1960s, and to be more specific 1963, when the Societa` Nazionale Agricola Industriale (S.N.A.I.) was set up at Giohar in agreement with the local government, thus continuing the collaboration between Italians and Somalis on an equal standing. Basically, and in spite of everything, the results obtained were generally positive, according to the sources consulted. The firm benefitted from strong collaboration with agriculture, which broadened its productive horizons, and from collaboration with its partners, the Societa` Saccarifera Somala (SSS), the Societa` Anonima Cooperativa Agricola (S.A.C.A.), the Societa` Agricoltori Giuba (S.A.G.), the Societa` Romana di Colonizzazione in Somalia and the Societa` Commerciale Italo Somala (S.C.I.S.). The work of the S.N.A.I. continued until 1970, when President Siad Barre began the nationalization of all companies in the attempt to reach self-sufficiency and to create an exporting economy by adopting techniques that could be easily adapted to the conditions of the local companies. In this context there was a very strong need to form partnerships and the best way of realizing this was to set up cooperatives which promoted economic development and the social improvement of members, who were encouraged to take part in the business, either by contributing with their products, investing their labour or using their services. The results that were so keenly hoped for did not arrive and many believed that there was no real will to support these cooperatives, because the credit conditions, especially interest rates, were generally no more favourable than for individual firms. The fourth part of the book will discuss how all these elements have conditioned the attempts of bilateral cooperation between Italy and Somalia in more recent years; even though development plans had been laid out for the country from the time of the Trusteeship with the dynamic support of the Italian economy, the results were disappointing. From the very beginning of Italian collaboration in Somalia it was believed that independence could be achieved more quickly if development plans encouraged a better use of internal resources and favoured the introduction of foreign resources
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following a certain order of priorities. Plans spreading over a number of years became the premise for a more efficient use of external aid, combined with the desire to consolidate in an economic sense the great successes obtained at a political level, by making sure the process was achieved almost entirely by Somalia itself. Even in this case, however, the results were not very encouraging: there remained too strong a dependence on foreign aid, which in most cases did not set the maximum possible level of economic efficiency in the country as its prime objective and failed to solve the real problems of the country, and actually created new ones. Italian collaboration was strengthened by the signing of important economic and aid agreements which were incorporated and made more organic in Act no. 1376 of 23.12.1967, called Assistenza tecnica, culturale, economica e finanziaria alla Somalia. Even after the revolution of 1969 relations between the two countries continued to be close and were redefined by Law no. 1222 of 15.12.1971 which dealt with and regulated the essential aspects of assistance in the development policy, unifying all cooperation in progress and making special provisions for Somalia. The composition of international aid can be classified in three main categories: bilateral, multilateral and OPEC countries. Bilateral cooperation in Somalia can be distinguished into two separate periods: up to and after 1977. The watershed year saw the breakdown of relations with the USSR and the search for technical and financial aid from other donors. Lastly, the conclusions will show that the numerous criticisms levelled against the Italian attempt at cooperation were justified, because the real interest of Italy lay in the desire to win prestige at an international level.
The Italian Colonial Question Italian historiography has for a long time neglected the colonial period. As Nicola Labanca wrote, “Italians almost immediately removed the colonies, and perhaps Africa, from their agenda: but they did not do so as a result of a criticism and selfcritique of their earlier fascination with it. They simply absolved themselves, resorting to the rhetoric of ‘brava gente’ [nice people]: they missed the opportunity for a real and proper ‘decolonisation’ of the memory. The revisionism of the imperial past ran aground even before it got underway”.1 The main concerns and worries of Italians from the 1950s to the present day have been the economic take off, the new international position of Italy and the widespread search for prosperity and higher standards of living.2 Decolonisation and the emerging “Third World”, the alliance with the United States and the Cold War, the emphasis on the Italian Republic’s changed role as ‘civiliser’ as reflected in the trust
1
Labanca 2002, p. 438. See also Labanca 2009, which takes an international perspective on the topic. 2 Triulzi 2008, p. 579.
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territory of Somaliland and the lack of condemnation of the Italian administration’s more violent actions or the indiscriminate massacres in Ethiopia after the assassination attempt on General Graziani in Addis Ababa3 persuaded post-war Italy to quickly turn over a new page and stop talking about the colonies.4 Over the last few years, even if in alternating phases, memories of the colonies have come to the fore again, prompted not only by requests for reparations for the economic and moral damage suffered by ex-colonies or countries occupied by Italy during the war, in particular Ethiopia and Libya, but also by the ever growing flow of immigrants to Europe, especially to Italy, and often from ex colonies from the mid-1980s onwards.5 For example, in November 1997 on a visit to Ethiopia, the President of the Italian Republic, Oscar Luigi Scalfaro, was the first post-war Italian politician to acknowledge the suffering inflicted on the country by Italian occupation and to pledge that the Italian government would return, 50 years after the promise made in the peace treaty, the Axum obelisk which had been plundered by Mussolini in 1937 and installed in front of the Ministry of Italian Africa on the 15th anniversary of the March on Rome. Provisions for the restoration of the obelisk had been made in the 1947 peace agreements, together with another monument, the statue of the symbol of Ethiopia “The Lion of Judah”, which had also been removed during the fascist period and returned in 1970 after a visit to Rome by the Negus Haile Salassie. However, the obelisk was returned to its homeland only 8 years later (following a decision by Berlusconi’s government in April 2005) and in the midst of problems and controversy.6 On this point Calchi Novati has written, “In the new international situation in which a re-evaluation of colonialism is used to justify and support military intervention (for example, Great Britain in Sierra Leone or France in the Ivory Coast), the relative “innocence” of Italian actions can no longer be an advantage for its policy in Africa. In Libya memories of bad administration and crimes committed by Italy during colonialism has, especially since Gheddafi came to power, been a major obstacle on the road to the normalisation of relations and a policy of cooperation”.7 This has led to renewed interest in the question and opened a more critical approach which brings Italy, though still in the early stages, closer “to the more mature European historiographies”8 and, as Labanca points out when describing the history of Italian colonies: 3
On these events, see in particular Del Boca 2005, pp. 105–123, 205–227. Triulzi 2008, especially 578–579. See also Del Boca, 1992, pp. 111–127; Uodelul Chelati Dirar, 1996, pp. 9–37. 5 See the articles of November 25, 1997 Breda’s and Caridi’s. 6 Alberizzi 2005. 7 Calchi Novati 2008, p. 572. 8 Triulzi 2008, p. 582. On this point see the papers presented at the conference Il mondo visto dall’Italia organised by SISSCO (Societa` italiana per lo studio della storia contemporanea) held at Milan in September 2002 and published in the section on Africa in Giovagnoli - Del Zanna (eds.) 2004, pp. 99–172. See also the proceedings of a recent conference on Italian colonialism. Palumbo (ed.), 2003; Andall - Burdett - Duncan (eds.), 2003; Andall – Burdett - Duncan (eds.), 20032; 4
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There was in short no truly prevalent element to be taken in isolation: there was a bit of everything. Everyone took part in the imperial March a little, and especially under fascism, especially in Libya and Ethiopia. Everyone, therefore: agriculturists and financiers, textiles and Fiat, electricians and chemists, shipbuilders and railway builders, small-medium sized and large companies. Everyone, but only a little; not entirely convinced, ready to retreat, quick to seize business but prepared to give it up (some more, some less). Here lies the contradiction of the widespread, but in the end weak, support for Italian colonialism. Support which was impassioned at a time of expansion, but ready to forget everything, to find excuses at a time of defeat and abandonment. This is from the point of view of the colonisers. From the point of view of the colonised and the conquered African territories the consequences of Italian dominion probably appeared to be quite similar to those of the dominion of other imperial powers, which had centuries of colonial tradition behind them and stronger and more organised interests abroad or connections with it. For the ‘native population’ colonialism meant the destruction of the traditional economy and the sudden arrival of a market economy; a break with centuries-old social, geographical and ethnic ties; a dramatic transformation of traditional societies and the creation of new “colonial” societies; appropriation of the best land and depletion of local societies’ most precious and most easily extractable resources; distortion of the economy with the introduction of monoculture and the decline of local manufacturing; corruption of the environment and society. All of this was – from the economic point of view – also the norm in Italian colonies. However, the ways and forms, the causes and the processes through which this was achieved, from the point of view of the colonisers and the colonial powers, were very different. In general, the colonial economy of the last of the great powers showed more weaknesses than strengths.9
The new political situation which emerged during and after the Second World War in Italian territories in Africa and their, and other African countries’, membership of foreign monetary areas meant the use of foreign currency for finance was absolutely necessary.10 For this reason the currency question became so urgent. The monetary aspect of transactions in a monopoly regime of foreign exchange, of the kind in force in Italy, had to go through the authorities that regulated the collection and use of foreign currency and so there was no way of solving the question privately. Furthermore, in Africa there was strong local and international competition in banking because there were about 30 ‘indigenous’ banks (half in Egypt
Andall – Duncan (eds.) 2005; Ben Ghiatt - Fuller (eds.) 2005; Conference organised by the Istituto Nazionale per il movimento di liberazione, L’Italia e l’Etiopia 1935–1941. A settant’anni dall’impero fascista, Milano Museo di Storia contemporanea, 5–7 ottobre 2006 (the proceedings were edited by Riccardo Bottoni 2008) which involved numerous scholars; the participants of the important Round Table which closed the conference were Shiferaw Bekele (University of Addis Ababa), Giampaolo Calchi Novati (University of Pavia), Uoldelul Chelati Dirar (University of Macerata), Agostino Giovagnoli (Universita` Cattolica del S.C.) Nicola Labanca (University of Siena) Richard Pankhurst (Institute of Ethiopian Studies – Addis Ababa), Giorgio Rochat (University of Turin), Alessandro Triulzi (Sapienza University of Rome), Angelo del Boca. 9 Labanca 2002, pp. 306–307. 10 Before the Second World War the Italian banking system in Libya, Somalia and Eritrea was favoured by the fact that the economy of these regions worked within the area of the lira (see below).
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alone) with about 200 branches and about 50 foreign banks, mostly British and French, with about 1,750 branches, half in the Union of South Africa.11 The Banca d’Italia’s economic interest in Italian expansion overseas started with the decision to establish a branch in Eritrea, which was intended to intensify relations with Italy, but also act as treasury of the State. Eritrea had been Italy’s very first colony and the setting up of a branch there was considered an innovative and “audacious act”, especially as regards other states which had much vaster colonial empires, and also as there was little interest in the Italian colonial question at that time, with memories of the first African campaign still very fresh.12 Bonaldo Stringher, the Governor of the Banca d’Italia, expressed his wish to see a greater opening on the part of Italy beyond its national borders so that it could claim a role within the assembly of nations.13 Among the schemes promoted by the governor as a tangible sign of his intentions was the commitment of Italian capital to the establishment of an issuing bank in Ethiopia. Italian banks had shunned Africa until 1905 when the Bank of Rome opened a number of branches in Egypt, the first at Alessandria, which later joined together to form a single independent institute giving rise to the Italian-Egyptian Bank (made up of the Banco di Roma and Credito Italiano); later, the Italiana per l’Egitto was created. The Banco di Roma also set up a number of branches in Libya in 1907, which promoted commercial activities, followed by the Banca d’Italia, the Banco di Napoli and the Banco di Sicilia; between 1923 and 1925 two other savings banks were created, which merged in 1935.14 The Banca d’Italia, however, was the absolute pioneer in Eritrea and Somaliland where it was later followed by small banks founded by Italian residents together with local partners and in 1935 by branches of the Banco di Roma, Banco di Napoli and Banca Nazionale del Lavoro.15 Furthermore, in 1906 the Banca d’Italia made a direct contribution to the completion and repair of the two railway lines of Massawa-Saati and Dig-DigtaGhinda and the purchase of rolling stock, as well as covering other costs incurred after 1909. The total expenditure amounted to 17 million lire which was paid to the Government of the Colony through a Consortium which included the Banca 11
Barclays Bank alone was present in British West Africa (Cameroon, Gold Coast, Nigeria, Sierra Leone), Portuguese East Africa, South-west Africa, Egypt, Eritrea, Kenya, Libya, Mauritius Natal, Nyasaland, Orange, Cape Province, Southern Rhodesia, Northern Rhodesia, Anglo-Egyptian Sudan, Swaziland, Tanganyika, Transvaal and Uganda. Archivio Storico della Banca d’Italia [Historical Archives of the Banca d’Italia] (henceforth ASBI), Banca d’Italia, Studi, pratt., no. 538, fasc. 3, p. 15 I Convegno economico africano. Attivita` bancaria italiana in Africa (1951– 1952). 12 ASBI, La Banca d’Italia nelle terre d’oltremare, published on the occasion of an exhibition on Italian territory overseas, May of the year XVIII E.F., p. 7. On March 26, 1906 the shareholders’ General Assembly voted on the question of whether to set up this new institute, which did not actually happen until February 2, 1914 with the opening of a branch in Asmara; later on April 15 of the same year another branch was opened in Massawa (ibidem, p. 63). 13 Ibidem. 14 ASBI, Banca d’Italia, Studi, pratt., n. 538, fasc. 3, p. 13. 15 Ibidem.
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d’Italia, Banco di Napoli, Cassa di Risparmio delle Province Lombarde, Banca Commerciale Italiana, Credito Italiano, Societa` Bancaria Italiana and Banco di Roma.16 From the very beginning banking in the colonies was subject to special regulations appropriate to “local uses and customs”.17 However, the poor purchasing capacity of the local population, the limited availability of liquid capital and the strong fluctuations in prices seriously hindered the commercial potential of colonies. In fact, the Banca d’Italia was forced to delay the beginning of its real colonial activity in Eritrea because of internal events and economic conditions; it was not until the military occupation of Libya and the consolidation of a colonial mindset in Italy that the Issuing Institute was able to work directly towards the economic strengthening of the territories under Italian sovereignty. The Italian government, with the Royal Decree of December 10, 1911, n. 1367, authorized the three issuing institutes18 to open branches in Tripoli, Benghazi and other towns in Tripolitania and Cyrenaica, where the Treasury Minister believed real opportunities existed. The decree also established the right to introduce special rules into their statutes for the activities to be undertaken in the new colony.19 The changes introduced into the Statute of the Banca d’Italia at the shareholders’ special General Assembly of March 30, 1912, were contained in articles 2 bis and 63 bis. These articles authorized the administration to set up branches in Tripoli and Cyrenaica which were to be administered by special regulation and to engage in all banking services normally provided in the Kingdom of Italy and all others considered appropriate to the economy of these regions. These regulations had to reflect the spirit of the scheme, which aimed to set up ordinary banking operations overseas and therefore was not limited to the real functions of an issuing institute that would not have been very suitable for the poorly developed economy of the new colonies. This led to the decision that each branch had a basic endowment fund, which had to be formed by withdrawing capital reserves for the amount decided by the Consiglio Superiore and as suggested by the general director. Thus, in 1913 with the Royal Decree of August 15, n. 111, the Bank was allowed first to apply the same measures adopted in Tripoli to the branch in Asmara and later what was decided in article 63 bis of the statute was extended to all branches to be set up in the colonies. Furthermore, the Royal Decree of June 21 1928 –VI n. 1404 added article 67 which provided for the Banca d’Italia to set up an independent colonial body which all branches in the colonies would join with their assets and liabilities. Lastly, the changed statute
16
ASBI, La Banca d’Italia nelle terre d’oltremare, cit., p. 9. Ibidem, p. 63. 18 It is important to remember that at the time the issuing of legal tender banknotes was also entrusted to the Banco di Napoli and the Banco di Sicilia: the unification of the service into one institute (Banca d’Italia) took place by Royal decree on May 6, 1926, n. 812 (converted into law June 15, 1926, n. 1262), which fixed June 30 1926 as the date for the end of the power of the Banco di Napoli and the Banco di Sicilia to issue banknotes. 19 Ibidem, pp. 13–14. 17
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including the new tasks devolved to the Issuing Institute and approved by the Royal decree of June 11, 1936-XIV, n. 1067, empowered the Banca d’Italia to have branches administered by special regulation in the remaining territories of the Empire. The clause fixing the maximum limit of endowment funds was abolished.20 The creation of the empire and the subsequent reorganisation of territories in East Africa led to the Bank extending its activities even further. A concrete example of the efforts made by the Banca d’Italia to stimulate the economy of the colonies was the establishment of customs warehouses in Tripoli. As Tuccimei says, “As soon as the decision to open a branch in Tripoli was taken, the Banca d’Italia considered setting up customs warehouses in the city for the development of trade”.21 The outbreak of the First World War, however, prevented the realization of the project which was re-proposed in 1923 when the quay in the port was ready. On that occasion the general outline of the agreements made in 1913 between the three issuing institutes was reconfirmed. As these agreements concerned only the management of the general warehouses, the Banca d’Italia suggested that it should take over full responsibility for the equipment of the plant to avoid difficulties arising from the joint ownership of property, thus establishing its share of the costs at 50% and the other two institutes the remaining amount. When the project was approved with the governor’s decree on June 7th, 1924 n. 591, the Banca d’Italia then arranged for the building of the general warehouses in the port of Tripoli, oversaw all the operations necessary to guarantee full efficiency throughout the concession and administered the warehouses with the Banco di Napoli and the Banco di Sicilia. The duration of the consortium was fixed at 90 years, after which the plant and all its facilities were to be handed over to the colonial Administration. The management of the consortium of the three banks started in the port of Tripoli on May 1, 1925 with the following activities: customs warehouses, credit operations on warehouse warrants and sureties; customs buildings of storage, exporting and importing. The general warehouses had the same basic characteristics as similar warehouses in the Kingdom of Italy and offered accessible prices to depositors for the custody of goods. The storage warehouses received incoming goods that could not be directly collected from the dock and outgoing goods which had to be checked. Incoming goods could be stored for 3 days, later extended to 4 days. The customs warehouses started its own business of loading and unloading on July 1, 1924 following an agreement signed in Rome between the Ministry for the Colonies and the Governing Board of the Banca d’Italia. Business was at first limited to only those operations concerning goods belonging to or destined for the administration of the state, but was later extended to goods transported on subsidised shipping lines. The constant improvements made
20
Ibidem, p. 16. Tuccimei 1998, p. 79; ASBI, Studi, Copialettere n. 191, Stringher to Crea, letter of 20.2.1912, p. 12–13. 21
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by the firm to the equipment meant that it gradually absorbed all the port work so that by 1929 the loading and unloading firm was the only one left providing these services in the port of Tripoli. They were to be modelled on warehouses in the two most important Italian ports, Genoa and Taranto. The services provided by the customs warehouses covered storage, public warehouses and exporting and importing and were carried out by contractual staff in the firm, casual workers for temporary and special jobs hired by the warehouses management and with the permission of the firm’s administration, as well as contract or casual employees, sailors and workmen called by special agreements or on the basis of collective work contracts in force in the colony or from the merchant navy and day labourers who were employed on the basis of daily needs and in accordance with local regulations and customs.22 The Banca d’Italia’s project with the Banco di Napoli and the Banco di Sicilia began to take shape when a request was made to the Ministry for the Colonies for an area on which the buildings were to be built.23 The request was presented on April 17, 1913, only 6 months after the signing of a peace treaty between Italy and Turkey at a very delicate moment for the political situation in the colonies, which was still very far from being absolutely tranquil. On May 14, 1936, only 5 days after the Declaration of the Empire, the Banca d’Italia started to provide troops still on operational tour with the main banking services in the capital of Ethiopia. The problem of which banking and credit facilities should be created in the new territories was carefully assessed in order to satisfy and promote the development of various economic activities, and especially to avoid an expansion of a banking system that could prove to be excessive for local needs and lead to “anti-economic competition”.24 For this reason the Council of Ministers of February 16, 1938 decided not to allow banking institutes without specific authorization to open branches in the Empire until June 30, 1938, a date which was later extended to June 30, 1940. In view of the difficult conditions prevailing in these colonial economies the Government decided to authorize the Banca d’Italia, in collaboration with the Istituto mobiliare italiano and the Consorzio per sovvenzioni su valori industriali, to also carry out medium and long term operations. The various tasks assigned to the issuing bank included the liquidation of the Bank of Ethiopia.25 As in Eritrea, the Banca d’Italia had been authorized to intervene in Ethiopia to stimulate credit with all types of activities.
22
ASBI, Filiali coloniali e dalmate, pratt. B. 833, f. 36, Regolamento di servizio, Comitato superiore, tornata 18.6.1937, artt. 5, 6, 10, 11, 18, 19). 23 ASBI, Studi, Copialettere n. 191, Stringher to Crea, letter of 20.2.1912, pp. 12–13. 24 ASBI, La Banca d’Italia nelle terre d’oltremare, cit., p. 106. 25 The Bank of Ethiopia had been established by Negus Haile` Sellassie` on August 29, 1931 and had taken over the Bank of Abyssinia which had a banking license for fifty years (ASBI, La Banca d’Italia nelle terre d’oltremare, cit., p. 119).
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It has to be stressed that organisational costs were much higher for the territories in Italian East Africa26 than in other possessions abroad because of the obstacles that were encountered. The difficulty of settling and living in these places which were so very different from the homeland posed serious problems for the supply of appropriate equipment and the deployment of staff necessary to guarantee the regular services of the Bank. For this reason staff rotation among branches was introduced (to avoid long stays in the particularly debilitating climates,27 but also to enable employees to acquire different areas of knowledge and get to know the specific customs of the different parts of the country) and special bonuses were given as tangible recognition of the efforts made by employees, as well as some other measures.28 Before the Second World War business opportunities for Italian banks in Libya, Somaliland and Eritrea had been favoured by the fact that all economic activity in those regions took place in the area of the lira: therefore firms that transferred all or part of their business to those lands or set up a new business did not come up against currency problems and could rely on the financial means which the “mother country banks” operating there had available and with whom they could deal on the spot.29 At the end of the war and as a new world order was being shaped, it became increasingly difficult to transfer currency as a result of the monetary system of watertight compartments that had been created by various states, difficulties which hit the ex-Italian colonies hard, especially Eritrea and Ethiopia, where the lira was no longer legal tender. The banking system in Africa could, therefore, no longer rely on normal transfers from the mother country, but only on the local collection of funds. This meant it had to regulate its uses in order to maintain normal liquidity, avoiding those long-term forms that had been allowed in exceptional cases in the pre-war period, when local liquidity was guaranteed by the transfer of national funds.30
26
The Royal Decree of June 1, 1936, n. 1019 established in article 1 that “Italian East Africa includes the territories of the Empire of Ethiopia, Eritrea and Somalia. It is a juridical body and is headed and represented in the name of the Emperor King by a governor general, who has the title of Viceroy of Ethiopia. The Governor General of Italian East Africa is based in Addis Ababa.” The empire was divided into different administrations: the Government of Eritrea, the Government of Somaliland and the Empire of Ethiopia which was in turn divided into governments, namely: Amhara with Gondar as capital, Galla-Sidama with the capital at Gimma, Harar with the capital Harar and Addis Ababa with a municipal administration under a governor directly under the Governor General; (art. 2 and art. 32 of the Ministero della Cultura Popolare 1938–1939, pp. 26 e 30). 27 Labanca 2002, pp. 274–277. 28 These included, for example, the free distribution of mineral water and ice, subsidies for work canteens, days off in the high lands at the expense of the Bank, reimbursement of medical expenses and medicines. 29 ASBI, Studi, pratt. n. 538, fasc. 3, I Convegno Economico Africano – Attivita` bancaria italiana in Africa di Ugo Foscolo, Roma, 18 aprile 1952, p. 14. 30 Ibidem.
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Furthermore, it is obviously more difficult to collect deposits in the more developed African countries with a high saturation level in banking: deposits will flow preferably towards local banks or the branches of big banks in their respective monetary areas, rather than branches of banks from other countries which will, therefore, have to rely almost exclusively on endowment funds, drawn from the current assets of the head office.31
Italian banks were clearly faced with problems in assisting firms that wanted to set up businesses in those countries which already had intense banking activity and where competition was unfair, as existing branches had abundant funds and were easily restocked by the head office. These difficulties were created by the prevailing conditions on the African continent, which consisted in backward and depressed areas, with an economy that was still poor and where it was impossible to collect the means needed by credit institutes for their financial services. Naturally these obstacles did not discourage Italian banks from assisting firms that wanted to work in Africa; studies were, in fact, made to examine the best forms of financing and the factors that had to be considered singularly to find a solution to the problem. These factors were classified as follows: (a) political–social factors (including those types of firms that encouraged migratory flows, both temporary and permanent, by associating capital and employment); (b) economic factors (although political factors were the most important, economic factors could merit exceptional measures if there were a series of commercial, industrial and currency advantages to be had); (c) credit factors (which could be divided into three forms: long term funds, short-term funds and financing of firms’ medium or long term investment plans); (d) currency factors (the new situation which emerged at the end of the Second World War and the new political situation in Africa meant that other currencies more generally accepted in international exchanges were used instead of Italian lire).32 The African continent, however, was a certain and profitable field of action for the Italian banking system, as indeed for the other countries present on the continent; suffice it to say, the cost of projects in the South African Union for the development of the electricity industry and transport amounted to more than 500 million dollars over a period of 6 years, with the involvement of the World Bank. Public and semi-public investment schemes were also set up in the following countries: Belgian Congo, French East Africa, French Equatorial Africa, Togo, Cameroon, Madagascar, Portuguese Guinea, Angola, Mozambique, Sierra Leone, Gold Coast, Nigeria, Tanganyika, Uganda, Nyasaland and Northern Rhodesia, which totalled an expenditure of 3,700 million dollars between 1946 and 1955, of which 760 were spent in 1950 alone.33 As can be seen from the report of the first African Economic Conference organised by the Banca d’Italia, it was hoped that Italy would give greater attention
31
Ibidem. Ibidem, pp. 15–17. 33 Ibidem, p. 17; OECE, August 1951. 32
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to Ethiopia; this cooperation was also seen positively in light of declarations made by the Minister of Industry and Commerce, as well as the Head of the Planning Office in Addis Ababa, who pressed for greater openings in strategic economic sectors, and especially for the development of agriculture. Italy granted credit to Ethiopia for the purchase of agricultural and other machinery and provided the expertise of specialised technicians and a qualified workforce, as well as financial help from Italian banks. The public works sector also offered great opportunities for Italian firms.34 Social and political advantages could also be discerned, as in fact: Unemployment constitutes one of the most typical signs of Italian unease; but it could certainly be reduced noticeably if firms with a good organisation and an adventurous spirit found adequate financial help to undertake works of great importance in Africa and employ armies of Italian workers. Today there is no point in being nostalgic about the colonies; although their disappearance has denied Italy of the territorial appendices that it had acquired, no matter how modest they were, it has led to the need to take more interest in those countries that are attractive for the economy.35
Naturally African people welcomed and showed their favour not only to Italy, but also to other European and non-European states that had sent or intended to send trade missions, such as Japan, India, Pakistan and East Germany. The latter, in particular, was considered an enterprising commercial competitor, especially in Ethiopia, Eritrea and Somaliland, all of which had an Italian ‘past’. East Germany had actually stepped up its penetration of all markets, and especially African markets, by sending its economic representatives and observers to study the possibility of reviving commercial relations. Italy had also taken on a number of schemes in Rhodesia, Tanganyika, Belgian Congo, Equatorial Africa and South Africa, but they remained isolated cases because they could not rely on an appropriate financial organisation. National problems of space and raw materials are serious, and since we cannot solve them by political means, we have to adopt economic ones. Exporting capital temporarily means using it for schemes that will set up a range of new activities in Africa, which will be sources of wealth for our country, because they will not only provide work for big groups of compatriots, but also neutralize the competition that almost all national firms are beginning to feel from similar, though less perfect, indigenous factories which have emerged in the post-war period and have been immediately given protection.36
As Calchi Novati has recently noted, “Decolonisation has been limited mostly to guaranteeing the administration of power at the centre, without considering if and how aspects of tribal or community belonging and jurisdiction should remain in force. A modus vivendi has now to be found between ‘the kingdom of the imported’
34
ASBI, Studi, pratt. n. 538, fasc. 3, p. 18. Ibidem. 36 Ibidem, p. 19. 35
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and the ‘kingdom of the native’”.37 In the age of globalisation38 and at the end of the bi-polar system, there is less incentive for the international system to protect states and their statehood.39
37
Calchi Novati 2009, p. 24. The geographical-economic world order has become increasingly globalised since the 1980s. A globalised geographical-economic order is meant as the “interrelations between individuals, societies, institutions, states and markets. In its manifestation and more recent interpretation, it refers to the«growth of networks of planetary interdependence», as a result of new information and communication technology, the creation of a world financial system, the expansion of an international production system based on the competitiveness and on the reputation, theoretically anomalous in a competitive market, of transnational firms” (Di Taranto 2007, p. 23). See in particular James 1999; Stiglitz 2002; Caselli 2002, especially ch. 1; Berend 2006, pp. 263–326. 39 Calchi Novati 2009, p. 24. 38
.
Contents
1
2
The Somali People: Between Trusteeship and Independence . . . . . . . . . 1.1 Somalia and Its Traditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 The Role of the Amministrazione Fiduciaria Italiana Della Somalia (AFIS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 The Role of the Banca d’Italia in the Period of the Trusteeship . . . . . 1.3.1 The Banca d’Italia and the Creation of the Somali Monetary System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.2 The Introduction of the Somalo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.3 The Creation of the Cassa Per La Circolazione Monetaria Della Somalia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.4 The Banca Nazionale Della Somalia . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 After the Trusteeship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 The Clans of Somalia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Analysis of the Economic System of Somalia . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 The Economic-Agrarian Activities of the Population and Their Evolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.1 The Agricultural Sector During the Trusteeship . . . . . . . . . . . . . . 2.1.2 The IBRD Report: “Is Somalia Ready to Become an Independent State?” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.3 Economic Development Between 1960 and 1969 . . . . . . . . . . . . 2.1.4 Scientific Socialism Between 1970 and 1975 . . . . . . . . . . . . . . . . . 2.2 The Availability of Labour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 A New Law on Foreign Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Terms of Trade in Somalia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 Banana Plantations: Profitable Agriculture or Not? . . . . . . . . . . . . . . . . . .
1 2 6 11 15 17 18 22 28 34 39 39 44 46 49 50 55 58 59 61
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5
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Companies and Firms in Italian Somalia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Towards Independence? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 The Societa` Agricola Italo Somala . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.1 The Expansion of the SAIS and the Work of Luigi di Savoia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.2 The Problem of Employment and the Workforce . . . . . . . . . . . . . 3.2.3 Agriculture and Types of Crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.4 Independent Somalia and the Transformation of the SAIS into SNAI 1960–1963 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 The Societa` Saccarifera Somala and the Importance of Sugar . . . . . . 3.4 The Societa` Romana in Somalia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 The Societa` Commerciale Italo Somala . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 Nationalization: The Birth of Cooperatives . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6.1 Multi-purpose Cooperatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6.2 Group-Farm Cooperatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6.3 Cooperative Farms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7 Internal Organization of the Cooperatives . . . . . . . . . . . . . . . . . . . . . . . . . . . International Aid to Somalia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Attempts at a Policy of Italian International Cooperation . . . . . . . . . 4.2 The Political and Financial Organization of Somalia During the Trusteeship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 International Cooperation in Somalia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 The Trade and Payment Agreement Between Italy and Somalia . . 4.5 Development Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 Development Plans and International Cooperation During the Somali Socialist Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75 75 76 79 80 81 86 91 93 96 97 98 98 99 99 101 101 104 106 109 112 117
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Appendice A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 Summary Sheets: The Independence of Africa 1960 . . . . . . . . . . . . . . . . . . . . . . . . 127 Africa’s Map 1960 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 Appendice B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 Organizations and Treaties of the African Continent (From 1960 to the Present Day) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Chapter 1
The Somali People: Between Trusteeship and Independence
“We are in favour of the autonomy of people in the colonies. The sooner this evolution is completed, the easier it will be to collaborate. We are in favour of all forms of government and do not have any intentions that may be irresponsible or interested in absolute sovereignty in a military sense; we only ask that the trusteeship be granted on the basis of our experience and that it be granted in such a way that we can really fulfil our task”.1 These words were intended to justify the direct intervention of Italy at a very delicate moment for the world at the end of the Second World War. The history of Somalia is complicated and particular. The country had been the target of the expansionary aims of foreign powers from the period of colonisation. Still today foreign aid in Somalia, including Italian aid, plays an important role and has many veiled economic and political reasons that in certain cases have hindered regular development. What follows is an analysis based on unpublished sources from the Archivio Storico della Banca d’Italia of the history of the Trusteeship, the only example of its kind because it was entrusted to an ex-colonial power which had been defeated in the Second World War, and of the little known work of the Banca d’Italia in setting up the monetary system. The history of the Cassa per la Circolazione Monetaria della Somalia and, more generally, the decision by the Banca d’Italia to encourage the birth of an independent Somali monetary system capable of supporting the process of self-government, do not only represent the way in which Somali decolonisation was accomplished, but are also part of a more general redefinition of Italian monetary policy at the end of the Second World War and the management of relations with its main international competitors. Obviously events did not follow a linear path and they are not without contradictions. In spite of the efforts of the Italian central bank to leave a stable monetary system in Somalia and a new Banca Nazionale della Somalia (NBS) that
1
Presidenza del Consiglio dei Ministri 1962, p. 22.
D. Strangio, The Reasons for Underdevelopment, Contributions to Economics, DOI 10.1007/978-3-7908-2778-1_1, # Springer-Verlag Berlin Heidelberg 2012
1
2
1 The Somali People: Between Trusteeship and Independence
“was the expression of local needs and with which the native population could identify”, the difficulties involved in building a strong financial structure, capable of replacing the Italian administration in the 1960s, depended heavily on the precarious situation of the real economy of the country and the decision of the government to control the new issuing institute. This analysis leads to the more general questions about the way in which some European states managed decolonization, the role played by the new elite in the government of the ex-colonies and the difficulties facing countries to use their scarce resources to rebuild an economy and social system that had been ruined in great part by centuries of foreign domination.
1.1
Somalia and Its Traditions
The population of Somalia is composed of a number of ethnic groups, clans and subclans, which in many cases have failed to integrate into the modern state created by the colonial culture. It is therefore a state in conflict with the intrinsic nature of its population. The state has developed thanks to foreign military and economic aid, whilst the population has changed thanks to the natural forces present in the country. Somalia occupies the north-eastern section of the Horn of Africa which juts into the Indian Ocean south of the Gulf of Aden. Its political borders do not correspond to well-defined physical elements, but are the result of international agreements. Somalia borders to the north-west with Djibouti, to the west with Ethiopia and to the south-west with Kenya. On its arrival in the country, Italy did not find a “ready formed authority and proceeded step by step, area by area”.2 European interference had begun in the second half of the nineteenth century and at first involved protectorate treaties, but later became real direct occupation. This led to the tripartition of the country into French Somaliland (from 1884) and British Somaliland (also from 1884), which shared the area on the Gulf of Aden except to the extreme north, and Italian Somaliland. “For France the port of Djibouti was little more than a stopping-off point in the intercontinental communications system to south-east Asia and later the railway terminal that linked the uplands to the sea”.3 As far as British Somaliland was concerned, it was purely a supply station for Aden, the equivalent of Djibouti across the sea that separated East Africa from the Arabian Peninsula. As part of the “carving up” of Africa and after the occupation of Massawa (February 1885) Italy began to take an interest in the southern region of Somalia, which was dependent on the sultanate of Zanzibar after the signing of a trade agreement on May 28, 1885. From the early nineteenth century Great Britain
2 3
Calchi Novati 1994, p. 57. Calchi Novati 1993.
1.1 Somalia and Its Traditions
3
had made treaties with the Somali heads in the Gulf of Aden and occupied the ports of Zeila, Berbera and Bulhar, which had been abandoned by Egyptians, in what would become British Somaliland. In 1888 its area of influence extended to the coast of French Somaliland in the north. The following year, thanks to the work of Filonardi, a trader and the consulate in Zanzibar, Italy managed to impose its own protectorate on the Sultanate of Obbia (February 8, 1889) and the Sultanate of Majeerteen (April 7, 1889), which then became part of the colony of Italian Somaliland. In 1893 the Italian government obtained a lease on the ports of Barawa, Merca, Mogadishu and Warsheikh from the Sultan of Zanzibar and their administration was granted for 3 years to the Filonardi Company which was, however, in great difficulty for a number of reasons, including the central authorities’ lack of interest. The economic results were very modest. At the end of the Filonardi concession and after a period of direct governmental administration the ports were entrusted to Cecchi4 and the Societa` Anonima Commerciale del Benadir, but it closed down after an attack near Mogadishu on November 26, 1896, in which Cecchi, numerous officials and a group of men were killed. The new company which took over from Anonima Commerciale del Benadir tried to improve the situation by strengthening the organisational and defensive structures. In 1905 Italy, under the Fortis government, decided to take on the direct administration of the colony after the earlier hostilities and local reactions had intensified in the intervening years. The only type of policy that the government managed to implement was repressive and predatory. “The real occupation, especially in the protectorates in the north, took place with fascism, when tribes were disarmed, chiefs were reduced to collaborators and expropriations became more systematic”.5 It was natural that once the local leadership had been conquered, it would become much easier to subdue the workforce. The hardest hit areas were the fertile lands in the south, where farmers were forced to work like slaves. Italy aimed to extend its dominion in the country as far as possible and to concentrate its efforts in Jubaland (Trans-Juba), an area considered to be extremely important because its land could be irrigated by the Juba River basin and because of the position of the port of Kismayo. The area was, however, under British rule and was subject to a long dispute between the two countries, which ended with a first agreement in September 1919 and definitively on July 25, 1924 with the signing of a convention made up of 12 articles which came into force the following year. The agreement re-
4 In 1885 Antonio Cecchi, explorer and geographer, was appointed by the Foreign Minister P.S. Mancini to accompany Colonel T. Saletta to Massawa on the “Gottardo” for the landing of the first group of expeditionary forces in Eritrea, after a mission to the Congo ordered by the Italian government had been cancelled. In August of the same year he went on a reconnaissance of the mouth of the Juba River and he wrote a report for the Foreign Minister in which he made the objective of his political and diplomatic action in East Africa very explicit: the occupation and exploitation of the Trans-Juba by Italy. This enterprise was not considered opportune by the Italian government, which recalled him to Italy. 5 Calchi Novati 1994, p. 57.
4
1 The Somali People: Between Trusteeship and Independence
proposed a solution that had been drafted in March 1920 and at the time had been considered unsatisfactory by the Italian government. It took another 4 years to reach an agreement because of problems to do with the exact definition of the area and populations to be transferred to Italy. “The lands were important for their wells; the populations were selected according to their attitude and their resources”.6 Italy supported the tribes that had been isolated by Great Britain and tried to reassure others that were more integrated and active in the market, but feared they would lose out by the arrival of a power that was weaker both economically and commercially speaking. Generally, the Somali people of Jubaland accepted this transfer without too many objections. From 1900 to 1921 Somalia lived under the threat of the religious leader Sayiid Mohamed Abdille Hassan,7 better known as Mad Mullah, who, once he had proclaimed himself “Mahdi”,8 waged a continuous war against British, Italian and Ethiopian forces.9 After the Great War Italian sovereignty was imposed on the protectorates of Obbia and Majeerteen by the governor De Vecchi, who was appointed in 1923. Efforts towards the economic progress of the colony, especially the setting up and extension of agricultural-industrial firms, were intensified. Rebellions became more frequent not only as a result of a new strong sense of nationalism felt by all the population, but also in part because of the inefficiency, meanness and unfairness of Italian rule, which concentrated its attentions on a limited number of Italian concessions that were allocated the best Somali land.10 The working conditions of farmers were so humiliating that a Fascist Federale (head of the party) in Mogadishu, Marcello Serra Zanetti, said, “The forced labour imposed on the natives of Somaliland, and cynically disguised by a work contract in 1929, is far worse than real slavery”.11
6
Ibidem, p. 59. Mohammed Abdille Hassan was a follower of Islam who completed a pilgrimage to Mecca and was an admired scholar of the doctrine. In 1898 he began to organise Muslim warriors whom he called Dervishes (an Arabic word which defines someone who is dedicated to God and the community), in preparation for the fight against Great Britain and Ethiopia to create a pan-Somali state from Ogaden to the Red Sea. His methods ranged from religious conversion to nationalistic appeals and drew on Mahdism. To reduce the pressure of his attacks he was offered sovereignty over Nogal, between British and Italian Somaliland, in 1904, but basically the war dragged on for two decades. Mohammed Abdille Hassan ruled with an iron glove to stimulate his followers and suffocate any internal tensions. No matter how despotic he was, for many Somali his tyranny was for a noble purpose. His advance was stopped by a British offensive. Mad Mullah was not defeated only by British weapons, but also by the conflict between rival tribes. He died a natural death in 1920. 8 Mahdi literally means ‘well guided by God’ and is a fundamental element of Islamic eschatology; he is given the task of combatting Evil. 9 Istituto Italo-Africano 1975. 10 Del Boca 1984. 11 Corriere della Sera, July 9, 1993, p. 9. From an interview with Angelo Del Boca. 7
1.1 Somalia and Its Traditions
5
The question of the border between Somaliland and Ethiopia, though solved on paper in 1908, was always the subject of disputes until the Wal-Wal incident, a chance, but decisive episode in the 1935–1936 campaign against Ethiopia. From June 1, 1936 Italian Somaliland, including Ogaden, was one of the five regions forming Italian East Africa, each headed by a governor. In the first days of 1940, after Italy entered the war against Britain, Italian troops began the invasion of British Somaliland and overcame enemy resistance; on August 19, with the occupation of Berbera, the conquest was complete. In 1941 Italy was forced to leave Somaliland following a British counterattack. This evacuation revealed the great damage done by the Italian administration and the few results obtained: there was not even one Somali university graduate and 94.4% of the population were illiterate; there was one doctor for every 60,000 inhabitants and one hospital bed every 990; only 20,000 Somalis had a brick house. The ‘best’ result achieved by the Italian mission was a concentration camp at Danane, where 3,175 Ethiopian and Somali partisans had died from starvation between 1935 and 1941, but was left in perfect condition. The first political movements began to appear during the British military administration of Somaliland. In 1943 the Somali Youth League (SYL) was formed with the support of Britain and wanted the unification of the Somali populations first and then their autonomy and independence. The League appealed to the more progressive groups, but was contested by the upper classes who headed the clan-orientated parties. The pro-Italian currents were grouped together in the Conference of Somalia which was supported by colonists and the few Italian officials left in the country. In 1947, under the influence of the SYL, the Somali National League was formed and immediately showed its radicalism by boycotting the elections. In January 1948 an international investigatory commission was visiting the country to ascertain the political economic situation and the wishes of the people, when serious episodes of fighting broke out and 58 Italians were killed. The fate of ex-Italian Somaliland was decided on December 21, 1949 by the General Assembly of the UN (in accordance with the peace treaty signed by Italy in 1947): the country was granted as a trusteeship to Italy for a 10 year period (from 1950), at the end of which it was to become independent. The return of Italians to Somalia certainly did not get off to the best possible start. They returned with an expedition of 5,791 soldiers on board ships loaded with cannons, armoured cars, tanks and 1077 t of ammunition.12 Certainly these armaments did not suggest the idea of a peace mission. There was, in fact, no intention on the part of the winning powers to take responsibility for decolonisation: it was left to Italy. France and Great Britain were not interested in following that path, whilst the United States had let it be known that it was willing to grant the administration of Somalia to Italy, even though it had been defeated in the war.13
12 13
Del Boca 1992. Calchi Novati 1994, p. 86.
6
1 The Somali People: Between Trusteeship and Independence
Only after the failure of the Anglo-French expedition to Suez in an attempt to stop the nationalization of the Suez Canal proclaimed by Nasser in Egypt did decolonization really get underway. The expedition aroused a wave of anti-colonialist feelings in Europe, and especially in Britain, which convinced the British government to acknowledge the new situation and to decolonize its colonies. De Gaulle in France was forced to take a similar path, though by a different route. In this international context where the slogan “return Africa to the Africans” was very popular in the 1950s and 1960s, though it was certainly not to be a painless process, Italy was to play an important role in Somalia by strengthening the economy, which needed large amounts of Italian and foreign capital together with the guarantee of a period of stable administration. At the end of the decade great progress had been made in almost all fields, thanks to the untiring collaboration between Italian and Somali forces, a factor which more than any other contributed to the success of the mission. From the very beginning of the mandate there was a need to establish guidelines, which aroused many doubts in 1950, though today they may seem adequate and opportune in the light of the results obtained, especially in view of the difficulty of actually realizing them in the short 10-year period of time fixed by the Trust Agreement. The main guidelines were: (1) rapid “decolonization”; (2) intensive training for as many Somalis as possible to enter all branches of the public administration; (3) the transition from a tribal order to a new organisation based on geography, thus overcoming the tribal structure to instil a unified national spirit in peoples who had jealously guarded their traditional orders founded on the different clans.14 Italy did actually fulfil the tasks listed in the Trust Agreement in advance; it was with the administrative elections of 1954 and the political elections in 1956, which created the Legislative Assembly and consequently the first Somali government, that the political-administrative structure of the future independent state was completed. The main success of the mission can be attributed to the strong collaboration and emotional dedication of the Italian administration aimed at winning the trust and goodwill of the population. This helped Somalis in the learning process and to shorten the period of the mandate which had been considered too short by a large part of national and international public opinion.
1.2
The Role of the Amministrazione Fiduciaria Italiana Della Somalia (AFIS)
The trusteeship system15 of the United Nations’ Statute was based on the League of Nations’ regulation of international mandates in both its political form and substance and as being primarily compromising. Mandates and trusteeship responded
14 15
Samatar 1989, pp. 79–81. Morone 2006b, p. 1.
1.2 The Role of the Amministrazione Fiduciaria Italiana Della Somalia (AFIS)
7
to the need to moderate the growing drive towards self-determination and independence of colonized people on the one hand and the imperial interests of the winning colonial powers on the other. The defeat of Germany in the First World War and of Italy in the Second created a power vacuum in the African colonial order, raising the question of how to reorganise the status of ex-enemy colonies. The winning powers were not prepared to support definitive solutions in the sense of the independence of territories, as it was considered dangerous for the whole colonial system at a world level. In fact, it would have been sufficient to grant independence to only a few territories for all the others to start claiming their own; the pax colonica did not allow for concessions. Whilst the international mandate offered a compromise solution at the end of the First World War, the trusteeship did the same after the Second. Through these particular forms of administration the right to independence was not denied to the enemy’s ex colonies, but simply or cleverly postponed to some undefined moment, thus perpetuating the para-colonial dominion of the winning powers. The argument to justify this was obvious and drew directly on the colonial paradigm of the civilizing mission of Europe in Africa; African peoples did not have the material and human instruments yet to be able to govern themselves, therefore a period of training and preparation was necessary, precisely the Trusteeship. In this sense the trusteeship was not just a simple colonial administration, whose real objective, behind the rhetoric, was dominion, but a kind of administrative “experiment” in which the United Nations acted as guarantors, insofar as they were responsible for monitoring the work of the administrating power during the preparation for independence under trusteeship; this element was the main innovation in comparison with the colonial past. The case of the Amministrazione Fiduciaria Italiana della Somalia (AFIS) presents some obvious peculiarities within this general scheme. The Somali Trusteeship was the only case in which the trust mandate was granted to a defeated excolonial power. In 1950 Italy was not even a member of the United Nations, which it joined only in 1955. This situation led firstly to the approval of a stricter trust for the Somali case than for other existing trust administrations: a specific period of 10 years was fixed for the mandate and autonomy or independence were mentioned in very general terms. There was also an accompanying document to the Trust Agreement which listed the Western constitutional principles of democracy and human rights on which the United Nations itself was founded, in order to safeguard once again the democratic running of the Italian trust in view of its fascist past. Lastly, an ad hoc authority was formed, the like of which could not be found in any other trust administration. The United Nations Advisory Council of Somalia (UNACS),16 with a Colombian, a Filipino and an Egyptian as members, was to coordinate with the Trusteeship Council and collaborate with the AFIS.
16
Morone 2006b, pp. 3–4.
8
1 The Somali People: Between Trusteeship and Independence
The main objectives of the trusteeship system were political independence, economic development and the socio-cultural progress of the native society. For this to happen, political, economic and social institutions had to be transplanted into Somalia and a process of Somalization to be undertaken. This involved the gradual introduction into the transplanted institutions of local personnel, who were appropriately trained so that at the moment of independence the country would be able to hold together, not just formally but also practically.17 In particular, the Italian Administration worked towards the creation of a series of peripheral and central governmental organs, assemblies, local and national municipalities which gradually became elective after an early experimental period. The AFIS lasted 10 years, from April 1, 1950 to July 1, 1960, and ended with the political independence of the country and the birth of the Somali Republic.18 In this period of time Somalia had to prepare for self-government and to do so the country had to be morally, as well as materially ready. This was fundamental because political autonomy could never be achieved in the country unless its people had the necessary moral and cultural understanding and a certain level of economic efficiency had been achieved.19 Ten years was certainly a short time, considering the amount of work that had to be done to lay the foundations at a moral level and what had to be recovered, enhanced, developed and consolidated materially.20 In the course of this period the Italian administration was faced with numerous problems in building a state and nation, which was the intrinsic purpose of the trusteeship. There was the problem of harmonizing the relationship between Somali nationalism, the administrative work of the AFIS and a third party, the UN, whose external supervision aimed to realize the hope of strong collaboration between the colonized and the colonizers. They remained simply hopes, because within the Trusteeship Council contrasts emerged between the administering powers and the anti-colonialist powers which hindered their work. In the period of the Trusteeship tribalism was a major factor, which the administration adopted as a practice of government and control. Colonialism had favoured the perpetuation of a system of clans, playing the tribes one against the other in order to dominate, but in the absence of an accepted and recognizable national political life that was constrained by the colonial system, the clans still prevailed over the embryonic class consciousness. In the case of the AFIS the relationship between the administered and the administrators was not exactly equal. On the one hand, it was obvious that the Italian administration was naturally going to impose an institutional model based on its own political-administrative tradition; on the other, the need for adaptation did not really find confirmation in practice. The very Constitution of the Somali
17
Morone 2006b, p. 2. Presidenza del Consiglio dei Ministri 1962. 19 ASBI, Banca d’Italia, Studi, pratt., n. 979, fasc. 5 20 Presidenza del Consiglio dei Ministri 1962, p. 22. 18
1.2 The Role of the Amministrazione Fiduciaria Italiana Della Somalia (AFIS)
9
Republic, drafted by the Trust authority, was in many ways too sophisticated for the society which received the transplant. The other contrast was at a local level between the AFIS and SYL. In fact, the SYL fought strenuously at the UN against the granting of the mandate to Italy. Theoretically, there was a convergence between the objectives set by the national movement and those imposed by the transplant of institutions and Somalization. In practice, political, economic and cultural modernization was slowed down by political prejudices linked more with the past than the present or the future, by both Italians and Somali. Therefore, even though the SYL supported reforms proposed by the Italian administration, generally the relationship between the SYL and the AFIS was difficult and there were many moments of tension. In time, the more progressive wings of the two organizations, the moderate faction of the League and the leading diplomats in the Italian administration, progressively grew closer. Later, collaboration became inevitable when a characteristically tribal political class was formed after the administrative elections in 1954 and the political elections in 1956.21 The AFIS gave up its long-lasting support of opposition groups, whilst the League accepted the rules of the game by entering the institutional and political machine created by the Italian administration. However, the problems were not over. Another crisis arose between the end of 1957 and the beginning of 1958 before the last elections of the trust period, when hostilities broke out again. The outcome did not prevent the continuation of a constructive relationship between the AFIS and SYL, though it took a lot of effort. Italy threatened to return the mandate to the UN and the League expelled the most extreme, anti-AFIS and pro-Egyptian wing of the party, which gave rise to the formation of a new political party called the Greater Somali League in 1958. During this crisis Italy could rely on the support of Great Britain, which was not prepared to accept the growing Egyptian influence in Somalia, and in particular on the future government party, just a few months after the Suez crisis. Apart from the SYL, another very important relationship in the building of the national framework was created with the traditional Somali society, but it too was marked by tensions owing to the resistance of some conservative forces. Egon Ranshofen-Wetheimer, head secretary of the UNACS, referred to this contrast during a visit to Somalia in the first months of the AFIS.22 The difficulties facing the Italian administration are clearly illustrated by the 1957 mission of the Inspector General of the Treasury, Foffano, who had to ascertain the minimum amount of expenditure needed to make Somalia economically and politically independent by 1960. In order to do this he wanted to get an idea of the environment and the political and cultural experience of Somalis, especially of the few who were already in government and the state
21 22
Calchi Novati 1994, p. 97. Morone 2006b, p. 7.
10
1 The Somali People: Between Trusteeship and Independence
administration.23 As he had to estimate, even in an approximate way, the Italian government’s minimum contribution to the Somali budget for the years 1957–1960, he was rather worried by the poor results obtained in 1957 by the Italian administration, especially in public works and economic progress in the country. Even allowing for a certain waste of funds, he stated that very little could be done in 10 years in a country that was so poor in natural resources and with such a backward population from every point of view. The budget he proposed for the new state foresaw a deficit of 30–40 million somali a year; the trade balance towards the sterling area would also remain in deficit for about 20–25 million somali a year. Another aspect of the situation that struck him negatively was the lack of organisation in government offices and the complete inadequacy of Somali officials’ expertise in performing their jobs which required a minimum of intellectual skills and civic responsibility (they were not even capable of dealing with written questions, as the Somali language was only spoken and they did not have sufficient knowledge of other languages to be able to express their thoughts in writing). The populations living in the areas far from the few urban centres (Mogadishu, Merca and Kismayo) were completely detached from any established authority; the central government was seen as a distant entity and alien to them. So much so, that in many parts of Somalia serious disturbances and conflicts occurred almost every day when the government tried to collect taxes. In 1958 in Juba, for example, dozens of people were killed and the tax collectors had to abandon the area without collecting anything. On the other hand, as far as the monetary system of Somalia was concerned, Inspector Foffano did not hide his doubts about how the Cassa per la Circolazione Monetaria formed under the guidance of the Banca d’Italia could survive in the hands of Somali, because even though the administration was entrusted to Italians, they could not ignore the wishes and decisions of men from the local government.24 In fact, in a number of fields Somali ministers intervened to favour directly, and more or less openly, their own groups of friends with special measures in complete violation of existing laws. Foffano’s inspection concluded that the chances of an independent life for the Somali state were almost non-existent, since Italy would not have been able to devolve more funds after 1960 without the financial and technical help of other developed countries. In view of the situation that had been created and the fact that Italy could not manage without the support of traditional Somali institutions, the AFIS worked along two parallel lines, one urban, the other rural. The first involved a “direct” transplant of Italian political, democratic and constitutional institutions, because local conditions made it possible. The second, however, required a more complex and substantially “indirect” transplant, in the sense that the inadequacy of the basic political and social conditions meant
23 24
ASBI, Banca d’Italia, Studi, pratt., n. 1005, fasc. 4. Strangio 2010.
1.3 The Role of the Banca d’Italia in the Period of the Trusteeship
11
structures could not be drawn directly from the outside, but the traditional ones had to be modified, or better “modernised”. In the first case interlocutors were political parties, in the second traditional leaders. However, the narrowing of this gap between the rural and the urban worlds was only partially successful.25 Economically speaking, at the end of the period of trust administration Somalia was still an extremely poor country with rudimental infrastructures, a balance of payments that was chronically in the red and total dependence on external financing.26
1.3
The Role of the Banca d’Italia in the Period of the Trusteeship
The decision taken by the UN to grant Italy the administration of Italian Somaliland for a 10 year period gave prestigious international recognition to the country, but it also posed Italy with the problem of reorganising the economy of Somalia on new bases in order to show how it was capable of helping less developed populations improve their standards of living. Naturally, this effort could not be undertaken entirely by Italy, not only because of the amount of capital needed, which the state did not have available, but also to avoid creating artificial economic activities as normally happens when an investment plan is decided by state organs and is not based on the real emerging needs and economic possibilities of a country.27 The real task of the Italian state was to apply a set of norms aimed at creating the conditions for healthy private economic development. As a consequence, as soon as the UN General Assembly’s decision was made known, three officials of the Italian Administration were allowed to visit the country. A legal expert, a financial expert and a government official were to be responsible for the management of the “Custodian of Property”. Their task was to find out about the legislation in force at that time, to get a deeper knowledge of the existing economic and financial services and investigate the performance and the accounts of the management of the “Property Custodian”. The “Property Custodian” was an office created during the First World War by the United States government and re-proposed after the outbreak of the Second World War, which had to monitor and administer the money and property of the body in the area it represented and present a report to the head office. Somalia received assistance because it was generally accepted at that time that aid should be given to underdeveloped countries, but in the case of Italy there were other factors too. Italy felt it had to absolve a moral duty to Somalia as it had created the new state based on a democratic order, but also because thousands of Italians
25
Mohamed Aden 1991, p. 104. Karp 1960. 27 ASBI, Banca d’Italia, Studi, pratt., n. 987, fasc. 6. 26
12
1 The Somali People: Between Trusteeship and Independence
lived there who had contributed to the modest prosperity of the region. It should also be noted that from the very beginning it had been decided that help from countries such as the United Kingdom and the United States, the European Economic Community and the Technical Assistance Committee of the UN was to continue after the deadline fixed for December 2, 1960, later brought forward to July 1, 1960. The handing over of Somalia to Italy took place in two stages; the first lasted 30 days when the first official contacts between a group of Italian officials, the command of the expedition and the British administration were made to prepare for the handing over of both inland and coastal Somalia. The second phase took 26 days, during which the real process of handing over began and was completed at Mogadishu. At the end of the 26th day the Trusteeship began.28 In particular the Banca d’Italia official had the task of keeping in close contact with the bank itself, especially to report on the delicate relations with Barclays Bank which was to stop all its business after the handing over.29 From the beginning it was firmly believed that Somalia could become an interesting consumption market for Italian industrial production, an export market for important products of the Italian economy and, above all, a strategic base for the economic penetration of rich African countries on the borders of Somalia and close by in the Middle East. However, Somalia could not and cannot be considered as a territory capable of absorbing large flows of emigrants, though it was soon used as a centre for work experience, training and expansion into other neighbouring African countries. Naturally the realization of such a vast program had to rely on a flexible structure in order to adapt continually to the typical changes of an economy that was still under construction. It certainly benefited from the dynamic drive of private schemes, without which success would have been impossible. One of the schemes proposed was the Compagnia Generale Africana, which had adequate financial means and was formed with both the direct and indirect contribution of Italian investors. It took on the form of a holding with the aim of promoting and guiding different schemes in all four sectors, agriculture, industry, trade and banking, both in Somalia and in neighbouring African countries and the Middle East around the Red Sea and the Indian Ocean. In order to create a favourable terrain for the development of Italian private business in Somalia maximum tax concessions were necessary for both direct and indirect taxes. Furthermore, in view of the special relationship between Somalia and Italy at an international level, special concessions were also needed for the transfer of capital and the extreme simplification of trade terms, especially between the two countries and in accordance with the decisions taken by UN organs.
28 29
ASBI, Banca d’Italia, Studi, pratt., n. 987, fasc. 1. Barclays Bank provides financial services in more than 50 countries, also in Africa.
1.3 The Role of the Banca d’Italia in the Period of the Trusteeship
13
In addition to this direct help, the state also provided indirect help which was equally important, as for example, the immediate extension of the Marshall Plan to Somalia and the request for Somalia to be included among the depressed areas that were to receive help from Truman’s Point Four Program.30 The most important private economic activities in Somalia were to be found in agriculture and trade. Sugar and oil refineries were developed and local agricultural and dairy produce and sea salt were exported, whilst industrial manufactures were imported, mostly in transit, for the Somali and neighbouring markets. The main problem was the fact that private investments in various sectors, especially at times of tension, had proved to be incapable of producing viably and therefore of pulling through in times of difficulty. In contrast, schemes organised on a solid industrial basis and of an appropriate size managed not only to resist, but also to recover quickly by setting up new programs of production suitable for the changed situation. An example is the case of the SAIS set up by the legendary figure of the Duca degli Abruzzi, whose agricultural, industrial and commercial activities centred on the Villaggio Duca degli Abruzzi. The company had a broad range of industrialised agricultural activities, whilst the industrial sector proper was run by the Societa` Saccariffera Somala and the commercial side of the business by the Societa` Commerciale Italo-Somalo, which had already become agents for numerous Italian and foreign firms. The company was faced with the challenge of promoting the creation and consolidation of many other private firms in the above-mentioned sectors. Another area in which there was a very strong need for change was the credit sector, and in particular the creation of a credit institute that could integrate and improve the existing banking organization which had been seriously disrupted by the closure of the branches of Italian institutes by the occupying Military Authority and then by their substitution with Barclays Bank branches. Given the small monetary and financial market in Somalia it was evident that the system had to be adapted to the needs of an area that required extensive long term investments, but had a limited amount of capital available. Therefore, a real “Investment or Merchant Bank” capable of attracting external Italian and foreign private capital, as well as giving any form of credit as required (short, medium and long term), was set up next to the ordinary specialized banks. The initial idea was that a private bank of this kind would ease the load of responsibility on Italian institutes for setting up and running numerous branches in the various regions. The purpose was to stimulate, coordinate and organize development of all kinds, not only the activities of the company, but also of all Italian interests in Ethiopia, Eritrea and other African, Middle East and Asian countries bordering on Somalia.31 Another problem was caused by the prices of local food products, whose level in Mogadishu was less than half that in Italy. The prices of imported food (such as pasta), however, were much higher and, occasionally, many times over (wine).
30 31
ASBI, Banca d’Italia, Studi, pratt., n. 987, fasc. 7, pp. 4–7. ASBI, Banca d’Italia, Studi, pratt., n. 987, fasc. 7, pp. 8–9.
14
1 The Somali People: Between Trusteeship and Independence
The prices of services were the same as at home, but there were twice as many people employed in the sector. Furthermore, the prices of clothing, furniture and in general all imported industrial products were a third to a half as high as Italian ones. There were two possible measures for intervention on the physical side of goods: import policy and the setting up of wholesalers under public supervision that exercised price-control over shopkeepers. Parravicini suggested a big warehouse be opened as soon as possible for the supply of all kinds of goods (from clothing to furniture, etc.) that could satisfy the needs of functionaries and officials.32 Another equally important measure concerned the local consumption market that should have represented the basis for the economic development of the country, but instead remained extremely primitive. This can be explained by the scarce interest of the native population to work at the wages offered to them, which were not comparable with the high prices. Wages were only just sufficient for the subsistence of a household reduced to a minimum of members. However, for the local economy to move towards development, the native population had to enter the economic system by increasing their expenditure on consumption beyond simple survival levels and accompanying modest variations in income with greater spending. In Somalia there were no public works to absorb unemployed labour. However, pure survival was guaranteed to everyone, because the S. A.I.S. was ready to hire more native workers who, in any case, could always work as shepherds or in rudimentary agriculture. The trusteeship, which in the early years had paid most attention to problems of a political and social nature, introduced the Economic Development Plans for Somalia in 1954, which provided for gradual investment until 1960 for a total of 8,100 million lire.33 In an attempt to act promptly on short term economic needs it proved to be more efficient to accompany projects aimed at raising the level of the systems and productivity of traditional economic forms with schemes intended to encourage and stimulate the growth of firms and therefore lead to an immediate increase in production, trade and revenue which the country needed. The work of the trusteeship was conditioned also by the collaboration of Italian entrepreneurs in Somaliland who played a significant role in the economy of the area. They asked for and obtained tax relief and a certain number of concessions, mostly licences granted by the Administration to sectors subject to controls or quotas. Thanks to their presence Somali people began to look with interest and ambition at the major companies in the country. What was missing so that a concession could give rise to a steady continuous business was the “profit logic”, that is, knowing how to make in an independent manner a profit whose reinvestment in the business would guarantee its continuity. Among the Western powers, the only country that showed any willingness to support Somalia in some way after 1960 was America, which manifested a growing interest in the country.
32 33
ASBI, Banca d’Italia, Studi, pratt., n. 987, fasc. 1. ASBI, Banca d’Italia, Studi, pratt., n. 987, fasc. 8, p. 6.
1.3 The Role of the Banca d’Italia in the Period of the Trusteeship
1.3.1
15
The Banca d’Italia and the Creation of the Somali Monetary System
The involvement of the Banca d’Italia in the trusteeship of Somalia can be ascribed basically to its experience and the specific tools it had available as the central bank “responsible” for monetary policy, but also to its knowledge of local conditions acquired from the first colonization of the country with the opening of a branch at Mogadishu on November 5, 1920.34 The Banca d’Italia’s studies on the monetary system to be introduced in Somalia began in July 194835 and were concluded in February 194936 at the request of the Ministry for Italian Africa in view of the trusteeship that would probably be granted to Italy. Three possible options were examined for the monetary system to be adopted in Somalia: (1) the extension of the Italian system to Somalia; (2) the introduction of an independent system; (3) the introduction of a mixed system based on the creation of a different currency, but linked to the Italian one. The analysis took into account the presence of conditioning factors, namely: the level of development in the country; the trend of local production; trade inside the country; the volume of trade between the Italian and Somali markets; the volume of international trade with other countries; the monetary regime in force at that time which, in a certain sense, influenced the choice of the new system because of the need to avoid destabilizing changes in local habits. The results of the Banca d’Italia’s study concluded the best solution to be an independent monetary system, because there would have been negative economic-financial repercussions for both Somalia and Italy in the case of the other two hypotheses.37 Giving Somalia its own monetary regime from the very beginning, which therefore corresponded to the real economic needs of the country, meant the best conditions could be created for the gradual process towards self-government and independence for Somalia.38 The independent monetary regime was to be founded on a currency with parity in terms of the East African gold sterling pound or its
34
See Strangio 2010, p. 39 and n. 1. ASBI, Banca d’Italia, Carte Baffi, pratt. 18, fasc. 7, sfasc. 1. 36 ASBI, Banca d’Italia, Studi, pratt., n. 976, fasc. 1, “Relazione al Consiglio Superiore in merito alla Cassa della circolazione monetaria della Somalia” edited by Palamenghi-Crispi of the Servizio Studi Economici della Banca d’Italia and dated 11 May, 1950. 37 ASBI, Banca d’Italia, Studi, pratt., n. 976, fasc. 1, “Schema di lettera della Banca d’Italia al Ministero dell’Africa Italiana – Direzione Generale Affari Politici”. 38 ASBI, Banca d’Italia, Studi, pratt. n. 548, fasc. 1, pp. 33–38, “VII Convegno Economico Italo Africano, pp. 27–28 aprile 1958 Milan (per iniziativa del Gruppo Vittorio Bottego con l’auspicio dell’Istituto italiano per l’Africa, dell’Ente Fiera Internazionale, della Camera di Commercio di Milano e con la collaborazione del C.E.I.A (Centro Economico Italia Africa))”; ASBI, Banca d’Italia, Studi, pratt. 548, fasc 1, p. 47, “La voce dell’Africa Periodico nazionale dell’istituto italiano per l’Africa, a. II, n. 9, pp. 7–13 maggio 1958”. See also Vedovato 1973. 35
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1 The Somali People: Between Trusteeship and Independence
multiple, on the issuing of paper money and coins,39 on the constitution of a “Cassa di Conversione” and on the creation of gold, silver and prestigious currency reserves including the lira. Furthermore, it was recommended that a very high gold parity standard be introduced for two reasons, firstly, for the currency in circulation at that time40 and secondly, for the neighbouring countries’ currencies, which had high purchasing power. The economic conditions of Somalia, at the time of the Banca d’Italia’s report, were not favourable for “the creation of a real and proper issuing bank”,41 but rather for a bank, a Cassa, for the conversion of the currency to be overseen by a collegial organ (Commissione e Comitato per la Circolazione), which was to be small, simple and not very costly, with its Head Office in Italy and made up of representatives from the Treasury, the Ministry for Italian Africa, the Banca d’Italia and possibly local administrations. According to the proposals made by the Banca d’Italia, the institute was to have a number of functions ranging from the issuing and control of the currency, the publishing of necessary regulations and acting as advisor to the government on monetary and currency questions in the country of the trusteeship. This Cassa was not to have contact with the public, which would be the task of the Banca d’Italia with a separate management and the support of its local organisation. The structure of the Cassa therefore resembled the “Currency Boards” in various parts of the British Empire, that is, the organisms which had the function of issuing and withdrawing banknotes and coins.42 A fundamental difference between them, however, was the composition of the Cassa’s reserves which had to be made up of gold, silver and foreign currencies and not just one single currency, as happened for sterling with the British Boards. Britain, in fact, followed a policy which tended to assimilate the currency of its colonial territories or those under its administration to the sterling, with the convertibility of the local currency in sterling at a fixed exchange rate through special authorities. These Currency Commissions or Boards43 did not keep any foreign currency reserve other than their own or gold, but took part in the overall reserve of the system in the sterling area.
39
This was to avoid a possible negative psychological reaction from the local population owing to the substitution of a “good” currency for a less “welcome” paper currency with possible problems for exchange operations. ASBI, Banca d’Italia, Carte Baffi, pratt. 18, fasc. 7, sfac. 1 (Letter from the Governor of the Banca d’Italia to the Ministry for Italian Africa, Direzione generale affari politici, which was responsible for the Trusteeship of ex-Italian colonies). 40 At the time of the Banca d’Italia’s study, the currency in force in Somalia was the East African shilling, whose gold parity was 0,124412 gr. of fine gold. 41 ASBI, Banca d’Italia, Studi, pratt. n. 537, fasc. 4, p. 77. 42 ASBI, Banca d’Italia, Studi, pratt., n. 976, fasc. 1, “Currency Boards”; ASBI, Banca d’Italia, Carte Baffi – pratt., n. 18, fasc. 7, sfasc. 1. 43 These monetary authorities were obliged to maintain a fixed exchange rate with a foreign currency. On their functioning and development, especially in the sterling areas, see Biblioteca Baffi B.I., “The Economist”, April 9, 1921, p. 725; “The Economist”, March 4, 1944, pp. 316–317 (East African Currency Board which reported on the currency situation in the territories occupied
1.3 The Role of the Banca d’Italia in the Period of the Trusteeship
17
The international value of the new currency and its protection against inflation and depreciation depended on the composition of the reserves. Limits in the construction of the composition of the reserves had therefore to be adopted; the Italian lire especially had to account for only, and no more than, 20% of the foreign currency because of its continuing instability at the time of the analysis. On the basis of the proposals made by the Banca d’Italia, the Ministries for Italian Africa, the Treasury, the Foreign Ministry and Foreign Trade and the Italian Exchange Office prepared the regulations for the creation of the monetary system.
1.3.2
The Introduction of the Somalo
The somalo, the official currency of Somalia, was introduced by the Italian government on the basis of studies made by the Banca d’Italia with the ordinance no. 14 of May 16, 1950, published in the Bollettino Ufficiale of the AFIS supplement no. 1, May 18, 1950.44 The somalo on the gold standard was given an IMF parity of 0,124414 gr. of fine gold equal to the East African shilling,45 in view of the recent devaluation of the sterling. This decision had been made to avoid imbalances and disturbances in the market, modifications in the accounts and variations in the price system and at the same time to help exchange operations in an environment that was little inclined to innovation. The somalo was guaranteed by gold, silver and foreign currencies insofar as an equivalent amount to the money in circulation had to be kept in gold, silver and foreign currency at the issuing body (Cassa per la Circolazione Monetaria della Somalia, see below). The somalo was subdivided into centesimi and circulated in banknotes in denominations of 1, 5, 10, 20 and 100 units; silver coins circulated in denominations of 1 somalo and 50 centesimi (250/1,000 fine silver) and bronze coins of 1, 5 and 10 centesimi of a Somalo.46 The introduction of the new currency and the withdrawal of shillings and lire in circulation began on May 22, 1950. In fact, various British Commonwealth currencies (the British and Egyptian pounds, the Indian rupee) had circulated freely immediately after the British occupation, but the authorities soon officially introduced the East African shilling, that is, the currency circulating in the nearby countries, Kenya, Uganda, Tanganyika and Madagascar into all the territories of the
by the British); “The Economist”, July 20, 1946 on the working of Currency Board in Burma; the report in 1965 East African Currency Board, Report for the Year ending 30th June 1965, pp. 1–20. 44 On the choice of the name see Strangio 2010, p. 47. 45 ASBI, Banca d’Italia, Segretariato, pratt. n. 1633, fasc. 1. 46 ASBI, Banca d’Italia, Studi, pratt., n. 998, fasc. 1.
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1 The Somali People: Between Trusteeship and Independence
ex-Italian East Africa.47 The substitution of the currencies was completed on July 22, 1950. From July 23 onwards the somalo was the only legal tender in circulation in the country because the shilling and the lira could not be accepted in payments. On the basis of the provisions in Article 10 of the above quoted ordinance no. 14 of May 16, 1950 and Article 6 of the ordinance no. 17 of May 1950, the exchange for the East African shilling was fixed at IMF parity of the somalo (1 somalo for 1 East African shilling), whilst the exchange for the Italian lire was on the basis of the somalo gold parity and the US dollar (1 somalo ¼ 87,50 Italian lire), because the lira still did not have its official par value. The exchange rate was the result of the somalo par value to the dollar (14 US cents ¼ 1 somalo) for the official price of the dollar fixed by the Italian foreign exchange office on April 29, 1950 (624.80 lira to the dollar). In accordance with Article 4 of the Ordinance no. 14 the technical characteristics of the somalo were regulated by the specific provisions published in the Bollettino Ufficiale of May 18.48 The issuing body of the somalo was the Cassa per la Circolazione Monetaria della Somalia S.p.A.
1.3.3
The Creation of the Cassa Per La Circolazione Monetaria Della Somalia
There were therefore two actors in the monetary system: the Cassa, with tasks and functions similar to those of the issuing department of a central bank in the Englishspeaking world (the issue and withdrawal of notes and coins) and the Banca d’Italia, with the functions of a banking department (credit and debit short term banking operations aimed at adapting the currency to the needs of the local economy and guaranteeing the regular functioning of the credit market). The need to have a body to issue the new currency together with the impossibility of establishing a public institution in a short time led to the forming of a joint stock company as the issuing institute. The Cassa per la Circolazione Monetaria della Somalia (CCMS) was therefore founded on April 18, 1950 with a document signed by Tomaso Columbano (Director General of the Ministry for Italian Africa), Alfredo Di Cristina (of the Treasury) and Amedeo Gambino (advisor to foreign finance companies SVEA), in the form of a joint stock company with its headquarters in Rome (in via Torino, 107). This took place whilst waiting for acceptance by both the General Assembly of the United Nations and later the Italian parliament. The Cassa was, however, later transformed into a public body by the Law of June 30, 1954, no. 677 (art. 4) with which the
47
Italian East Africa was the term used for the colonies of Abyssinia, Eritrea and Italian Somaliland after the conquest following the Italo-Abyssinian war. Officially the colony was established on May 9, 1936. 48 ASBI, Banca d’Italia, Studi, pratt., n. 987, fasc. 1.
1.3 The Role of the Banca d’Italia in the Period of the Trusteeship
19
agreement between the Italian Republic and the United Kingdom of Great Britain and Ireland was ratified for the definition of the norms regulating the finance and economy of the trust administration. The same Law, furthermore, subjected the Cassa to the supervision of the Ministries of the Treasury and the Foreign Ministry.49 The share capital, which amounted to 87.5 million lire, was subdivided into 100 registered shares underwritten for 99.5% by the Ministry for Italian Africa and the remaining 0.5% by foreign finance companies (SVEA). It became operative after the convention was signed by the AFIS, sealed in Mogadishu and published in the Bollettino Ufficiale of the AFIS on May 18, 1950.50 The Convention between the CCMS and the AFIS was approved in accordance with Article 6 of Ordinance no. 14 of May 16, 1950 with the administrative decree no. 19 of May 18, 1950, published in the Bollettino Ufficiale of the AFIS (supplement no. 1 of May 18, 1950).51 Article 6 of Ordinance no. 14 on the creation of the somalo currency for the territory of Somalia stated that the right to produce and issue coins and notes for circulation in Somalia was granted to the Cassa, according to the terms and conditions established by the Convention. The Cassa was to depend on the Banca d’Italia for its functioning with a separate management.52 The Convention specified that the reserves for the 1 somalo coins had to be equal to the difference between the value of the silver contained in them and their face value (nominal value), whilst the Cassa was not obliged to hold reserves for the coins of the denominations of 50, 10, 5 and 1 centesimi.53 It also fixed the somalo parity, later communicated to the International Monetary Fund, the composition of the currency and the criteria for the composition of the reserves, but it was also pointed out that, in the absence of a specific law, the Cassa would be subject to the norms about the supervision of the issuing body in force in Italy. The Cassa was managed by a Board of Directors composed of between seven and nine members, who were elected by the General Meeting of shareholders for 3 years with the possibility of renewed election.54 Apart from the President who was a delegate of the government, the Board of Directors was made up of officials who could come from any of the Administrations, that is, the Ministries of the
49
ASBI, Banca d’Italia, Studi, pratt., n. 977, fasc. 5; Cassa per la Circolazione Monetaria della Somalia 1966. As a consequence, the decree of the President of the Republic of March 5, 1955 arranged for the share capital, amounting to 87.5 million lire, to be transformed into an endowment fund and handed over entirely to the Cassa by the Italian State. 50 The agreement was made between Fornari, as representative of the AFIS and Parravicini, representing the Cassa (ASBI, Banca d’Italia, Studi, pratt., n. 987, fasc. 1). 51 ASBI, Banca d’Italia, Studi, pratt., n. 976, fasc. 1. 52 ASBI, Banca d’Italia, Studi, pratt., n. 987, fasc. 1, “Bollettino Ufficiale dell’AFIS”. 53 ASBI, Banca d’Italia, Studi, pratt., n. 979, fasc. 6. 54 On April 18, 1950 two of those elected were Giovanni Paravicini, the deputy director of Banca d’Italia’s Economic Studies department and Francesco Palamenghi Crispi, Secretary of the Banca at the Economic Studies department.
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1 The Somali People: Between Trusteeship and Independence
Treasury, Italian Africa and Foreign Trade, the Banca d’Italia, the Italian Foreign Exchange Office and the AFIS. In accordance with Titolo IV article 24 the Board had “the faculty to sign any convention with the Trusteeship of Somalia, the Italian State and any Authority, Body or person”, as well as fulfilling the social objectives listed in article 24, that is “the power to create, issue, circulate and withdraw money for Somalia (. . .) and over the composition of the reserves and uses of the part of the reserves made up of currencies”.55 The company statute of the Cassa provided for the exclusive right to produce and issue banknotes and coins as legal tender with debt-paying power in Somalia under the Trusteeship.56 The issuing of banknotes, that is legal tender notes, took place against the receipt of gold, silver and foreign currency and the withdrawal of notes and coins, or the notes issued against gold, silver or foreign currency. The Cassa was also authorized to keep “a quantity of currency no greater than one third of the money in circulation as a reserve”.57 The Convention between the Banca d’Italia and the CCMS was signed in Rome on August 17, 1950, by which the Cassa entrusted the Banca with “its accounting and administrative management in Italy and Somalia as well as its relations with public administrations, third parties, authorities and foreign countries to do with that management (Article 1)”.58 The task of the Banca was to apply and execute the operations decided by the organs of the Cassa. These functions can be summarized as follows: to order in the name of the Cassa the production of banknotes and coins; to take delivery of banknotes once they had been printed; to store money reserves, fulfil the operations of the outflow and receipt of coins and notes in exchange for gold, silver and/or foreign currency on behalf of the Cassa; to store the reserves which were to be managed in Rome; to provide for the withdrawal and destruction of worn out notes and coins; to take care of the accounts of the Cassa; to provide data for the Cassa’s financial statements. A Special Bank and a Central Bank were created within the Somali Cassa, both with headquarters in Rome and another local branch at Mogadishu. The Special and Central Banks became two distinct parts of the Banca d’Italia; they worked for the Somali Cassa in the same way they functioned for the Banca d’Italia. Of course, both the management (for example the request forms for the different denominations of notes and coins were subjected to a number of revisions) and the book-keeping were kept quite separate.59 The notes printed by the Poligrafico (state printing office) and coins forged by the mint were delivered to the Special Bank of the Banca d’Italia, which took responsibility for them in its role as Special Bank for the Cassa per la Circolazione
55
Ibidem. ASBI, Banca d’Italia, Studi, pratt., n. 976, fasc. 1, “Statuto sociale della CCMS, Titolo 1 art 2”. 57 Ibidem, “Statuto sociale della CCMS, Titolo 1 art. 3”. 58 Ibidem, “Convenzione con la Banca d’Italia”. 59 Ibidem. 56
1.3 The Role of the Banca d’Italia in the Period of the Trusteeship
21
Monetaria della Somalia. The notes and coins were transferred from the Special to the Central Bank whenever it was decreed by the Administration of the Somali Cassa in accordance with the laws and statues on the circulation of the somalo. Problems arose when there was an immediate need for money or a greater demand than foreseen and it was not easy, and certainly not immediately possible, to get the required notes and coins from Rome; a local bank therefore had to hold an adequate reserve of currency managed by the Banca d’Italia. These functions were attributed to the Banca d’Italia because the Cassa did not have its own autonomous structure and identity. The Banca guaranteed, firstly, efficient and constant security measures as a result of its experience as one of the principal issuing institutes, and secondly, there was a considerable reduction in costs as it had not been necessary to create a completely new bureaucracy. Furthermore, the monetary system, as conceived for Somalia, could and did function only thanks to the Banca d’Italia which took part in the refining of the system and took responsibility for regulating the monetary flow between the Cassa and the market, making sure that the total amount of notes effectively in circulation was not determined by the mechanical action of the balance of payments, but was the result of agreed government action. The allocation of funds for each office and the composition of notes and coins were carefully calculated by taking into consideration the different areas, local habits and the presumed stocks of the means of payment, valued on the basis of private information because of the lack of systematic official data collecting. Lastly, to guarantee the simultaneous introduction of operations throughout the country, three permanent exchange offices were set up in Mogadishu (at the Banca d’Italia, Banco di Napoli and Banco di Roma) and five mobile offices that were to carry out exchange operations in the area of the five peripheral Commissions (Lower Juba, Middle Juba, Lower Webi Shabeelle, Mudug and Migiurtinia). Half way through May all the offices were operative in the various regions and it was decided that the exchange operations had to start in all parts of Somalia on May 22 and end July 22, 1950. In Mogadishu, on the first day there was such a large flow of public that it could hardly be kept under control by stewards. The Somali population was very curious about the new currency and welcomed its introduction. The European and Asiatic populations also accepted the new currency willingly in spite of a certain hesitation that had been noticed by traders who were worried that the new currency might not be accepted outside Somalia. Prices, which were increasing because of the growing demand for goods and wage rises, did not suffer shocks that could be attributed to the circulation of two currencies (somalo and East African shilling). On January 8, 1959 the Somali government’s request to move the general headquarters of the Cassa from Roma to Mogadishu was accepted with the President of the Republic’s decree published in the Gazzetta Ufficiale. The Headquarters took on the tasks and functions performed in Somalia by the Banca d’Italia. The Somali government’s request was dictated by the need to realize three main objectives in view of future independence:
22
1 The Somali People: Between Trusteeship and Independence
1. Have control of the money circulating in Somalia and understand the problems connected with it before the deadline of the trusteeship; 2. Use the earnings of the Cassa in medium-long term credits; 3. Create technical and managerial personnel. This, however, could not be achieved just by moving the headquarters. As the correspondence between the Governor of the Banca d’Italia and the Ministry of Economic Affairs of Somalia shows, the Somali government indicated the need to create an autonomous financial and banking body that would be capable of managing and evaluating future situations in the new state. In this context the report of the President of the Somali Cassa dated August 30, 1958 is particularly significant, because it shows the results of his collaborators’ work in Somalia at the AFIS, Francesco Palamenghi-Crispi, and Giorgio Bacchi. Their work proved to be absolutely essential in identifying the activities necessary for the Cassa, according to the criteria established in agreement with the AFIS (through the head of the administration, the plenipotentiary minister and the head of planning), the Ministers of the Treasury, Foreign Affairs and Economic Activities about the transformation that would inevitably follow at the end of the AFIS.60 On July 1, 1960, with the Proclamation of Independence for Somalia and the consequent end of the AFIS’s work and the Trusteeship, responsibility for the currency was transferred to the Banca Nazionale della Somalia.
1.3.4
The Banca Nazionale Della Somalia
The Annual Report for 1958 coincided with the publication of a decree by the President of the Republic, December 2, 1958, no. 1131 in the Gazzetta Ufficiale on January 8, 1959, which brought about important and substantial changes to the Statute of the Cassa.61 The Cassa was transformed into a central bank and entrusted with the other operations appropriate to issuing institutes (rediscount for credit firms, issuing of cheques and bank drafts, investments in public securities or in securities issued in Somalia or the Italian Republic and publicly guaranteed, currency operations, deposits, cash services) as well as other functions for the AFIS and the Somali government, including first and foremost Treasury services. The Board believed that this transformation would be highly beneficial, as the period before December 2, 1960, when full autonomy and sovereignty would be handed over, would give them time, on the basis of the experience acquired, to study what would be the most opportune provisions to adopt so that the Somali issuing institute’s work would be effective and useful for the real state of the country.
60 61
ASBI, Banca d’Italia, Studi pratt. n. 987, fasc. 3, Missione Palamenghi-Crispi (1958). ASBI, Banca d’Italia, Studi, pratt. n. 976, fasc. 1.
1.3 The Role of the Banca d’Italia in the Period of the Trusteeship
23
The work of the central bank of Somalia was in fact divided between the Cassa and the branch of the Banca d’Italia in Somalia, to which the management of the branch of the Cassa itself was also delegated. However, the Banca d’Italia could not provide all banking services for the Somali government, nor could it supervise and coordinate credit activities which are normally entrusted to the issuing institute, because of the very nature of its position as a foreign bank working in Somalia, and in any case it would have had to stop at the time of independence. Therefore, as the date for independence drew nearer it became necessary to concentrate all the functions in one body. The transformation was made on the basis of the following criteria: (1) the setting up of a banking organization to guarantee monetary stability also in the future, an essential condition for healthy economic development; (2) rediscount in favour of credit institutes working in Somalia; (3) regulatory functions in the credit sector, and treasury services with the faculty to grant advances to the Government to cover momentary needs of cash within the limits of a tenth of the fiscal revenue of the previous year; (4) the faculty to invest reserves, except for those guaranteeing circulation, in securities issued or guaranteed by the Somali state, thus creating the premises for the creation of a financial market in Somalia capable of collecting savings and granting credit in the medium and long term. Two separate sections in the Cassa worked to reach these objectives: one was given the functions and tasks performed by the Cassa from the very beginning, the other the banking functions mentioned above. The very organization of the Cassa was changed by the introduction of a broader representation of members from the AFIS in the executive and control organs in agreement with the Somali government, the creation of the Head Office in Mogadishu and the transformation of the branch into the headquarters of the Cassa, together with the closure of the Banca d’Italia’s branch.62 This transformation, on the other hand, was necessary (a) to give the Somali government the possibility to follow the Cassa’s activity as an issuing institute for a long enough time in order to gain experience; and (b) to present a banking system capable of functioning autonomously when the Trusteeship came to an end. 1959 saw a systematic internal re-organization as well. The Cassa had mainly used permanent and contract staff from the Banca d’Italia for its activities in Somalia up to that time and hired directly only one contract employee and five Somali guards as service personnel. This situation could only be temporary, as it was natural that Somalis should be hired for office and executive jobs.63 In the December 6, 1959 session the General Assembly of the United Nations agreed, together with the administering authorities, to the early end of the Trusteeship of Italian Somaliland, as the fundamental objectives of the protectorate regime
62 63
ASBI, Banca d’Italia, Ragioneria, pratt. n. 3017, fasc. 47. ASBI, Banca d’Italia, Studi, pratt. n. 1007, fasc. 1.
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1 The Somali People: Between Trusteeship and Independence
had been reached. The Italian government decreed in Law no. 643, June 28, 1960 in its one Article that The termination of the protectorate agreement for Italian Somaliland under Italian administration provided for in Article 24, signed in Geneva January 27, 1950 between Italy and the Council for the Trusteeship of the United Nations and made executive with Law no. 1301, November 4, 1951, is brought forward to July 1, 1960.64
The transfer took place in Mogadishu on July 4, 1960 (the first day the offices of the new state opened), as provided for in the documents exchanged on July 1 between the Italian and Somali governments. These documents recognised (1) that total responsibility for the currency was transferred to the Somali government, as from June 30, with reserves in gold, silver and foreign currency for notes at a 100% coverage and for coins to the value of their issue in relation to their cost; (2) that the liabilities of the banking department were transferred to the Banca Nazionale della Somalia (created as an issuing institute with the Law Decree no. 1678 of the Somali government on June 30, 1960), that is: (a) debts on demand; (b) deposits in current accounts; (c) savings deposits; (d) current accounts; (e) liabilities in foreign currencies and guarantees with the consequent transfer to the Banca Nazionale della Somalia for a corresponding amount; (3) the transfer of credit and debit operations for clearing payments,65 payments to new businesses in the process of being set up, (internal and foreign) bills receivable for collection on behalf of third parties and cash for any other operation in Somalia to the Banca Nazionale della Somalia; (4) the use of property owned by the Cassa in Somalia by the Banca Nazionale della Somalia; (5) the transfer of the reserves of banknotes and coins in somalo and material for the production of coins, banknotes and cheques.66 The financial report for the Cassa per la circolazione monetaria della Somalia for the year ending December 31, 1959 presented the new organization that had been given to the Cassa by the President of the Republic’s decree no. 1131 of December 2, 1958. The operations already performed by the Cassa and typical of an issuing institute were, therefore, conducted side by side with banking operations proper. In 1959 a bill67 was presented to the Legislative Assembly, whose first article provided for the change of name for the currency of Somalia. This was not just to mark the transition from one political regime to another and underline the newly acquired independence, but rather because the issuing of the somalo had from the very beginning raised a number of doubts, so much so that the new currency continued to be referred to as the shilling, especially as there had been so much insistence on its parity. The Somali government therefore decided to adopt the Somali shilling as the name for the currency of the new Republic. The shilling was to continue to be subdivided into centesimi, as there was no reason to abandon the
64
ASBI, Banca d’Italia, Studi, pratt., n. 1010, fasc. 1. It compensates the credits and debts between banks to avoid superfluous payments. 66 ASBI, Banca d’Italia, Ragioneria, pratt., n. 3051, fasc. 1, pp. 49–51. 67 ASBI, Banca d’Italia, Segretariato, pratt., n. 1008, fasc. 2. 65
1.3 The Role of the Banca d’Italia in the Period of the Trusteeship
25
decimal system, thus maintaining the same parity and therefore the somalo’s exchange rate for other currencies. The actual creation of a new currency and the authorization of its issue took time and in any case economic, social and psychological reasons advised against a change of currency in a short time. In 1950 it had not been possible to delay the introduction of the new currency as the money circulating in the country was also legal tender in other countries. It would have been neither legally and technically possible, nor politically and economically beneficial to keep it for longer than was strictly necessary, therefore the East African shilling had circulated only from April 1 to August 22 in 1950. In contrast, in 1959 the situation was very different because the somalo was a currency exclusive to Somalia and the Cassa per la circolazione monetaria was transferring its responsibility to the Banca Nazionale della Somalia: therefore it was decided that the somalo banknotes and coins were to remain legal tender for a while until the Banca Nazionale della Somalia completed the gradual withdrawal and changeover.68 Somalia not only set up its own completely independent monetary system, but also took full and total responsibility for the internal and international purchasing of the currency. From July 1, 1960 the Somali Republic alone became responsible for the good name and internal and international stability of its currency and this task was all the more challenging because the somalo, in the 10 years of its existence, had been synonymous of stability and as such had been well accepted in internal and international payments. The new monetary system neither ended the need to follow a healthy financial policy nor did it isolate the country from the rest of the world.69 Somalia and its suppliers and clients, the countries with which it was connected through trade or payment relations, had to continue to trust each other: the flows of goods, services, capital that formed the vital lymph of the country’s economy had to remain constant, if not increase in intensity. The Banca Nazionale della Somalia was established by the decree no. 3/1678 of June 30, 1960, converted into law no. 2 of January 3, 1961. It was a body with its own legal status and independent administration, whilst the CCMS was liquidated, in accordance with Article 4 of the law no. 157 of March 9, 1961, by the Ministerial decree of November 16, 1961.70 The Banca Nazionale della Somalia which had inherited, and then extended, the functions of the Cassa, continued to maintain the distinction between the issuing and banking departments. The establishment of the Banca Nazionale della Somalia has to be seen within the international context of the immediate post-war period, which viewed the creation of a central bank as a first important sign of sovereignty for those countries
68
ASBI, Banca d’Italia, Ragioneria, pratt. 3017 fasc. 34. ASBI, Banca d’Italia, Studi, pratt. 1008, fasc. 2. 70 Published in the G.U. no. 310 December 15, 1961. Furthermore, the closure of the Cassa was decided, once again by ministerial decree, February 7, 1966 (published in the G.U. no. 98 of April 22, 1966), on June 30, 1966 (ASBI, Banca d’Italia, Segretariato, pratt., n. 1629, fasc. 2, sfasc. 6 e ASBI, Banca d’Italia, Ragioneria, pratt., n. 1636, fasc. 13). 69
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1 The Somali People: Between Trusteeship and Independence
that had only recently won their independence. In an article that appeared in Il Corriere della Sera on April 6, 1959 the imminent establishment of the Banca Nazionale della Somalia was not considered as an accidental fact, but as the consequence of a deliberate political strategy and, above all, of national independence and economic development in the African continent. [. . .] The establishment of the National Bank is certainly an act of sovereignty which results from and completes the right to issue money, but is above all the creation of an essential instrument for the economic development of the country.71
On November 23, 1960 a Monetary Agreement was signed between Italy and Somalia to define the questions concerning the currency and transfer of activities from the CCMS to the BNS, as provided for in the documents exchanged at Mogadishu on July 1, 1960.72 In particular, Article 2 provided for a grant of 6 million somali (equal to 525 million lire) by the Cassa to the BNS to protect the Somali currency, thus guaranteeing its present stability and solidity, which made it a valued currency and an efficient instrument for the consolidation of the Somali economy.73 Article 3 established that “In relation to the above, the Banca Nazionale della Somalia replaced the Cassa per la Circolazione Monetaria della Somalia in all its rights, obligations and claims concerning the activities performed by the latter in Somalia as issuing institute”.74 Furthermore, the ownership of the buildings and equipment in Mogadishu and Kismayo was transferred from the Cassa for a total value of about 200 million lire.75 The transfer of ownership took place in the Chairman’s offices at the BNS on March 19, 1963 between Luigi Mazzaglia (Chairman of the Cassa) and Abdi Aden Mohamed (Chairman of the BNS).76 At the beginning of the BNS’s activities the total lack of Somali workers with appropriate training in banking accelerated the “process of Somalization”,77 which
71
ASBI, Banca d’Italia, Segretariato, pratt., n. 1629, fasc. 2, sfasc. 3. ASBI, Banca d’Italia, Studi pratt. n. 1006, fasc. 6, Accordo Monetario tra l’Italia e la Somalia, ratified by the Italian Head of State by Law no. 37, January 3, 1963, published in G.U., no. 39 the following February 11. 73 ASBI, Banca d’Italia, Studi, pratt., n. 995, fasc. 6. See also ASBI, Banca d’Italia, Ragioneria Cassa pratt. n. 3008, fasc. 8, Pro memoria per il Sig. Presidente della cassa per la Circolazione Monetaria della Somalia; ASBI, Banca d’Italia, Ragioneria pratt. n. 3010, fasc. 6, Lettere e Varie anno 1960. 74 ASBI, Banca d’Italia, Studi pratt. n. 1006, fasc. 6, Accordo Monetario tra l’Italia e la Somalia. 75 ASBI, Banca d’Italia, Ragioneria pratt. n. 3009, fasc. 5, Cassa per la Circolazione Monetaria della Somalia Chiusura della sede di Mogadiscio. 76 ASBI, Banca d’Italia, Ragioneria, pratt., n. 3043, fasc. 4, Cassa per la Circolazione Monetaria della Somalia in liquidazione Aprile 1963. 77 This process led to the substitution of foreign with local staff, starting with manual and technical workers, once they had completed a period of training and obtained qualifications; the aim was to encourage a greater awareness and participation of the local population in the activities of the various public institutions in the country. 72
1.3 The Role of the Banca d’Italia in the Period of the Trusteeship
27
started with scholarships for young Somali who were sent to Italy for an apprenticeship at the Banca d’Italia or other Italian banks (Banca Nazionale del Lavoro, Banco di Roma and Banca Commerciale Italiana). This problem was described in the Report of the Third Permanent Commission (Foreign Affairs) – Rapporteur Medici on the Bill presented by the Ministry of Foreign Affairs together with the Treasury, the Ministry of Finance and the Ministry for Foreign Trade, and sent to the President on December 16, 1961, which was concerned with technical and financial aid for Somalia and the liquidation of the Cassa per la circlazione monetaria della Somalia.78 It discussed the advisability of giving “[. . .] the new independent state of Somalia aid to ensure economic stability and to help development”79 and, in particular, of guaranteeing the presence of Italian technicians and experts in the country in order to complete and consolidate the work done so far. The group of technical assistants that Italy provided for Somalia included, in addition to 50 doctors, vets and specialists in tropical medicine and infectious diseases, 149 teachers who supervised the functioning of Somali schools, 14 members of the air force who guaranteed minimal technical services at Mogadishu airport, as well as magistrates, engineers, surveyors, accountants, agriculturalists and experts in all fields of the public administration and economy who offered a first essential support to the Somali state in training new managers. Furthermore, it provided 104 Somali students with scholarships from the Ministry of Foreign Affairs, enabling them to attend higher education courses in Italy, mostly in Rome but also in Florence, Naples and the Polytechnics of Turin and Milan.80 This process was introduced gradually, at least in the banking sector, and in 1966 about 160 employees of the BNS were Somali, also in top executive positions. The foreign staff, made up of Italians only, was reduced to just nine.81 The Banca d’Italia had tried to realize in its field what was not so easily achieved in the public structures that had been handed over to local governments, that is, to transform an organization that had been created and developed according to Western criteria and totally alien to local society into a Somali authority, as the expression of local needs and with which the local population could identify. In the course of the 1960s and 1970s the BNS became the main target of the government which disapproved of the autonomy that the institute had enjoyed up to that time. It therefore proposed to transform it into a department or agency of the government itself. Exercising greater influence over the BNS meant obtaining significant advantages82; in fact, illegal extensions of the indebtedness of the Treasury were requested which went against the law and agreements made with
78
ASBI, Banca d’Italia, Segretariato, pratt., n. 1636, fasc. 1. Ibidem. 80 Ibidem. 81 ASBI, Banca d’Italia, Segreteria Particolare, pratt., n. 474, fasc. 1, sfasc. 8, Appunto di Palamenghi-Crispi sulla cessazione del suo distacco in Somalia, pp. 12–26. 82 ASBI, Banca d’Italia, Segreteria Particolare, pratt., n. 474, fasc. 1, sfasc. 8, pp. 22–24. 79
28
1 The Somali People: Between Trusteeship and Independence
the International Monetary Fund; payments of debts for Treasury services and IMI loans toward the Bank could be spread out or avoided83; trade activities were directed towards friends and away from rivals; the central bank was seen primarily as a source of ready money to be used for less desirable purposes.84 In spite of the efforts and the continuous encouragement given to the Somali government by the United Nations to hire technicians to help with their decisions and thus become independent of the suggestions and advice of experts, PalamenghiCrispi85 wrote in a private note addressed to the central administration of the Banca d’Italia on June 21, 1966 that “the central bank remains an unknown concept in Somalia”,86 just like other financial and economic instruments transplanted there, but not entirely assimilated.
1.4
After the Trusteeship
The end of the AFIS was accompanied by the partial success of Pan-Somalism87 and the Somali Youth League, because the British administration of Somaliland came to an end at the same time and the two territories were united into a single state. The British protectorate was smaller and politically followed Mogadishu. But as the administrations worked in different ways, unification was never total. The British approach was characterized by a particular pragmatism, greater attention to details and a continuous striving for improvement, whilst the Italian administration was unfortunately marked by poor standards of political and individual morality. European colonization had been more intense in the south which was more
83
Two loans were given to the BNS for the Somali government by the Istituto Mobiliare Italiano of 1,000 million lire for Italian and Somali businesses in the cultivation of bananas and 2,000 million for the sugar industry, respectively (ASBI, Banca d’Italia, Studi, pratt., n. 366, fasc. 7, p. 33). 84 Ibidem. 85 He was the Director General of the BNS from July 1960 to August 22, 1966 and previously Secretary on the Board of the CCMS, nominated by the Ministry for Foreign Affairs. He was appointed by the AFIS and the Somali government to work on the economic problems of Somalia. In July 1959 he had been sent by the Banca d’Italia to the CCMS as director general and director of the head office in Mogadishu. Here he was in fact referring directly to the so-called doctrine of Hammarskjold, quoted by Henry Block, the then head of the Technical Assistance Bureau, on a visit to Somalia before its independence. The doctrine stated that the official and economic operators of an ex-colonial country should be removed (the former immediately, the latter gradually) as soon as the country obtains independence and substituted with technicians and operators from other countries (ASBI, Banca d’Italia, Segreteria particolare, pratt., n. 474, fasc. 1, sfasc. 8, p. 17). 86 ASBI, Banca d’Italia, Segreteria Particolare, pratt., n. 474, fasc. 1, sfasc. 8, p. 22. 87 The term Pan-Somalism refers to the search for the unity of the Somali nation, a fundamental criterion for nationalism based on cultural unity rather than concrete political unity, the only way of contrasting tribalism.
1.4 After the Trusteeship
29
developed, whilst in the northern areas there was a stronger preference for tradition over “modernism” which had not been interiorized. Economically speaking, the two regions were oriented towards different export markets. In 1960 the proclamation of the independence of the two ex-possessions was organised in such a way that between June 30 and July 1 the Somali Republic was formed from the total fusion of Italian Somaliland and British Somaliland, with Mogadishu as capital. The constitution was approved on June 20, 1961 through a referendum by the provisional President Aden Abdullah Osman Daar, who was triumphant in the south but was boycotted and opposed in the north by the Somali Youth League. The Somali constitution was modelled on the Italian constitution and the very transposition of Western constitutionalism to the Somali situation raised strong doubts about its appropriateness and functionality.88 The constitution was explicitly balanced in favour of the Great Somalia: “The Somali Republic will promote the union of all Somali territories by legal and pacific means” (Article 4). In spite of the various foreign dominations, the Somali have never abandoned their own cultural identity, especially their ancestral language. Thanks to the maintenance of the Somali oral traditions Somalia today still has an extremely strong culture and social identity that acts as the main unifying social and national force. Somalia is actually peculiar among African states in that it can be defined as a Nation-State, a term that indicates the substantial ethnic, linguistic and religious homogeneity of its population. This homogeneity, however, is not in actual fact complete, because of the presence of groups of Bantu, who have settled in farming in the southern part of the country along the Juba and Shebelle Valley and are very distinct from the majority of Somali who are pastoral nomads. Between 1960 and 1969 Somalia tried to consolidate the concept of national unity and had to deal with the gap between the drier and less developed central northern regions and the south richer in resources. The presidency was entrusted to a man from the south, Aden Abdullah Osman “Aden Ade” of the Hawiye clan, as mentioned above, whilst the post of Prime Minister went to the northerner, Abdirashid Ali Shermarke of the Darod clan.89 The first decade after independence was characterized by divisions and fragmentations. The unifying force of the SYL weakened and the clans returned to the centre of political clashes. Efforts to promote national unity made little progress. One of the questions at the centre of conflict was the written national language. Until the 1960s Somali was only an oral language and all official documents were written in Arabic, English or Italian.90 In addition, the problems of dependence on external aid re-emerged, whilst the weakness of the productive forces and the neglect of the agricultural sector continued, as these sectors were certainly not supported by development plans, which aimed to satisfy the interests
88
Calchi Novati 1994, p. 98. Calchi Novati 1994, p.131. 90 Carbone 2005, p.117. 89
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1 The Somali People: Between Trusteeship and Independence
of the ruling classes (bureaucracy and the trading class). Somalia depended in particular on Italy, which accounted for 43.1% of Somali trade in 1961. Equally significant in the political economic situation of the time was the refusal by Somalia to join the agreement for the mutual recognition of the borders promoted by the Organization for African Unity (OAU)91 in 1964. The main objective of Mogadishu was, in fact, to annex the territories populated by Somali in the bordering areas of Ethiopia, Kenya and Djibouti. It was in this climate that the military coup was hatched which led to the assassination of the head of state. The military had taken power in many parts of Africa, but the Somali military were not satisfied with just the pure and simple conquest of power to remedy inefficiency, corruption or instability. Tension was accentuated by the rise to power of General Siad Barre, from the northern clan of Darod whose mother came from Ogaden. A change of direction was made immediately evident by Barre’s wish to adopt the doctrine of socialism and Marxism, thus distancing himself from the conservative or antirevolutionary stereotype. The coup originated in a climate of strong dissatisfaction in reaction to a long phase of economic stagnation. Abuses had discredited the image of the parliamentary regime.92 Barre represented the rebirth of Somali nationalism in his first decade in power, a young man who brought innovation, overcame widespread clanism and focused on the lay, democratic and popular culture of Somalia. His second decade at the head of the country, in contrast, was marked by the decline of avant garde and innovative impulses and gave way to dictatorship, whose consequences are still visible today. One of the first measures that the new President took was to codify the Somali language that was scripted in 1972. A year later all school books were published in Somali. Another pillar of Siad Barre’s policy was universal and free education. For the first time all Somali could have access to a modern education which was not exclusively based on the Koran. All diplomats had to spend a year of civil service among the nomadic populations to teach them at least to read and write. The fight against illiteracy was extended to the big cities, where adults were also offered access to evening schools. It was the first decisive step towards general literacy
91
This organization was created in May 1963 at Addis Ababa in Ethiopia and was signed by 53 African states. Its purpose was to promote unity and solidarity among African states, defend the sovereignty of member states, put an end to every form of colonialism, promote international cooperation by referring to the Charter of the United Nations and the declaration of Human Rights and coordinate and harmonize economic, diplomatic, social, health, scientific and defence policies in all the member states of the organization. The supreme organ of the OAU was the Conference of the Heads of State and Government or their representatives who met annually in ordinary sessions. The Conference played basically a political role, took decisions, adopted resolutions and declarations. It had, in fact, the task of discussing problems of common interest in order to coordinate and agree upon the general policy of the organization, review the structure, functions and activities of all the Organs and specialized representative bodies of the Organization and issue internal regulations to make it operative. Calchi Novati 1994, p. 132. 92 Calchi Novati 1994, p. 132.
1.4 After the Trusteeship
31
amongst the population, greater awareness of the development of the country and a sense of national unity which brought great popularity to the leader. Universities were opened and young Somali students entered the public administration. A national airline company was established, the Somali Airlines, the first in Africa to have only Africans, and in the case in point Somali, in its staff, including pilots, technicians and engineers. The population was also encouraged to take part in the construction of the country. Everybody helped to build schools, hospitals and offices, whilst in the health sector they formed a National Emergency Service to fight epidemics and drought. Central to these measures was a policy of equality between sexes and equal opportunities for all clans. It was hoped that the scarce resources would be made available and distributed among the nomadic populations according to more rational criteria, thus contrasting the effects of drought and allowing all to have a share in the services that would be provided by the state. The few industries in the country, banks, insurance companies, cotton plantations, fuel distribution, sugar production, imports and exports, except for livestock, became the monopoly of the state. The dominant position of the state was furthered strengthened by the introduction of central planning. The policy of the country has to be considered within the framework of an analysis of Africa and the Third World in the 1970s, when the USSR was at the zenith of its power and the ideologised (Marxism) and bureaucratized (single party) model seemed to be the winning solution. In the absence of a class to be invested with the task of spurring on the revolution, Siad Barre’s regime drew on enthusiasm and spontaneity.93 The aim was to use as best as possible the energy of the vast Lumpenproletariat who lived by their wits. The authority of Siad Barre became absolute and he held all the main offices: head of state, commander of the armed forces, president of the High Council of Justice and the Council of Ministers and leader of the single party. Many death sentences were passed on opponents of the regime in 1972. The problem of tribalism emerged dramatically because the crisis was interpreted as the settlement of a feud inside the group that had organised the coup in 1969, between the Darod and Hawiye.94 One of the greatest failures of the regime’s development plan was the agricultural sector, which did not receive any attention at all and therefore slowed down the overall economic progress of the country. The effort to create cooperatives, where self-reliance could have been experimented and technological innovations concentrated, gave rise to only 14 cooperatives that were suffocated by bureaucracy.95 If Siad Barre had left power after the defeat with Ethiopia, perhaps everything would have been different. It was this war in fact that was not only the cause but also the consequence of his decline. The terrible drought that hit
93
Calchi Novati 1994, p. 136. The Darod and the Hawiye are two of the main clans in Somalia. Siad Barre was a member of the Darod clan. 95 Calchi Novati 1994, p. 138. 94
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1 The Somali People: Between Trusteeship and Independence
Somalia hard in 1974–1975 triggered off a period of famine and entry into the Arab League in February 1974 in the hope of obtaining advantages from oil revenue did not have the desired results. The decision to attack Ogaden was decided after Djibouti was declared an independent territory in 1977, thus creating in point of fact a second Somali state and undermining the project of Pan-Somalism. Barre’s decision to attack won him great prestige, but it quickly faded after defeat. Siad Barre set out to liberate Ogaden, where most of the nomadic population came from, but underestimated the interest of the United States and the USSR in Ethiopia. In the spring of 1977 the Western Somali Liberation Front (WSLF96) received the order to start an offensive against the inhabited centres of Ogaden. Enormous material, human and economic resources were spent on a war that seemed to go in favour of Somalia until the decisive Russian intervention on behalf of the Derg regime.97 The Somali army had pushed to less than 100 km from Addis Ababa when Moscow decided to intervene on the side of Ethiopia, which was considered of strategic importance for the control of the Horn of Africa. The reasons that pressed Somalia to attack Ethiopia can be found firstly in the ambition to reunify Somali territories, which was allegedly felt very intensely by the population. As Ogaden was considered a part of Somali territory, war was judged to be inevitable for its annexation. Secondly, as in the past the government in Mogadishu and President Barre himself, whose mother was from Ogaden, came under pressure from the WSLF. Other reasons can be found in the conviction that Ethiopia was almost at the end of its resources, that the Soviet Union would not have succeeded in uplifting it and that the Americans would in any case have supported Somalia. It was also thought that the war against Ethiopia would have favoured the unity of the Somali and helped forget the failures of the regime. The words of Nicolino Mohamed, ex-head of the cabinet of the Somali Ministry for Foreign Affairs at the beginning of the 1960s, later forced into exile and spokesman in Italy for the Somali National Movement, are very clear as to how this war started. “The aggression against Ethiopia was not felt by the Somali. It started only by wrong calculations made by Siad Barre. The dictator, who enjoyed the protection of the USSR, had not realized that the Soviets had been courting Colonel Menghistu as early as 1974 and that between Somalia and Ethiopia the Russians would have chosen the latter”.98 In the decade before the Ethiopian war Somalia had received more military aid from Russia than any other country in Africa. But once the hostilities broke out, the
96
The WSLF was already active in Ogaden at the beginning of the 1960s and had become stronger or weaker depending on the intentions of the government in Mogadishu. 97 Derg was the Ethiopian communist military government in power from 1974 to 1987. The name comes from the language of Ge’ez (Semitic language) meaning council and is the abbreviation of the Coordinating Committee of the Armed Forces, Police and Territorial Army. 98 Del Boca 1992, p. 6
1.4 After the Trusteeship
33
Somali radio began to broadcast continuous messages that encouraged the Somali to withdraw, otherwise they risked military defeat.99 Siad Barre lost his leadership in this way and paid dearly for the introduction of scientific socialism in Somalia, whose collectivism was at odds with the free and nomadic nature of the population. Queuing for food or living very closely together went against the habits and will of the people, who were used to open spaces of pasture land. The loss of popular consensus led to a toughening of the regime and at the same time the birth of the first opposition movements. The failed coup by Abdullahi Yusuf in 1978 marked the beginning of an autocratic drift that was totally deaf to requests to abandon power. A number of armed movements appeared in opposition to the regime.100 The principal opposition came from the big Somali communities in Aden, Djibouti, Gulf Emirates, Nairobi and the Somali diaspora in Europe. The largest group of opponents, from Majeerteen, found refuge and help in Ethiopia itself, where in the course of 1978 the Somali Salvation Front (SOSAF) was founded; 3 years later it became the Somali Salvation Democratic Front (SSDF), but ceased to exist in the early 1980s. The Somali National Movement (SNM) was founded in 1981 in the north of the country in a region called Somaliland administered by the British.101 Barre responded to these subversive movements by introducing a repressive policy among the most violent in the history of Somalia. In 1980 he proclaimed a state of emergency, assumed complete power and re-formed the Supreme Revolutionary Council (SRC) that he had abolished in 1976, entrusting it with the task of fighting against “banditry, tribal rivalry and subversion”.102 From that moment on Siad Barre’s policy became a policy for the conservation and consolidation of power and repression, culminating in the bombing of Hargheisa in Somaliland (the present day independent region and ex-British colony) in 1988. His motto had become “socialism unites, tribalism divides”. Surrounded by his clan, it was one family against the rest of the country until the outbreak of civil war. The recent history of Somalia is therefore characterized by guerrilla warfare that has persisted since December 1990, when Siad Barre’s regime was overthrown. The Kenyan jurist Mathew Kihuithia Ngugi summarized perfectly the consequences of this type of policy. “Since the end of Siad Barre’s regime Somalia
99
Lewis 1982. The SODAF (Somali Democratic Action Front) and the DAF (Democratic Action Front) had been founded in the mid-1970s, but their activity had been negligible. 101 The SNM was founded in London on April 6, 1981 in the presence of about 500 Somali from Europe and the USA. According to its spokesman, the ex-ambassador in Saudi Arabia Hassan Aden Wada, the SNM was fighting to re-establish the ancient neutralism of Somalia and to establish friendly relations with all their neighbours. 102 . «Le Monde», October 23, 1980. 100
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1 The Somali People: Between Trusteeship and Independence
has been the first example of a state that has cannibalized itself up to its virtual nonexistence”.103
1.5
The Clans of Somalia
Belonging to the same clan forms a much more significant tie than an ordinary genealogical relationship in the Western sense. As has often been mentioned above, there exists a strong linguistic and cultural cohesion within the country, because the people share the practice of nomadism (though not the settled populations, such as the Digil and Mirifle in High Juba and more generally the people of Bantu origin); furthermore, all adhere to Sunni Islam with a strong attachment to the Sufi brotherhood.104 Although they form a people in an ethnic sense, they do not, however, have such strong cohesion as to allow real national political unity.105 Lewis106 distinguishes six big families in the Somali nation, four in particular that are typically nomad (the Dir, Isaaq, Hawiye and Darod) and two settled in agriculture in the south of the country (the Digil and Rahanweyn). The following are the most important and those that were also most involved in the conflicts: • • • • •
In the north west: the Isaaq, Dir (including the Issa and Gadabursi); In the north east: the Majeerteen belonging to the bigger group of the Darod; In the central regions: the Hiwaye, in turn divided into Abgail and Habar-Gidir; In High Juba: the Digil and Mirifle; In various regions in the north, south and Lower Juba: the Darod, which together with the Majeerteen, include the Dhulbahante and Warsangeli in the north, the Ogaden to the West and the Marehan and others in the south.107
These are just some of the tribes present in Somalia, which are divided further into numerous clans and sub-clans, each with its own history and interests and together represent the real essence of Somali history. The basis of the social order is the rer (extended family) whose loyalty lies with the cabila (group of the rer) with a select identity. Each rer chooses a head amongst the elders who rules with the help of an assembly (scir). The reference to the cabila alludes to the defence of the common interests of the group and the protection of the
103
“Liberazione”, August 1, 2006. Bersani 1993. 105 Unity has also been hindered by the internal contradictions of a society with a political structure based on clan affiliation and a modern state structure as understood by colonial authorities, which in certain periods tried to strengthen the clans in order to limit the prospects of a movement fighting for independence. 106 Lewis 1980. 107 Bersani 1993, p. 13. 104
1.5 The Clans of Somalia
35
“family” forming an organization defined as “pastoral democracy”.108 The rer is a linguistic-cultural rather than political unit which forms the basis of an inter-clan confederation without any administrative organization and vulnerable to external threats. There are also minority groups, such as the Rahanweyn, an association of small groups with their own linguistic characteristics and socio-economic semisettled lifestyle. This type of community organization has helped Somalia to create a primary socio-economic nucleus to guarantee inter-cabila “equilibria” in the absence of a state structure.109 The Rahanweyn have enjoyed economic supremacy in the course of the history of Somalia, whilst the former were dominant in the political-military field. The Hawiye moved from an initial position of opposition to the colonizing powers to a kind of collaboration with them, thus showing how the anti-colonialism of the cabila was anything but compact. A description given by Calchi Novati is very clear and to the point: “The nomadic tribes descend from a common ancestor called Samaale and enjoy greater prestige as they consider themselves to be aristocracy, whilst the common ancestor of rural tribes is called Sab. The four pastoral families, though spread over a vast area, are culturally fairly homogeneous. The standard Somalo language is a common channel of communication from Djibouti to Kenya and the medium by which poems and songs, so important in the culture and history of Somalia, are transmitted through the oral tradition”.110 Given such a segmented structure the history of Somalia has been characterized by continuous outbursts of clan conflicts caused mostly by competition for access to resources. In any case, in a situation like this, colonization by different foreign powers first and later unification that took place with government systems which were not only alien to Somali tradition, but also very different in themselves, have not helped to build a set of services and policies of common interest to the different clans.111 In the pre-colonial period nomadic clans in Somalia were mostly still a rather closed economic, social and cultural reality. With the passing of time society has been transformed and the relationships between different status groups changed within the clan. In a redefinition of the clan classifications, which were defined as tribal, the Italian government distinguished between Somali language populations (Darod, Hawiye, Dir) settled in the western and eastern pastoral regions (Benadir, High Juba), the nomadic tribes of Majeerteen and Mudug and tribal groups of the Sab language. But identifying the so-called tribal lands was much more difficult because of the existence of non-sab semi-nomadic communities. In fact, during the period of colonization the clans were used as an element of division, both to maintain order
108
Lewis 1983. Aruffo 1994, p. 31. 110 Calchi Novati 1994. 111 Mohamed Ali Nur (ed.) (1998). 109
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1 The Somali People: Between Trusteeship and Independence
and to try to stop any revolt. Immediately after independence parliament appeared as a traditional shir (inter-clan assembly), where power relations decided the allocation of institutional offices, so that many heads of clans became frontline leaders in the new republic. In the post-independence phase (1960–1969) the Darod and the Hawiye were the most successful in exploiting the situation and occupying administrative offices by taking control of the army and police, respectively. The Isaaq of Somaliland hoped to obtain a federal state. Their main concern was not to be dominated by the other, larger tribes of the central southern areas and this fear led to the first coup in 1963. The Pan-Somali nationalist drive of the Somali Youth League, shared also by the leading tribes, led to conflicts and ultimately wars against Ethiopia, with disastrous results that were destabilizing for the country. The main contrasts within the Somali region can be attributed, on the one hand, to the fact that the official “modern” institutions clashed with the real power of the clans (even if theoretically clans had been banned under Siad Barre’s rule and it was prohibited to even refer to the tribal foundations of Somali society). On the other hand, they can be attributed to the fact that the very traditional structures of the social and economic organization had been weakened by a state system that was both inefficient and interfering, propped up only by loyalty to the dictator of a bureaucratic political apparatus that did not hesitate to use violence to repress internal dissent. The tribal nature of these clashes was fuelled by the progressive fragmentation of Somali society, in which first the families opposed each other and then the clans and then the sub-clans. The very essence of a clan is the holding of both political and military power, completely separated from spiritual authority, with the prevalence of the former over the latter.112 These are all undoubtedly elements that have contributed significantly to the Somali drama, which, as the ethnologist M. Mohamed-Abdi113 has stressed, is an identity crisis of Somali society as a whole. It is, to be more precise, a social, moral and religious crisis all in one. In addition, it has to be remembered how the militarization of the area has changed the organizational and legitimizing systems within the clans and at the same time disrupted and undermined the traditional mechanisms of mediation and conflict resolution. Another type of influence has come from the political logic of Somali social life based on economic competition through military means. As mentioned above, Siad Barre’s regime had tried to abolish the clans, because they did not fit in with the government’s typically dictatorial plans, making it a real taboo to even mention them. Naturally the regime was not successful in totally dominating them because traditional society was kept completely separate from the state, helped
112
Battera 1996. From his unpublished paper Crise d’identite` en Somalie, presented at the First Conference of the European Association of Somali Studies, SOAS, University of London, September 23–25, 1993, quoted in Battera 1996.
113
1.5 The Clans of Somalia
37
even more by the state itself which was primarily concerned with the central areas and therefore neglecting most of the northern areas. Nevertheless, the clan was still the first victim of a totalitarian system, because it was subjected to the interests of a regime that did not hesitate, sooner or later, to use it as a means for holding on to power.
.
Chapter 2
Analysis of the Economic System of Somalia
Italian colonialism could not see beyond bananas, practically it didn’t develop anything beyond bananas. It was a kind of colonialism that did not even look after its own interests: In other words it was short-sighted. Then came independence and things did not change very much, because the old leaders were simply the puppets controlled by old colonial interests.1 These eloquent words by the historian Del Boca invite us to investigate the real economic situation of those years and examine the conditions of the agricultural, industrial and service sectors which had survived the difficult events the country experienced during the scramble for Africa at the end of the Second World War and the necessary creation of a new international order. This will be done with the help of unpublished sources from the historical archives of the Banca d’Italia, which give tangible evidence of its work, even after the end of the Trusteeship.
2.1
The Economic-Agrarian Activities of the Population and Their Evolution
About four-fifths of the population of Somalia was engaged in agriculture and subsistence pastoral farming. The country was divided into four regions: northern Somalia or Migiurtinia with an arid climate and little vegetation, central Somalia or Mudug, equally arid and with a nomadic population, central-southern Somalia, which had the most developed agricultural and animal husbandry sectors and southern Somalia or Lower Juba with thick vegetation and very rich fauna. One of the greatest problems was the shortage of water. Water reserves were limited to the area between the Jubba and Shabelle Rivers and outside of this area there were only wells.
1
Speech by Siad Barre quoted in Del Boca 1992.
D. Strangio, The Reasons for Underdevelopment, Contributions to Economics, DOI 10.1007/978-3-7908-2778-1_2, # Springer-Verlag Berlin Heidelberg 2012
39
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2 Analysis of the Economic System of Somalia
Table 2.1 Agricultural production of Somalia from 1954 to 1957 (Area in thousands of hectares; production in thousands of quintals) Products 1954 1955 1956 1957 Area of Area of Area of cultivation cultivation cultivation Dhurra 300.0 1.000.0 473.0 560.0 313.4 504.6 Maize 25.0 200.0 79.0 540.0 71.6 500.6 Beans 3.5 6.5 3.5 6.5 2.5 5.2 Peanuts 0.5 5.0 0.9 8.8 1.3 12.8 Bananas 6.7 550.0 8.0 734.0 (a) 8.8 650.0 Sesame 8.0 17.0 12.2 48.0 11.5 29.8 Sugar cane 3.5 (b) 83.6 3.2 (b) 104.0 2.5 (b) 88.9 Cotton (fibre) 7.0 2.5 10.5 8.7 6.1 4.4 Chewing tobacco _ _ 0.3 3.3 0.2 1.1 Source: ASBI, Banca d’Italia, Studi, pratt., n. 1,009, fasc. 1, p. 5 Note: (a) Area on July 1, (b) Sugar produced
Area of cultivation 562.4 1179.0 76.6 486.1 5.0 9.8 2.4 28.4 8.6 600.0 28.8 74.4 1.1 (b)100.0 5.8 5.9 0.2 0.8
The country has a very poor physical geographical structure and its few resources required a lot of money and effort to exploit them. Agriculture was seriously hindered by the lack of rainfall, especially in the dry area which has at the most 600–700 mm per year. Somalia, therefore, has to be considered an arid region in the north and semiarid in the south. The climate of seasonal rains, almost continuous winds and, even worse, irregularity of rainfall over the years, made it very difficult for the population to work effectively. In the interfluvial area, where rainfall is sufficient for the cultivation of the crops essential to feed the population, there was another obstacle created by a shortage of agricultural workers. Animal husbandry, limited by the scarcity of drinking water, was considered the main area for long term development, but it had little prospect of providing immediate and consistent income.2 The main crops were dhurra, maize and bananas, the first two consumed only by the local population who used it for their own food, whilst the third was mostly for exportation (Table 2.1). 39% of Somali territory could not be used for either animal farming or agriculture, 43.5% was used for animal farming and 17.5% for agriculture, totalling 8 million hectares. Of these only 800,000 ha were cultivated, 146,000 in irrigated or flooded areas and 654,000 in arid areas. The situation in Somalia was made even more problematic by the fact that most of the population, which belongs to the Cushitic group, was involved in nomadic pastoralism, whilst only a few tens of thousands could be considered settled farmers. The reasons for this can be explained basically by two factors: • Their Camitic origins, with strong cultural nomadic-pastoralist bases • The climatic and environmental conditions that favour a nomadic-pastoralist economy rather than a settled agricultural economy.
2
ASBI, Banca d’Italia, Studi, pratt., n. 1009, fasc.1.
2.1 The Economic-Agrarian Activities of the Population and Their Evolution
41
The most modern forms of agriculture were concentrated in the southern area where there are greater water resources: banana and sugar cane plantations. In the other regions of the country the lack of water made agricultural resources very scarce, limiting activity to oases where date palms were cultivated. There were, therefore, two basic agricultural sectors: one of a modern type oriented towards exportation, whose main crops were sugar cane, bananas, cotton, peanuts, cassava and grapefruit; the other was traditional for the subsistence of the population which produced mainly maize, millet and sesame.3 The backwardness of the agricultural sector was evident; in particular the traditional crops, in spite of the area of land occupied, were not capable of satisfying even internal demand. Animal farming was also strongly conditioned by the availability of water. Cattle were, in fact, concentrated in Benadir and in Middle Juba and Lower Juba where animal husbandry was non-nomadic. In the arid northern regions pastoralist nomads kept goats and sheep. Animal husbandry was by far the largest asset of the territory, but had few prospects of an immediate and consistent income. Industrial activity mostly concerned the transformation of agricultural, livestock and fishing products and was concentrated almost entirely in the southern part of the country near Mogadishu. However, industry remained small and in the hands of Europeans. Ever since the period of colonialism the Somali economy has had very particular characteristics. Its organization perpetuated a misfit between goods of first necessity for internal consumption and export-oriented products. It relied on foreign aid and subsidies that were the only resources for investment and development, which reinforced the economic status quo. Public resources allocated for the expansion and improvement of agriculture were clearly inadequate. Furthermore, as the organization of the state machine was controlled in an irregular manner by elite factions, the distribution of foreign aid fell under their control. Thus, the concentration of power in the hands of a few led to embezzlement, the wrong use of resources and political instability. The improvement of the agricultural sector had been one of the prime objectives of Italian policy from the very first years of colonization in Somalia. The method most frequently adopted was to give appropriate incentives of various kinds that could convince the native population to improve and extend their work in rural areas. This kind of invention, which presupposed the enthusiastic collaboration of natives, was called the indirect method. In other situations, in the presence of seriously depressed populations who were underfed and without any will to react against their condition, direct methods were judged essential, though transitory, as they were based on the principle of compulsory cultivation in the exclusive interest of the farmers. Italian programs used exclusively indirect methods.4
3 4
Steiner 1994. Maugini 1969a, p. 53.
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The rural population lived in two completely different worlds, the pastoral and the agricultural. The main differences lay in the fact that herdsmen, the expression of poor semi-desert regions which at times were almost beyond any possible economic use, led an extremely simple, hard life. It was at times dangerous and marked by the bloody defence of herds and watering places, whilst they lived almost exclusively on milk and other products from their animals. They were proud of the freedom and independence they enjoyed and felt an instinctive diffidence towards any changes in their traditional habits. Pastoralist tribes did not like working the land which they viewed with a certain disdain and as belonging to inferior races.5 The farming populations, however, were permanently settled on the land and had a completely different mentality and living habits. They had a habitation, worked the land, produced various crops, kept small farm animals, fed well and could even build up reserves of food in good years. It was a quiet sort of life, less subject to uncertainty, more open to the changes of progress and therefore able to respond to beneficial external stimuli.6 One of the biggest obstacles facing the farmers trying to cultivate the land as best they could was the use of primitive tools which involved an enormous waste of energy. Furthermore, the dated farming methods, the spread of bacterial diseases and the persistence of insects that scourged the crops, often ended by annulling the efforts of the farmers. It was exactly in this direction that the first steps were made by Italian aid, but they did not always succeed in obtaining a consistently positive response on the part of the local people. In the early years of Italian colonization Somali agriculture was thought to have great potential, as the words of the agriculturalist, Dr. Macaluso,7 testify in a declaration of 1908: “There are very many tropical crops that can be usefully and safely introduced into all the areas of our promising colony. . . I can say that the productive potential of our colony is extraordinary”.8 With the benefit of hindsight, this statement has proved to be overoptimistic. When Italy tried to start a development policy for the social and economic progress of the country and made explorations of various places, it was immediately evident that in some cases these were more illusions than real possibilities. The rich, very fertile plain of Governor Carletti, for example, was really a never-ending, poor xerophyte wood, whilst the Shabelle River, described as the Nile of Somalia, swells like a torrential seasonal stream, but also has long dry periods. It was clear that the only element that could dominate the economy of the country was water and that everything, or almost, depended on the possibility of being able to use it.
5
Ministero degli Affari Esteri-Comitato per la documentazione dell’opera dell’Italia in Africa (ed.) 1955. 6 Ibidem, pp. 54–55. 7 Dr. Macaluso was the Director of Agriculture and ended his mandate in 1910, when he was replaced by Dr. Romolo Onor with the title “Technical consultant for agriculture”. 8 Maugini 1969b.
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The aims of the Italian strategy in practice focused on the attempt to free rural people from want, instil in them trust, hope and the certainty that tomorrow will be better. There were many schemes for land reclamation and the introduction of new crops into the area, as well as the improvement and spread of the distribution of existing ones. The government created political-administrative and technical organs with the function of checking and following every agricultural scheme and added opportune experimental activities aimed at providing the technical and scientific help necessary for those operating in the sector. There were, however, many problems connected with these economic activities. In the first place, even when capital goods and the necessary technical skills were available in adequate quantities, the very low population density often made their adoption inefficient. On the other hand, the real problem of the Somali economy was that rationalization in both sectors (pastoral and farming) appeared to be dependent on the introduction of “new” capital goods, which were complementary to the other factors of production that were already available in abundant quantities.9 Admittedly, even in the modern sector the fundamental bottlenecking of the development process was not so much the shortage of a particular factor of production, but the absence of a real entrepreneurial base. More generally it can be said that the fundamental disequilibrium of the dualistic system consisted in the disproportionate quantities of resources employed to produce forms of subsistence in the traditional sector and the very small quantity of “surplus” left over for the modern sector. This was due basically to the fact that the formation of a surplus was an occasional and sporadic event that did not determine lasting effects on the production methods for subsistence. The weak point of Somalia, therefore, was clearly its economic situation which, from the very beginning of the Italian mandate, was still in an embryonic state. As has already been underlined, about 70% of the population was engaged in activities strictly aimed at subsistence and contributed little or nothing to the general economy and to the public income of the country, whilst the remaining 30% enjoyed a still very modest standard of living. There were, in fact, very few active ‘items’ worth noting in the economic life of Somalia: cotton, bananas, leather, ivory, mother pearl, incense and fishing, some of which became the focus of attention for Italian efforts to maximize efficiency.10 Most of the economy was therefore directly or indirectly connected with the activity of Italians, or at least to existing organized capitalist firms, which were also very few in number and mostly faced with very unfavourable environmental conditions.11 About 12% of local revenue came from direct taxes, to which Italians contributed 95%. About 65% was made up of indirect taxes that hit more than
9
Conforti 1939. ASBI, Banca d’Italia, Studi, pratt., n. 979, fasc. 5. 11 Querini 1969. 10
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2 Analysis of the Economic System of Somalia
half the local population of consumers. Another element to point out is that the wages paid on the plantations contributed very little to the broadening of the domestic market, because they were either spent on the purchase of imported consumer goods or transferred abroad. The social organization of nomadic herdsmen worked clearly in function of the very ecology of the territory and the needs of seasonal transhumance. In the southern areas, where the environment changes and is more conducive to farming along the banks of the two rivers, the Jubba and Shabelle, there were two types of communities with strong hierarchies. Here colonialism used the differences between clans for its own needs of dominion, in the logic of divide and rule, thus pitting various segments of traditional society against the others. This made it particularly difficult to persuade a society, whose sense of belonging and community depended traditionally on blood ties and the institution of clans, to accept a new concept of national belonging that good find its reason for being in the territory. The affiliation to clans actually ruined the logic of belonging to a nation and consequently the management of state institutions. The result of this complex compendium between modernity and tradition can be found in the expression used by J.L. Amselle12 of “hybridization”, in which the fundamental characteristic was the persistence of traditional, clan practices, but for modern and political objectives.
2.1.1
The Agricultural Sector During the Trusteeship
The sources of the Archivio Storico della Banca d’Italia show clearly how much progress was made in the agricultural sector during the 10 year period of the Trusteeship, though this judgement is based purely on a statistical analysis without considering the ulterior motives of Italian intervention. Exports showed a notable increase, especially bananas. In 1949 7,542,580 kg of fresh bananas were exported, in 1950 the figure increased to 16,999,063, and in only the first 6 months of 1951 they amounted to 11,000,000 kg, even though heavy rains had caused numerous problems with the harvest and transport from the plantations, especially to Kismayo.13 The development and growth of agriculture was helped by the joint participation of inhabitants in the country and in towns. The Chamber of Commerce believed that this collaboration would bring great advantages to Somalia. In fact, it was the Chamber that succeeded in obtaining the entry of custom-free agricultural machinery (after permission from the AFIS) which helped the big agricultural areas and the individual European and native farmers to mechanize as much as possible work in the concessions and neighbouring fields.
12 13
Morone 2006b, pp. 9–11. ASBI, Banca d’Italia, Studi, pratt., n. 1004, fasc. 4.
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In its attempt to promote agricultural development in the best possible way during the Trusteeship, Italy realized that immediately after the independence of the country it could not continue to be the only power to be responsible for the economic situation, as it did not have the necessary capital. Furthermore, it intended to avoid creating situations of artificial economic activity which in general are created where investment plans are decided by state bodies and do not derive from the real needs and economic possibilities of the country. The Italian state therefore set itself the task of creating healthy economic development based on private enterprise, providing ad hoc norms and directing the activity of private entrepreneurs towards those sectors that showed potential for development and profitability for investors. Even though there were and still are many who consider Italian intervention in Somalia a failure, others believed that, had the country been well administered, it could have become an interesting consumption market for Italian industrial production, an export market of useful products for the Italian economy and, above all, an important base for the Italian economic penetration of rich African territories neighbouring with Somali and in the Middle East. Somalia as a market in itself certainly could not have become an important outlet for Italian production, nor could it have been considered capable of receiving large numbers of Italian excess workforce. The geographical position of Somalia, however, did offer an advantageous opportunity; from there an important trade network could irradiate out by land towards East and South-east Africa and, by sea, to countries lying on the Indian Ocean. A project of this kind needed, firstly, an intelligent political-economic strategy to develop the necessary infrastructures and secondly, a nucleus of activities that could be developed into an organic plan. Furthermore, big tax concessions on both direct taxes and indirect taxes were needed to create the conditions necessary to encourage the desired organizational development of private enterprise, especially for Italian firms in Somalia. Completely new juridical norms also had to be created, for both new and already existing Italian firms in Somalia, as they were working in a country that was no longer a colony, nor a foreign country, but a territory under Trusteeship. The special relationship between Somalia and Italy and the position of Somalia at an international level made the granting of special concessions for the transfer of capital and of currency necessary. Trade terms, especially for Italian-Somali exchanges, also had to be simplified, but in accordance with regulations established by the UN organs. Article 1 of the Bollettino Ufficiale of the AFIS no. 9 of 01-121950 established the exemption from duties of all machinery and tools imported by anyone, regardless of nationality, from Italy or any other country in the world, for new industrial or agricultural firms or for the extension and improvement of existing companies.14
14
ASBI, Banca d’Italia, Studi, pratt., n. 979, fasc. 5.
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Article 10 stressed the point that, unlike previous provisions taken for ex Italian East Africa, these exemptions also included machinery and equipment purchased from local representatives of the producers and local importers. This measure was considered by all as the element that could trigger off the long awaited reconstruction and development to be achieved through total mechanization. It was seen as a possible solution to the very backward state of the Somali agricultural sector, allowing multi-crop farming, but also as the premise for the birth and growth of solid industry that would enhance the value of the natural resources of the country. The needs of domestic consumption would be satisfied and a noticeable margin left for exportation. In 1952 strong contrasts emerged over the trading of import–export licences, which became even harsher with an article published in Meridiano Somalo.15 The journalist wanted to show that the U.V.C.E., responsible for the distribution of approvals for the importation of first necessity goods, did not grant them to traders with a regular licence who regularly paid income tax, licence fees and the many other small sums that appeared under different names and that generically could be called taxes, but to politicians who never paid taxes at any time because they did not have licences and therefore were not subject to the checks that the real trader was subject to. Consequently, the commerce of licences ranked first among illegal traffic in Somalia. A trader who wanted to obtain a licence for any good, whose importation had been banned for months, found a solution by turning to those who held the monopoly of licences and by paying an appropriate sum of 5%, 8% and sometimes even 12% ad valorem (in other words, a bribe or kickback).16
2.1.2
The IBRD Report: “Is Somalia Ready to Become an Independent State?”
Missions from the United Nations were sent to check that the work of the Italian Trusteeship was being done efficiently and to ascertain the real potential of the country in view of independence. One of these missions visited the country between March 9 and April 16, 1956 with the purpose of assessing the real economic conditions of the country. The mission published its conclusions in a Report presented to the Protection Council (Consiglio di Tutela) and the Italian government. It affirmed that: • Somalia had few resources available and none of them could produce rapid development;
15 16
ASBI, Banca d’Italia, Studi, pratt., n. 1005, fasc. 3. Ibidem, p. 29.
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• The animal husbandry sector could provide some real possibilities for development, but only in the long term; • Agriculture offered few possibilities and its exploitation required great skill; • The aid provided by Italy, directly under the form of annual financial contributions and indirectly by the purchase of the production of bananas at favourable prices, contributed to the development of education, health and public well being and gave the country more roads and other public services than it would have been able to do on its own; • Somalia alone did not have the necessary capacity to develop national income in order to reach autonomy before the agreed time; • The programs implemented by the AFIS were considered sufficiently satisfactory and adequate for the real needs of the country.17 Another mission, the third since the beginning of the Trusteeship, arrived on July 18, 1957 and left Somalia on August 6 of the same year, at the express request of the Italian government. In its report the mission insisted on the fact that some basic economic and financial decisions had to be taken before the end of the mandate and, in particular, aid would have to continue after the end of the Trusteeship for about 20 years. The Mission believed that it was of utmost importance to decide as soon as possible about the amount and form of possible future aid, given the economic condition of the country, and especially about the aid to be assigned to increase the size of herds that represented one of the most urgent problems. Another critical point was the banana industry that had to cope with unfavourable natural conditions and high transport costs. The Banca d’Italia pointed out, however, that its survival was due simply to its protection in the Italian market, which paid about 50% more for Somali bananas than bananas from West Africa or the Canaries. It argued that once the Italian monopoly ended, the exportation of bananas would no longer be profitable and it was impossible to foresee what other crop could substitute them. In fact, if on the one hand the “concessions” were the most dynamic pat of the Somali economy, on the other it could hardly be in the interest of Somalia to continue indefinitely with a crop that was clearly uneconomic. Special attention was given to expenditure on education, health and public services, which attracted the largest share of public investment during the early years of the Trusteeship. The increase in social assistance and higher wages made expenditure rise much more than receipts. Considering all these factors, what emerges from the words of Mr. Williams, a member of the Bank’s Commission to Somalia, is that it was a very poor country with few opportunities for development: schools, hospitals, roads and other public services existed only thanks to Italian intervention. Given these premises there was very little chance of an increase in income before 1960 that could replace financial aid with internal resources.
17
ASBI, Banca d’Italia, Studi, pratt., n.1009, fasc.1.
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2 Analysis of the Economic System of Somalia
The report also stressed that these problems needed immediate attention, without waiting for the date of independence, and that possible solutions could be: • Collaboration between the Italian and Somali governments in the search for a practical solution; • The continuation of Italian aid after 1960; • Assistance from the Bank and the UN’s Department of technical assistance (immediately dismissed because the UN did not have the authority to assist national governments directly); • Assistance from the United States which could provide the economic and financial aid essential to prop up Somalia after 1960 as part of its efforts in the fight against communism in the world and in favour of the spread of democracy. The report expressed the hope that Italian banks would remain in Somalia after 1960, because they played an essential role in the country’s foreign trade. It also foresaw the possibility of creating a new credit institute with a financial structure that could grant small amounts of credit to Somali small farmers and tradesmen, as well as to cooperatives and other organizations. In fact, the Credito Somalo opened in May 1954 and organised a vast network of small branches and agencies offering credit services throughout most of the country. It also ran a special ploughing service for Somali farmers and cooperatives which was paid for partly in cash and partly through loans. As early as 1961 external financing of about 1.3 billion lire was granted to balance the budget, in addition to about 600 million to pay for the services of nonSomali technical staff which the country would certainly still need and 870 million for financing other economic works. This need for financing could have decreased if the Somali government had successfully been helped to economize in the expenditure on personnel and to involve a larger part of the population, which was excluded before 1960, in the development. The IBRD report was followed by some comments in the Corriere della Somalia, some of which shared the pessimism expressed by the mission, whilst others showed excessive defeatism. Many thought it was a mistake to believe that a country and a population could reach full and absolute political independence only after having reached economic self-sufficiency; very few of the peoples who had won national independence in various parts of the world had reached that target with a “self-sufficient” economy and many had had to face the enormous problems of a deficit economy immediately after independence. The Somali government was, on the other hand, sure that aid from Italy would reassure the Somali people of economic and social development. In concrete terms, this aid consisted in the presence of 250 experts to sustain and facilitate the functioning of the most important and vital branches of the new state, in the provision of scholarships for Somali students to study in Italy and a liquid financial contribution which the Somali government could use freely as it wished. It was also decided to allocate a sum of 5 million dollars which the country needed; the Italian representative at the Protection Council of the UN, Girolamo Vitelli, said that two fifths could be covered by Italy and the remaining figure by the American and
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British governments. With this additional aid Italy hoped that Somalia could satisfy its economic and financial needs as had been planned by its government, thus giving its people the orderly and peaceful economic and social development that is an essential factor for the independence of free peoples.18
2.1.3
Economic Development Between 1960 and 1969
After independence one of the main problems for the country continued to be the scarcity of food which had persisted for many years; according to Querini (op. cit.) the reason lay not so much with the 1963 floods or the 1965 drought, but rather with the growing rural exodus.19 “The accumulative effects of the exodus on traditional agricultural structures, especially the increasingly extensive and marauding exploitation of natural resources, exacerbated, at least in relative terms, the backwardness of the traditional producers, on whom the provision of food for most of the population ultimately depended.” Somalia enjoyed comparative advantages in the production of many agricultural goods; however, foreign capital was concentrated in only one activity, banana plantations, which did not require a very large workforce, but needed an expensive network of storage and transport infrastructures, because the product was extremely perishable. In general, it can be said that the problem of the structural interdependence between agriculture and industry in a country like Somalia consisted basically in increasing the local value added in the commercialization and transformation of the traditional sector’s products. There was the risk, on the one hand, of these products being hastily consumed in the domestic market with a large amount of waste, as happens for highly perishable goods such as meat and fish, and, on the other, of their being exported in a natural state, leaving foreign industries all the benefits of subsequent processing. At the time of independence the Somali economy was still firmly anchored to a level of subsistence and the new state did not have a public administration capable of levying taxes on the productive activities of farmers and nomadic herdsmen. In the 1960s, in fact, most of its revenue came from exports and international trade, but these resources were insufficient to satisfy the needs of government and its development objectives. In the first 3 years of independence Somalia covered 30% of its budget with financing from Britain and Italy and loans and funding from Western and Arab countries. This revenue made it possible to start a 5-year plan of national development from 1963, which provided for investments in infrastructures for a total value of about 100 million dollars.
18 19
ASBI, Banca d’Italia, Studi, pratt., n. 987, fasc. 6. Querini 1969, p. 210.
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The main objective was to favour the cultivation of bananas and the exportation of livestock, after the necessary infrastructures, better roads, ports and irrigation systems, had been built. As most of the Somali population was nomadic and animal husbandry put pressure on the land that was already very arid, it was decided to target investments on the creation of agricultural models that could attract nomads towards settled activities and train them in the use of modern farming techniques. These projects were made in Baidoa, Afgooye and, in the north, the second city of the country Hargeisa, where agriculture was non-existent. These efforts in agriculture were matched by those in pastoral farming. Between 1965 and 1966 the Livestock Development Agency was created which provided veterinary services, water and food for animals and means of transport. The exportation of animals was the leading productive sector of Somalia and this policy was welcomed by nomads because it not only guaranteed the health of the animals, but also made their activity more efficient by offering an outlet on the international livestock market. Until just a few years before exports were blocked because of a lack of health certification, Somalia was the leading livestock exporter to countries in the Gulf. In the post-independence period, therefore, trade in Somalia developed in two key economic sectors, livestock and bananas, making the country the leading exporter of bananas in the world for a few years. In spite of these early successes Somalia did not manage to free itself of external aid; although there had been a surplus in the current accounts, Mogadishu was still dependent on external aid and finance. Agricultural practices were still tied to the traditional farming methods that had undergone very little modernisation and the backwardness of the subsistence level agriculture could not satisfy the needs of the growing urban population.
2.1.4
Scientific Socialism Between 1970 and 1975
Mohamed Siad Barre legitimized his coup d’e´tat in 1969. On October 20, 1970, the first anniversary of the coup in Somalia, Barre announced his adherence to soviet socialism in the rhetoric typical of that period. 1970 was a very intense year for the political and economic life of Somalia, which saw the publication of the First Charter of the Revolution whose general declarations of intention contained a very precise meaning. The Supreme Revolutionary Council in the First Charter of the Revolution promised to: (1) build a society based on work and the principle of social justice, bearing in mind the environment and conditions of the Somali people; (2) prepare and guide economic, social and cultural development in order to achieve rapid progress; (3) eliminate illiteracy and develop the cultural heritage of the Somali people; (4) create the basic conditions to prepare for the written form of the Somali language; (5) eliminate corruption, anarchy, tribalism and every other phenomenon of social misbehaviour
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in the State; (6) abolish political parties; (7) call a popular election with absolute impartiality at the first opportune moment”.20 On the advice of the Soviets the Somali president announced a 3-year plan for national social development that was to run between 1971 and 1973. The objective was to improve the living conditions of the population, guarantee everyone a job, eliminate capitalism from Somalia, modernize agriculture and create new industries. Siad Barre soon put the economic system under state control; he nationalised the banks, insurance companies and all industries and at the same time created national agencies to replace private companies. After the introduction of nationalization laws, the whole credit sector and the most important industrial firms passed into the hands of the state, with the sole exception of the Balad cotton company which remained with mixed Somali-German capital. Two state bodies were created to work in the commercial sector: the National Agency of Foreign Trade (NAFT) which dealt in export-imports and became monopolist for the importation of products such as flour, cement, edible oil, rice, textiles, raw cotton and the National Banana Board (NBB) which exported bananas. The NBB was set up in 1970 and from that time onwards always paid producers a fixed price of 54 Somali shillings per quintal exported, a price that is certainly higher than producers obtained before the body was created. Furthermore, the NBB granted credit to producers for the purchase of insecticides, tractors and boxes for packaging, which at the end of 1973 amounted to 18,000,000 Somali shillings. The transformation of agriculture was generally undertaken independently of changes in ownership or expropriation. The “Crash” Programme for collective farming was started in land that was already cultivated, especially Italian concessions which had been abandoned. The “Crash” Programmes basically were intended to fulfil the national objectives of land reform by reclaiming uncultivated land, increasing the production of food produce, eliminating urban unemployment and rural under-employment, directing young people towards agriculture, introducing modern techniques in agriculture and encouraging a spirit of collaboration within the general framework of real development. As the Crash Programme gradually developed, it was the nomads who were willing to move to agriculture and actually formed the main nucleus. On February 16, 1970 the first recruitment involved 2,500 young people, of whom 1,060 were employed in agricultural companies in Genale, Afgooye, Jowhar, Beledweyne and Tog Wajaale, 500 in road building and 1,000 in reforestation, digging wells, etc. Food, clothing and accommodation were provided free by companies; in addition a daily recompense of 2.10 shillings was given for personal expenses and, if food was not provided, 2 extra shillings were paid. The so-called nationalization of the land had ideally the objective of fighting ancient tribal values, since private property continued to be recognized in spite of
20
From “Nuova era”, La Prima Carta della Rivoluzione, febbraio 1970.
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the negative consequences of the excessive subdividing of the land itself. Barre was, in fact, very good at involving the population and stoking Somali nationalism to obtain popular support for the construction of the Nation. In these years of a centralized economy some fundamental measures were undertaken, such as the transcription of the Somali language, the extension of free education to every Somali and a health service. The only sector that was not included in the Somalisocialist neologism “hantiwadaag”, a word meaning common property, was the ownership of the nomadic populations’ animals. Livestock is a good that is strictly personal for each nomad who, by tradition, was not responsible to anyone and did not recognize any sovereignty above himself. Siad Barre, aware of this very widespread attitude, did not dare to declare that the livestock were also “hantiwadaag”. In addition to nationalization the Somali president introduced changes to the laws on investment to favour the entry of foreign capital. Industry in Somalia was fairly modest and nationalization was more for appearance sake than a real change in the economic system of the country. Barre proved himself to be very able in making the resources present in the country efficient because he succeeded in involving all members of the community in his plans. In 1973 the government passed a law on national agricultural cooperatives21; in that year agriculture absorbed 10% of all available resources, but a year later this percentage had already risen to 29%. There were three types of cooperatives: multipurpose cooperatives, group farm cooperatives and production cooperatives. The first were conceived as organizations to protect a number of lower level organizations. Their initial objective was to start an education programme to convince individual herdsmen and farmers of the value of agricultural cooperatives. Once the social environment was prepared, the next step for the cooperatives was to work gradually towards the collectivization of the means of production. In the first phase farmers would continue to own their land and livestock, but would have to share their work tools, such as agricultural machinery and sprayers. The common use of the factors of production was intended to prepare work on the land for the more advanced and final development phase of the cooperatives, when production cooperatives were to be created. In this last phase the ownership of land and other resources of production became public property. At Galooley, an area in the district of Gabiley in the north west of Somalia, the first cooperatives were formed in 1973 by members of the government who made agreements with farmers. On a purely formal basis, a conference was held to promote the superiority of the cooperative business organization as compared to individual efforts and the government’s intention to help the development of cooperatives on condition that farmers agreed to form their own cooperatives. State help consisted mostly in providing tractors and a sum of 30,000 Somali shillings. These funds were used to build one single big central cooperative,
21
Samatar Abdi 1989.
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which was completed in 1974 with the help of farmers. Thanks to substantial state aid, the members of this cooperative were asked to move on to the highest stage of cooperatives, the Tacabwadaag.22 Ideally, its formation was based on the promise that the state would look after the administration of the free agricultural land for the benefit of the members who farmed it collectively and were paid wages for their labour. As there were not sufficiently large areas of land available in the Galooley area, farmers contributed by adding a small part of their own land to the Tacabwadaag, whilst the state participated by donating tractors and other tools. After the harvest and farmers had been paid, the surplus went into a common fund. Surpluses were possible because those who worked in the Tacabwadaag businesses had their own fields and therefore were totally or partially self-sufficient. If the harvest were inadequate for the needs of the members of the Tacabwadaag, then the common reserve was dipped into to help them. There were two projects in this field which were particularly important: The Northwest Region Agricultural Development Project (NWAP) and the Agricultural Extension and Farm Management Training Project (AEFMET). The NWAP aimed at self-sufficiency in wheat. It built on the bunding work started by the British administration in the 1950s and U.S. Agency for International Development in the 1960s. Most of the funding for the project (72%) was provided by the World Bank which gave a loan of 10 million dollars. The objective of this project was aimed at the consolidation of the soil by building solid embankments to reduce erosion and to store water for agricultural purposes. The other project, AEFMET, also financed by the World Bank, was set up in 1970 and continued until the end of Barre’s regime. It was designed to overcome the lack of technical and administrative expertise at the Ministry for Agriculture. The main objective was to improve agricultural productivity, especially of small businesses, and to spread new and better farming methods. One of the target areas was situated in the region of the Middle Shabele to the north of Mogadishu, outside the regional capital of Jowbar and one of the most evolved agricultural regions of the country, where rice was introduced for the first time and developed. The cooperatives for national development did not concern just the agricultural sector, but also included pastoral farming, where there was a need to guarantee the regeneration and administration of pastoral lands. The provisions and practices that were introduced were to prove very useful during the years of drought towards the end of the 1970s. In addition to administering the land, the government organised education programmes for the nomadic populations, especially for the young. Siad Barre sent children who had completed their schooling in towns to spend a year doing civil service with nomadic families to teach adults to read and write and to give a basic education to children. Attempts were also made to improve the provision of health and veterinary services.
22
Tacabwadaag is a Somali term which indicates a semi-productive cooperative.
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2 Analysis of the Economic System of Somalia
The great drought between 1974 and 1975 hit pastoral farming badly. In the north of Somalia tens of thousands of animals died: more than 60% of sheep, 80% of cattle and 40% of camels, totalling more than 7 billion Somali shillings (almost 1,000 billion lire at the time) of economic damage.23 The worst hit area was the vast dry plateau near the border with Ethiopia, where livestock had always been the only source of livelihood for nomadic populations. This terrible natural calamity had devastating effects on the population itself, which was forced to significantly change its lifestyle. But the main problem lay in the need to work on the mentality of the nomads, who considered farming as slave’s work. The idea of proposing a new system of social organization presented many unforeseeable problems, since it was a situation steeped in centuries of perennial uniformity in the nomadic life and the direct and exclusive relationship between man, tribe and nature. From 1978 onwards in the aftermath of the calamity and with the help of the USSR, Somalia relocated about 90,000 nomadic herdsmen who had lost all their livestock to cooperatives in agricultural villages and fishing ports along the coast. New cooperatives appeared at Dujuuma on the banks of the River Jubba, at Kurtunwaarey near the Schebelle River and at Sablaale near Kismayo. However, the finance promised by the World Bank and cooperation from Kuwait in the production of rice, maize and beans were not sufficient to modify the nomadic way of life. Only women and children lived in the cooperatives, whilst the men, as soon as they had saved enough money, invested in livestock and returned to their old life. The behaviour of the nomads is symptomatic of Somali liberalism and the ideological restriction that socialism imposed on the population. The successes of the first 5 years ended with the war of Ogaden, which broke out in 1977. In spite of the excellent results obtained, the involvement and participation of the state which had encouraged and rallied farmers began to fade. This failure marked the end of the era of cooperatives. Although they had been set up in the capital and regional centres, cooperatives disappeared and reappeared only when the state authorities decided to re-establish them temporarily to extract “development contributions” from the farming class. Military defeat and the impoverishment of the country caused by the waste of so many resources, both human and material, also disillusioned the population and the socialist experiment came to an end. The Russians had, in fact, decided to support Ethiopia against Somalia. In addition there was the corruption of the state apparatus, where managers used their positions for personal interests rather than for the community. All of this explains why nationalism ran out of steam and left the door open for a return to clanism. At the end of the 1970s the Somali economy was suffering from the effects of both a war and a drought, but in that period the greatest damage was caused by the abnormal growth of foreign debt and the collapse of the industrial sector. Indebtedness to foreign countries grew during the 1970s at a higher rate than earnings from
23
Arecchi 1983.
2.2 The Availability of Labour
55
exports. In 1978 Somalia’s debt stood at 4 billion shillings, equal to 25 years of banana exports, according to IMF estimates. The foreign debt of Somalia was made up of three parts. One-third was to be paid back to the USSR (approximately 110 million dollars), China (87.2 million), Bulgaria and East Germany; a second third to OECD countries and the last third the OPEC countries, namely: Saudi Arabia 81.9 million dollars, the Arab Fund for Economic and Social Development 34.7 million dollars, Kuwait 27.1 million dollars and others, such as Iraq, Qatar, Libya and Algeria. The loans from the USSR were all cancelled, whilst those from the OECD countries were only spread out in time. However, the Somali economy no longer attracted foreign investment as it had done previously because of the accumulation of debt and delays in repaying it. The financial weakness of Somalia led to the country being taken under the control and administration of international financial institutions and it lost control and management of the macroeconomic level of the system. The years between 1975 and 1981 saw a decline in the industrial sector with its exports falling to 20% of total exports at the time of the war of Ogaden. The Somali economy had thus entered a phase of total stagnation.
2.2
The Availability of Labour
In traditional Somali society there is a social hierarchy with the nomadic herdsman at the top. Settled farmers are, instead, considered to be of a lower social class, “insofar as they are less warlike and ethnically contaminated by pre-Somali populations living along the banks of the Jubba and Shebelle Rivers”.24 From the very early years of Italian presence in the country development plans were based on the principle of improving and increasing native agriculture in the remote areas far from the centres of colonization and of directing as many workers as possible towards national firms in the areas closest to the reclaimed land. The first criterion to be adopted by the government was “rotation”; in practice this meant that some families in a cabila or a village, in agreement with their leaders,25 were given shifts of work in concessions at Genale.26 This system could not lead to excellent or even satisfactory results, because it involved a continuous, or almost continuous, rotation of workers, so that it was impossible to train the specialized or semi-specialized workers necessary for the development of more advanced agricultural areas as the reclaimed lands hoped to become or were becoming. Furthermore,
24
Querini 1969, p. 150. Maugini 1969b, p. 140. 26 Genale was the seat of the Azienda Agricola Sperimentale of the Italian colonial Government. It was the first nucleus in a vast area of agricultural concessions for the irrigated production of bananas, cotton and other cereals. Many agricultural firms were connected to the complex system of irrigation fed by the giant damn built across the River Shebelle. 25
56
2 Analysis of the Economic System of Somalia
it provoked inevitable unfairness and discontent in the cabile and villages, and resistance from individual workers and the leaders themselves. Given the few gratifying results obtained with the shift system, the Governor’s Decree of May 10, 1929, no. 7375, amended later on January 20, 1930 no 7937, made it compulsory for a working family to live in the company and fixed the rights and duties of both the employer and the worker in various articles. The results of this new decree were much better than earlier ones, but the labour supply still remained problematic, especially in Genale, where farm workers often abandoned the land and were not replaced by the cabile. In this way, given the reluctance of the Somali to work in agriculture, there was a growing abhorrence to work in the concessions and a consequent total or partial departure from the area around some villages. It seemed increasingly obvious that it was going to be difficult, if not impossible, to satisfy the labour demand in the colonized areas by hiring workers only from neighbouring areas. The government therefore studied the possibility of transferring workers from distant farming cabile to these regions and to place these families in Italian companies. Italian entrepreneurs were very careful to offer these workers working conditions which were fair and free from exploitation and abuses. The most frequently used method of payment at that time, which mirrored Somali tradition, was to pay for labour on the basis of the work done, rather than a daily wage. Nomads exploited natural resources almost exclusively on a family basis, whilst contact was made with other clans only at times of famine and war. Traditional farmers tended to group together in villages, both along river banks and close to easily accessible water resources. Efforts to solve the problem of labour scarcity included studies on the possible mechanization of planting and harvesting, which involved the introduction of different types of machinery and their adaption to local environmental conditions and crops, which in many cases was very successful. The main objective was to help the natives succeed in producing what is absolutely essential for life, correcting the production rotation and adopting a strategy based on three main points: • Public works to directly increase native agricultural activities; • Technical assistance and information in the most important and interesting agricultural areas; • Government-controlled forms of agricultural collaboration and partnerships between Italian entrepreneurs and native farmers. Each of these measures obviously did not exclude the others and, indeed, they were almost always integrated in order to reach satisfactory results in the best possible way and in the least possible time. The subdivision of Somalia into clans influenced the distribution of the workforce in the country. The very essence of the clan system, made up of vast and scattered units, meant it was impossible to act together on a plan for organization and the economy. As Somali production was fundamentally for subsistence,
2.2 The Availability of Labour
57
Table 2.2 Employment by sector Somalia 1963 Sector No. of people (in 000) % of total population Agriculture, Forests, Hunting and Fishing 1.899 82.8 Livestock (nomads and semi-nomads) (1.379) (60.0) Agriculture (500) (21.7) Fishing and Forests (20) 0.9 Mines 4 0.2 Manufacturing 32 1.3 Construction 40 1.7 Electricity; Gas; Water 4 0.2 Trade 80 3.4 Transport and Communications 64 2.8 Public Sector 120 5.2 Various 60 2.6 Total 2.303 100.0 Source: Nigam 1965, p. 11 (The data refers to only 19 districts in the southern region and ten urban centres in the northern regions)
families constituted the basic productive units. The coexistence of individuals belonging to different clans in the same country created further problems for nomads in their fight for survival, because it increased the pressure of the population and livestock on the limited resources available, especially water and pasture land, in the short term at least. This type of coexistence, therefore, gave rise to rivalry and conflict. The settlement of more or less permanent villages close to water points or urban centres could not in itself solve the problem for these groups, so long as they felt uncertain about their rights and the resources necessary for survival remained very scarce. Subsistence for most of the population was provided by animal husbandry, which involved transhumance in search of water and pasture land (Table 2.2). Part of the campaign undertaken against tribalism included the decision taken in 1960 by the government to declare all the land that was not actually cultivated public property, so that each Somali citizen could farm. The power of the stronger clans was therefore restrained. One of the sectors that gave the greatest training opportunities to the Somali workforce was the banana industry, which, in addition to being of real economic importance, also took on a social function, because it guaranteed jobs to a significant number of workers and their family nucleus. In fact, the number of Somali workers permanently employed in the sector were: Agricultural sector Transport, packaging, repairs Total Source: Mission BIRS 1955
8,000 units 4,000 units 12,000 units
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2 Analysis of the Economic System of Somalia
There was a total of about 12,000 units with four dependents (spouse, two children, one dependent relative) which relied on the banana industry for work and their livelihood. The figure of 12,000 corresponds to one per cent of the total population of Somalia. However, it must be considered that this industry recruited workers only in the cities of Mogadishu, Merca and Kismayo, therefore the ratio increases to 12% and the total number of people who, together with the worker himself, lived off the production of bananas was about 30–35% with a significant impact on the maintenance of political and social order in the three main urbanised areas of Mogadishu, Merca and Kismayo. Another positive contribution of this industry came from the kind of training it provided workers and farmers, directing them towards forms of mechanized modern agriculture and going beyond the traditional ways of mere subsistence farming. Consequently, numerous Somali farmers began to work for European companies operating in the banana export business, thus establishing Italian-Somali collaboration that was to bring benefits to both the political and economic fields.
2.3
A New Law on Foreign Trade
After national independence on July 1, 1960 there were two different trade and currency systems in Somalia that needed to be incorporated and integrated into a new code of regulations which reflected the growing needs of the new state in the international community and the changes that had taken place in foreign trade.27 The system that was in force in the northern region was regulated by the ordinances passed by the British administration on December 20, 1950 and December 10, 1952, which adopted in practice the principles of the currency policy that was in force in the sterling area and was quite liberal, with special conditions for purchases in Commonwealth countries. The system in force in the southern regions was characterized by a certain restrictiveness, granting Italy special treatment in the class of goods subject to licensing. The norms were based on those of the Italian trusteeship with the ordinance of June 8, 1950, which was later revised in the decree of December 8, 1956. With the birth of the new state and the introduction of liberalisation, a single customs tariff was prepared and preferential treatment abolished (decree of March 1961). In the meantime Somalia joined the Bretton Woods system (August 1962) and the association agreement of the European Community was signed in Yaounde´ (July 20, 1963)28 making it even more urgent to unify the system of foreign operations into a single set of norms that were appropriate for the development of the country and could satisfy the obligations it
27 28
Graziosi 1967b, pp. 492–509. Aliboni (1969).
2.4 Terms of Trade in Somalia
59
had undertaken internationally. For this purpose, a commission was created in 1963 to draft a bill which was to become the decree of September 26, 1964 and converted into law on October 29 in the same year. In accordance with what had been provided for in the “new system of foreign economic operations”, all transactions that involved movements of currency could be made in Somali shillings or in currency that could then be used for any transaction inside the country. Special permission was required for transfers abroad. In general, the new law established the basic criteria for procedures to do with trade and currency policy, though it did not specify any restrictions. The practical application of the law was to be clarified in regulations at a later date, so that it could become clear which operations should be restrictive and how the new system should be administered. In the wake of this, two new decrees were passed on March 24, 1965 and March 30, 1965.29 The first listed which goods, services and capital were subject to licence and created an advisory commission and two committees for the issuing of licences. In the second decree the Ministry of Industry and Commerce, which was the main organ responsible for the functioning of the new system decided the laws that were to regulate the daily handling of operations, procedures concerning applications, and permissions for payments, etc. Essentially these provisions were intended to avoid the creation of reserves for speculative purposes and to facilitate the sale of goods from abroad in the domestic market with special credit concessions as well as favouring the supply of goods produced locally.
2.4
Terms of Trade in Somalia
After having presented a general view of the economic condition of the country and before moving on to analyse one of the most important productive sectors for Somalia, it will be useful to briefly analyse the position of Somali exports and imports in international trade. Table 2.3 shows the destinations for all Somali exports and it clearly highlights the geographical concentration of the areas to which Somali products were directed. In contrast, Table 2.4 shows that most imports came from developed capitalist countries. Two trends can be seen from the data examined so far. The first is a decrease in the percentage of Somali exports to capitalist countries (especially Italy); and the second is an increase in imports from developed capitalist countries, accompanied by a corresponding decrease in imports from underdeveloped countries. Moving on now to consider Somali exports from a quantitative point of view, they show a certain, though very irregular, growth, whilst from the point of view of their value there is not such a well-defined trend. This can be explained by the
29
Andreis 1967.
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2 Analysis of the Economic System of Somalia
Table 2.3 Countries receiving somali exports in % Countries 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 Italy 56 56 51 49 36 22 41 38 31 27 28 Saudi Arabia 16 17 24 27 30 30 34 43 50 56 49 South Yemen 13 12 15 14 16 18 14 13 13 11 13 U.A.R. 1 2 3 5 10 5 2 1 _ _ 1 Iran 5 4 3 2 2 1 1 2 2 _ _ East African 3 1 1 _ _ 3 3 _ _ _ 1 Community U.S.A. 1 1 1 1 1 2 3 1 _ 2 1 Others 5 7 2 2 5 19 2 2 4 4 7 Total 100 100 100 100 100 100 100 100 100 100 100 Total in millions 164.2 188.0 180.2 227.1 215.1 192.0 213.9 198.5 212.0 232.0 154,4 of So. Sh Source: Bertolani-Garibbo 1971–1972 Table 2.4 Imports from somalia according to area of origin in % 1966 1967 1968 1969 Developed capitalist countries 66.9 67.4 69.7 73.6 Socialist countries 5.7 12.4 9.6 6.1 Third world 27.4 20.2 20.7 20.3 Total 100.0 100.0 100.0 100.0 Source: Banca Nazionale Somala, Bollettino n. 25–26, Mogadiscio, June 1971
1970 70.8 9.4 19.8 100.0
growing difficulties faced by traditional agricultural products, especially bananas, in finding markets in developed countries (see below). The total value of livestock exports was increasing in this particular period, whilst their unit value remained stationary, though with an irregular trend. However, there was actually a slight decrease, if the inflation that had hit the shilling in the past is taken into account. A common characteristic of livestock and bananas (80% of total exports) is that their demand is very inelastic. When prices fall, demand grows only a little,30 and in the case of bananas it does not increase at all, so that earnings from Somali imports did not increase and in some cases actually fell. In fact, Somalia was caught up in the consequences of a more general process that saw a change in the composition of exports from underdeveloped countries. Whilst the exportation of some agricultural products increased only slightly or, at times, remained stationary, exports of mineral and fuel products increased much more. Another factor to point out is that Somalia’s share of international trade decreased proportionately more than other underdeveloped countries’ in general. The problem was always the same – Somali exports were based, and still are today, on only two products: livestock and bananas.31 Obviously this situation dates back to the colonial period and what all that meant for industry, agriculture and trade.
30 31
Bettelheim 1968a, p. 414. Jalle` 1968, p.81.
2.5 Banana Plantations: Profitable Agriculture or Not?
61
The only effect international trade has had on countries like Somalia has been to “promote the production of primary goods, which became the bulk of exports. These articles, however, often had inelastic demand in the export market, often with demand trends that did not grow very quickly and excessive fluctuations in prices”.32 As mentioned above, one of the main problems of the Somali economy was, and still is, that “the movement of the economy is mainly dominated by external factors. These external factors determine the structure and size of investments”.33 Therefore, one of the key requirements for the development of this country was for it to free itself of external influence and rely on decisions taken inside the country for national needs rather than those of foreigners.
2.5
Banana Plantations: Profitable Agriculture or Not?
In 1928, just as a damn was being built on the River Shebelle at Genale and most of the vast irrigated area was allocated to the production of bananas,34 the exportation of bananas was introduced into the south of the country. The main areas were Afgooye and Giamane. At the beginning private entrepreneurs freely exported the products and there was no control or regulation by the government. It was only after a decree was passed in 1931 forbidding the importation of bananas from abroad that the state was forced to become interested in it. As a result exports rose from 7,176 quintals in 1930–1956,483 in 1932. As the sector was expected to grow constantly, the Azienda Monopolio Banane (AMB) was created by Law no. 2085, December 2, 1935 to regulate and strengthen Italian interests, on the assumption that Italy would maintain sovereignty over Somalia and have a state fleet for the transport of bananas.35 The AMB’s activity was suspended between 1940 and 1948. Many disputes arose over the waste of goods on arrival between producers and the AMB, which set prices that were fob (free-on-board) with cif (cost, insurance and freight) approval and weighing. The AMB intended to make the producers pay for the waste, whilst the producers claimed that the faults in the fruit found on arrival were generally the consequence of the bad functioning of the refrigerated holds and the damage was caused during transport for which the AMB was responsible. The fob price refers to the traditional clause in sea transport contracts that indicates in price lists that shipping costs and risks up to the time of the loading of the goods on the means of transport are charged to the seller. This clause is used in national and international foreign trade statistics
32
Myrdal 1966, p. 58. Bettelheim 1968b, p. 41. 34 Castellani 1985. 35 Brusasca 1949. 33
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2 Analysis of the Economic System of Somalia
to indicate the value of the goods plus transport costs and insurance from the place of production or commercialization to the national border of the seller. The cif price refers to the traditional clause of contracts for sea transport in national and international foreign trade statistics to indicate the value of goods including transport costs and insurance from the foreign place of production or commercialization to the national border of the buyer. The consumption of bananas in Italy reached 460,000 quintals in 1939, whereas in 1947 and in 1948, according to the Associazione Commercianti Importatori Banane (Association of Banana Traders and Importers) 200,000 quintals of bananas were imported each year into Italy, of which 10,000 from Somalia.36 In 1949 7,542,580 kg of fresh bananas were exported, in 1950 16,999,063 and in the first quarter of 1951 alone they reached 11,000,000 kg, in spite of harvesting and transport difficulties, especially in Kismayo because of the rains.37 After the Second World War bananas became the most important crop in the country. In 1950, banana plantations covered only 2,800 ha producing 28,000 t. In 1954, taking into consideration the fob price paid by the AMB, producers made a profit of 18 lire/kg. (the Monopoly paid 98 lire minus 80 lire for costs). It is important to stress that this profit was gross of loss of weight and waste insofar as the AMB bought fob with cif approval and weighing. This led to a reduction in fob which had previously been set at about 10%, so that profit was approximately 10 lire a kg, the equivalent of a profit of about 12% on the amount invested in production and fob delivery of a kilo of bananas. Substantial improvements in the production systems were made from 1954 onwards with new agricultural techniques that produced a greater yield per unit, greater mechanization and better organization within the firm. In 1955 bananas were grown in 233 concessions, of which 191 were in the area of the River Shebelle (153 at Genale and 38 at Afgooye) and 42 in the area of the Jubba, where cotton had once been produced.38 In 1963 banana plantations covered 11,000 ha, producing 110,000 t.39 Table 2.5 shows that the exportation of bananas rose from 45.8% to 58.9% between 1958 and 1959 with an increase of 28.6%, a figure that grew considerably until 1963, taking the production of bananas to first place ahead of all other crops. It is easy to understand from these data why Italian public opinion was outraged by the purchase of Somali bananas at the special price set by the Italian Azienda Monopolio Banane. From 1950 to 1956 Somalia exported 2,321.6 thousand quintals of bananas to Italy,40 all purchased by the A.M.B., which paid 22.9 billion lire at the agreed
36
Brusasca 1949. ASBI, Banca d’Italia, Studi, pratt., n. 1004, fasc. 4 38 Data taken from the Economist, cited in ASBI, Banca d’Italia, Studi, pratt., n.1009, fasc. 1, p. 8. 39 Samatar 1989, pp. 89–90. 40 The data have been taken from the official reports of the Italian government at the Protection Council of the UN, cited in ASBI, Banca d’Italia, Studi, pratt., n. 1005, fasc. 4, p. 3. 37
2.5 Banana Plantations: Profitable Agriculture or Not?
63
Table 2.5 Production and exportation of bananas in somalia, 1950–1963 Year Production Exports Area (ha)
Tons
1950 2.800 28.000 1951 3.600 34.000 1952 3.800 40.000 1953 6.200 60.000 1954 6.700 55.000 1955 8.000 73.400 1956 8.800 65.000 1957 8.600 60.000 1958 8.498 83.000 1959 8.500 85.000 1960 9.100 91.000 1961 11.000 98.000 1962 12.000 107.000 1963 11.000 110.000 Source: Shirname 1965, p. 16
Tons/ ha
Tons
10.0 9.4 10.5 9.7 8.2 9.2 7.4 7.0 9.9 10.0 10.0 8.9 8.8 10.0
22.065 25.200 32.030 30.178 43.389 48.278 36.515 42.565 55.848 58.763 73.735 84.316 75.555 94.512
% Of total banana production 78.8 74.4 80.1 50.3 78.9 65.8 56.2 70.9 67.3 65.7 81.0 86.6 70.6 85.9
Value (thousands of So. Sh.) _ _ _ _ _ _ _ 45.859 58.960 65.000 74.430 90.267 80.149 101.000
% Of all banana exports _ _ _ _ _ _ _ 44.2 45.3 44.6 45.3 48.0 44.1 45.0
price.41 On the basis of the pure fob cost, it can be said that the price of Somali bananas was on average 15–17 lire a kg higher in the period under consideration than the average price on the international market. Considering these figures, the AMB therefore seems to have paid Somalia overall a premium of about 3.7 billion for bananas, whilst the Monopoly made a profit of about 15 billion in the same period, of which 13 came from the trade of Somali bananas and the rest from trading bananas from other places.42 From the very beginning Somali bananas cost 100 lire more a kg than, for example, Spanish bananas. The explanation given by the AMB concerned the high war costs incurred by farmers, higher Somali labour costs, the greater cost of packaging and the lack of means for loading in Somali ports.43 In spite of these explanations there were, in fact, a number of circumstances which could seriously condition an objective judgement of the question.
41
The data have been taken from the Report of the IBRD Mission on the economy of Somalia in 1957, cit. in ASBI, Banca d’Italia, Studi, pratt., n. 1005, fasc. 4, p. 3. This figure refers to the fob price with cif approval according to the contractual clause for the purchase of Somali bananas and corresponds to the total actually paid by the AMB to producers, but differs from the figure of the Statistics Office of Somalia that refers to conventional customs prices. 42 The data have been taken from Dr. Malagodi’s report, “Linee programmatiche per lo sviluppo economico e sociale della Somalia” of 1953; from the Report of the IV Permanent Commission (Finance-Treasury) at the Chamber of Deputies (n. 640 A del 1954) and the Bill (2026 of the Chamber of Deputies) on the Ministry of Finance’s budget for the year 1956–1957, present in the ASBI, Banca d’Italia, Studi, pratt., n. 1005, fasc. 4, p. 3. 43 ASBI, Banca d’Italia, Studi, pratt., n. 979, fasc. 7.
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2 Analysis of the Economic System of Somalia
First of all, many of the concessionaires had rented banana plantations with contracts that guaranteed 35% of income from the production of bananas and had returned to Italy to follow other business activities; secondly, the AMB insisted on being supplied by two main Somali firms under conditions of a monopoly or near monopoly rather than importing packaging from Italy at a price that was 20–30% lower. Furthermore, many Italian operators insisted on the fact that in Somalia the cost of bananas on board ships should not exceed 45/55 lire al kg, given that the production costs on the plant varied between 10 and 25 lire a kg, transport on board 5–10 lire a kg and the cost of packaging from 25 to 30 lire a kg. The 1955 IBRD mission pointed out that Italy paid a cif price for Somali bananas (Italian ports) at 174 lire a kg. made up in the following way: Production costs and producers’ profit Packaging, transport and loading on ship FOB price at Somali ports Cost of transport by sea to Italy borne by Monopoly
64 48 112 62
Considering that bananas from Guinea and the Canary Islands were exported to Italy at an average cif price of 110 lire a kg., the excess price paid to Somalia by the consumer was actually 64 lire a kg, a figure that covered entirely the cost of production and the producer’s profit. As Italy imported 492 thousand quintals of bananas, the indirect contribution paid in that year to Somalia therefore added up to 3 billion lire (3,149 billion lire to be exact), representing about 60% (more than 5 billion, 5,412 billion to be exact) of the total value of the imports. The higher cost of Somali bananas compared with those of other countries, was mainly due to the scarcity of rainfall and the long distances that separated the plantations from the ports. The data collected by the Mission shows how important the production of bananas was for Somali agriculture and foreign trade, as expressed by the percentages given below: Year
Revenue for public accounts
1955 24% 1956 16% 1957 17% Source: IBRD Mission 1955
Balance of trade 75% 57% 56%
It is important to stress, however, that the Italian interest in bananas should not be viewed in relation to the Monopoly’s profits, but considered within the broader framework of its importance for Italian-Somali economic-commercial relations. It appears that Somalia imported a total of 27.3 billion lire of Italian goods between 1950 and 1956, paying on average 25% higher prices than the cost of the same goods in the international market.44 Therefore, whilst it is true that Italy granted
44
The data were taken from the official reports of the Italian government at the Protection Council at the UN. These data refer to the conventional values at the Somali customs.
2.5 Banana Plantations: Profitable Agriculture or Not?
65
Somali bananas a substantial advantage, it is equally true that Somalia gave an overall greater advantage on goods that it bought from the Italian market. To be more precise, on the basis of what has already been said, whilst the purchase of 22.9 billion lire of Somali bananas by the Monopoly brought the concessionaire a total premium of 3.7 billion compared to the supposed international price, the purchase of 27.3 billion lire of Italian goods in the same period corresponded to a premium of 6.8 billion. Bananas made up, in fact, 71.3% of the value of Somali exports to Italy in the years under consideration and therefore the Italian currency available in the local market as a result of this trade must have directed a considerable amount of Somali purchases towards Italy. The banana business was not only an important factor in the public income of the country, but it also gave rise to a series of complementary activities (transport, workshops, exchange, packaging, etc.). The conditions in which the cultivation of the banana took place varied in the areas of the Shebelle and the Jubba, depending on the different water regimes of the two rivers. In fact, whilst the Jubba flowed continuously, the Shebelle normally ran dry for 3 months a year from the end of January to the end of April. To deal with this problem, farmers in the Genale area created huge basins for the plantations, which were used to store water for the dry period of the river so that the banana plants could be irrigated regularly. As far as the production costs of Somali bananas were concerned, a special Commission was to sent to Somalia in 1958 by the Italian Ministry of Finance to estimate the cost of the bananas produced by the 230 firms operating at that time. Cost of a hand on the plant
32 lire/kg
Costs packaging, land transport, loading, unloading, customs, income tax, 48 lire/kg administrative costs Total cost 80 lire/kg Source: Ministero Italiano delle Finanze in ASBI, Banca d’Italia, Studi, pratt., n. 1005, fasc. 4, p. 7
Immediately after the independence of the country, in the attempt to strengthen the economy and independence, it was decided that the best thing to do was to improve the banana production as much as possible, especially as this crop, which had absorbed most foreign investment, had enjoyed considerable success. It was hoped that it could act as the driving and regenerating force for the economy of the country. The authorities wanted to show that the differences between Somali bananas’ production costs and prices and those of other producer countries were not so substantial. A document, which can be found in the ASBI,45 contains a comparison between the sales price in Italy of Somali and French bananas: The French cif bananas cost about 118 lire/kg, whilst the Somali bananas in 1958 cost 153 lire/kg (98 lire + 55 lire for transport). It has to be stressed, however, that this price
45
ASBI, Banca d’Italia, Studi, pratt., n. 1005, fasc. 4, p. 10.
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2 Analysis of the Economic System of Somalia
included 15 lire paid by the AMB extra to Italian shipping companies compared to international freight. If international freight was applied, the cif cost of Somali bananas became 138 lire, which fell to 115 lire/kg in 1960, and 75 a kg for a fob sale as established by the Italian report of the Trusteeship at the United Nations on the economic needs of independent Somalia. For all these reasons it was firmly believed that government intervention was necessary if Somali production was to match the level of international prices (in the countries of the European Economic Community). Intervention included measures such as: (a) The improvement of roads so that the fruit could be transported more easily from the plantations to the port; (b) The building of a dock at Kismayo that would allow the direct mooring of banana ships to reduce by a third the cost of loading in the bay, which was about 7.50 lire a kg; (c) The gradual concentration of banana production on the Jubba where production costs were lower and the yield per unit higher, and above all more constant, as compared with the Afgooye and Genale areas, which were conditioned by the frequent drying up of the River Shebelle; (d) The adoption of more rational systems of production in closer rows with plantations of 2,500 plants per hectare instead of the 500, as occurred normally; (e) The direct intervention of the Somali government, which declared internationally that it would abolish the export duty on bananas by 1960. The banana business was marked by the fact that it was oriented to one single market: the Italian one. Even after independence Italy was the only country prepared to absorb the banana production at such an uncompetitive price, and this was “for a number of non-economic reasons among which it is difficult to distinguish between a sincere desire to help Somalia and condescendence to groups of Italians interested in maintaining a privileged regime for the importation of Somali bananas”.46 However, the monopolistic relationship between Italy and Somalia characteristic of the exportation of Somali bananas created many problems for the country.47 The exportation of bananas was the most important item in the balance of payments and was also one of the basic sources of income for the State budget from the various direct or indirect taxes and levies on production. But this is true only from a strictly financial point of view, because an analysis of the situation from a broader, economic point of view shows that the real contribution of the plantations to the development of the country was extremely modest. The main problem was that this type of production needed factors of production that were very scarce in Somalia, namely fuel, fertilisers and skilled labour, with the added drawback of the work
46 47
Querini 1969, p. 204. Bettelheim 1968b, p. 415.
2.5 Banana Plantations: Profitable Agriculture or Not?
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Table 2.6 Production costs of bananas Somalia 1963
Expenditure on administrative staff Labour Fertilisers Fuels and oil Spare parts and various consumables Amortization, improvements to firms, buildings, machinery and equipment General expenses (welfare, health, interest, etc.) Real cost of the fruit in warehouse, packaging in firm Source: Italconsult 1965, p. 28
Somali Shilling/quintal 3.80 9.05 2.30 2.83 1.02 2.05
%
0.95 22.00
4.31 100.00
Table 2.7 Percentage of Somali partners in banana producing companies (1962) S.A.C.A % S.A.G % Total Italians 173 73 51 30 224 Somali 63 27 121 70 184 Total 236 100 172 100 408 Source: Italconsult 1965
17.27 41.14 10.45 12.87 4.64 9.32
% 55 45 100
being intensively seasonal. In contrast, it had very little power to absorb those factors of production that were relatively abundant, such as land without irrigation and unskilled urban labour.48 Furthermore, the packaging and transport of this product, which is delicate and extremely perishable, needed a capillary network of infrastructures to quickly harvest the crop and transport it towards commercial centres for loading and packaging49 (Table 2.6). This type of activity requires very good entrepreneurial abilities and working capital that were consequently directed away from alternative uses that could have absorbed more local resources. On the other hand, unlike many other tropical products, bananas cannot be easily transformed industrially, so that they have to be exported as a raw material. Besides, they are so perishable, they cannot become the target for the action of “Marketing Boards” which have successfully managed to stabilize producers’ incomes in other countries and for other products by also regulating the absolute level and the percentage of profits transferred abroad by exporters. One of the main problems the plantation sector faced in starting off an accumulative process of development was the limited possibility of creating local value added, because the exported good was produced mainly by foreign operators (Table 2.7), with foreign factors of production, including modern capital goods and skilled labour, whilst very few of the underemployed local factors of production were used. The non-mechanized agricultural banana companies in the northern,
48 49
Ibidem, p. 206. F.A.O. 1966, pp. 5–10.
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central and southern coastal regions employed 410,000 people, with an average of 7.4 people per company. This meant that the remuneration paid out in the plantations, especially profits and wages, did very little to broaden the domestic market, because it was spent on the purchase of imported consumption goods or transferred abroad thanks to the law (no. 10 of 1960) which was rather liberal as far as foreign investments and capital transfers were concerned. The problem of real efficiency in the sector became more pressing at the end of the Italian mandate in 1960, when the question arose of whether Somalia would succeed in running the sector profitably without Italian support. In 1957 the Economist50 expressed its opinion in a special issue about the problem of banana production in Somalia: “Somalia is moving towards independence and complete bankruptcy”. The Economist quoted the World Bank Mission which had stated on a visit to Somalia that the country would need foreign aid for another 20 years after 1960. It was reasonable, therefore, to suppose that as soon as Italian aid stopped, it would be very hard to find other resources that could provide a source of income. The very same Mission estimated that once the banana subsidy was abolished Somalia would need about 6 million dollars a year just to maintain its standard of living at the same level, which was, in any case, very low. As the development of the European irrigated plantations tended towards the creation of an artificial economy based on bananas, the future of workers also seemed very uncertain. For this reason Italian and American companies carried out investigations in the hope of finding oilfields, without obtaining concrete results however. Nevertheless, many people still believed that the banana business could continue, especially with the introduction of more appropriate systems of planting, fertilising and cultivating. Poor rainfall and the long distances from the plantations to the ports meant bananas cost more to produce than in other areas,51 so the convenience and profitability of continuing the banana business in the future depended entirely on substantially reducing the fob price of Somali bananas, but also and especially the cif price. In addition to a substantial reduction in company costs, the fob price could be ‘lightened’ by conspicuous economies in packaging, land transport and loading, if a dock were built in the bay at Kismayo to enable ships to moor and land directly. Essential port equipment was also needed and roads leading to the port laid or repaired. Studies forecast the possibility of saving about 18% on the fob price, whilst the cif cost of Italian ports could, thanks to this advantage and a better use of stowage (following improvements in packaging with direct loading and applying international freight tariffs), be reduced by 24%. In this way the Somali production could become competitive with the average price of bananas from other countries, without the need to ask for local tax concessions, whilst the Italian monopoly
50 51
Economist 1957. ASBI, Banca d’Italia, Studi, pratt., n. 1009, fasc. 1.
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Table 2.8 Italian importation of bananas (in quintal) Year Imports Indices Imports from Indices Total from Somalia other countries
Indices % Other imports compared to Somali imports 1949 60.495 _ 12.390 _ 72.485 _ 20 1950 144.607 100 29.618 100 174.225 100 20 1951 211.307 146 43.280 146 254.587 146 20 1952 271.797 187 55.669 187 327.466 187 20 1953 321.793 222 65.910 222 387.703 222 20 1954 378.065 261 77.435 261 455.500 261 20 1955 469.198 324 96.101 324 565.202 324 20 1956 375.601 259 83.900 283 469.501 269 22 1957 436.016 301 109.003 368 545.019 312 24 1958 537.900 372 133.600 451 671.500 385 25 1959 553.100 382 174.400 588 727.500 417 31 Source: Societa` Romana in Somalia in Relazioni e bilancio al 30 Giugno 1959, p. 11
would have less interest in promoting purchases in other markets, so that its supply in Somalia could eventually satisfy the entire demand in Italy. On the other hand, banana production was considered the backbone of the Somali economy and the best way of strengthening any sector is to find good outlets for the product, either by deliberately aiming at strong markets or by attracting new currents of consumption. The arguments presented by a statistician, Enzo Umberto Rossi, in his paper Il problema bananiero, Ed. Roma, 1958, Arte Grafica Romana52 at the VII Conference on Italian-African trade therefore seemed very interesting. He stressed how the Somali banana, for its organoleptic qualities and its standards of marketability, was highly appreciated by consumers and was much superior to other world varieties. He also pointed out that the German market was the largest banana market in the EEC and this market was supplied almost exclusively by Ecuador and Columbia with almost 3 million quintals a year. He therefore suggested that Somalia, which was included among the countries associated with the EEC, should try to place as many bananas in Germany as it did (thanks to the Monopolio) in Italy through special agreements. In view of these indications it was decided to defend and maintain banana production, whose viability depended on its concentration in the Jubaland by 1960 and on the completion of the project for the port of Kismayo by the set date. The concentration of the banana production in Jubaland started with the transfer of groups of workers who had been employed in companies in Afgooye and Genale, after new facilities had been added to the companies already existing in Jubaland. In this way production was to be made in units which allowed a more economic administration, thus reducing unit costs. The success of this transfer depended entirely on the completion of the port at Kismayo, so that the Shebelle banana producers could concentrate their business in
52
ASBI, Banca d’Italia, Studi, pratt., n. 1004, fasc. 1.
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Jubaland, lower costs and give the banana sector some chance of survival after 1960. Consequently, another contract was signed with the AMB for the 4 years after the end of 1960 in the hope of safeguarding banana income in Somalia, and thus creating greater economic security and covering the costs of financing the work on the port of Kismayo. It was thought that the expected increases in sales would have favoured the birth of new Somali companies to work directly and effectively in this business. In fact, the increase in the consumption of bananas by Italians, which was satisfied by the total imports of the Monopoly, was higher than the increase in imports from Somalia (Table 2.8). From 1950 to 1959 the index of imports from Somalia rose to 382, whilst the index of imports from other countries increased in the same period to 588. As the data for 1959 was provisional and therefore cannot be considered complete, “other countries” amounted to more than 174,000 quintals, which represented 31% and was by far the highest for all the period under examination. In this way, with no damage to, but only advantages for the Monopoly, Somalia could supply ever greater quantities to meet the progressive increase in Italian consumption, whilst the “other” suppliers integrated the supply in the market when Somalia, for seasonal or other reasons, could not meet the demand satisfactorily. These ‘other’ bananas came from the Canaries and Brazil. A similar reason for keeping the AMB alive was really quite attractive to Italian finances, which collected more than 7 billion lire from this company in the financial year 1956–1957. After 1960, when the premium paid for Somali bananas was much smaller, Somali production had the advantage of a solid commitment to the continuous purchase of the goods. The extension of the AMB’s business was closely linked to the gradual introduction of Common Market regulations. Although the AMB was to continue until 1964,53 the Somali production of bananas would later have to be in a position to cope with the conditions of the Common Market (EEC). In actual fact, it only had to be competitive with bananas from French West Africa, whilst it would have 20% protection against those from elsewhere. The main firms’ prime objective was to weaken the bilateral relations in the sale of bananas between Italy and Somalia, in order to enable Somalia to supply other countries in the Common Market which were not bound by preferential supplies from other markets. In 1963 bananas accounted for approximately 45% of exports from the country. Between 1958 and 1963 the proportion of exports in terms of value remained more or less stationary. This was in great part due to the fall in the price of Somali bananas; the average price of bananas in 1949 was 155 lire and in 1963 91 lire (Table 2.9).
53
ASBI, Banca d’Italia, Studi, pratt., n. 1009, fasc. 1
2.5 Banana Plantations: Profitable Agriculture or Not? Table 2.9 Average price of bananas in Somali ports, 1949–1963, fixed by the AMB
71
Year Lire/kg Annual % of fall price/kg 1949 155 1950 140 9.7 1951 137 2.1 1952 127 7.3 1953 123 3.1 1954 115 6.5 1955 112 2.6 1956 106 3.4 1957 101 4.7 1958 98 3.0 1959 94 4.1 1960 94 4.3 1961 92 2.1 1962 92 2.2 1963 91 1.1 Source: IBRD, The Economy of the Trust Territory of Somaliland, 1957, and Ministry of Agriculture and Animal Husbandry, quoted in Shirname, Report to the Government of Somalia on Food and Agricultural Economy, p. 16
Before 1960 banana plantations were entirely under Italian ownership. It was only after independence, to be more precise between 1964 and 1965, that things changed so that 350 of the 450 banana plantations passed into Somali hands. In spite of their substantial numerical superiority, the area of land held by Somali firms was smaller than that of the Italian plantations which amounted to about 250–350 ha. Italian plantations also maintained the monopoly of exports which were managed by their associations, the Societa` Azionaria Concessionaria Agricoli di Genale (SACA) and the Societa` Agricoltori Giuba (SAG). From the mid 1970s onwards, the development of the cultivation of bananas became one of the main objectives of Somali government policy, if for no other reason than to aim at an increase in inflows of a valued currency from the exportation of a product which, even though there was strong competition in the international market, still seemed to have some concrete possibilities for outlets. At the same time, however, the government aimed at a greater diversification of Somali exports based mainly on livestock.54 It is clear that the development of the cultivation of bananas depended to a large extent on certain economic policy choices made by the government: (a) The price of bananas; (b) Whether it was compulsory to export the whole output of bananas that had the characteristics required by the international market;
54
Castellani 1985.
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2 Analysis of the Economic System of Somalia
Table 2.10 Area of banana cultivation in Somalia and area of production in the period 1975–1983 Area cultivated with bananas Area of production Year Ha Index (base 1975–1977 ¼ 100) 1975 8.300 109.2 1976 7.400 97.4 1977 7.100 93.4 1978 6.800 89.5 1979 6.000 78.9 1980 4.600 60.5 1981 3.600 47.4 1982 4.300 56.6 1983 4.400 57.9 Average 7.600 100.0 1975–1977 Average 5.800 76.3 1978–1980 Average 4.100 53.9 1981–1983 Source: Castellani 1985, p. 10
Ha 6.100 5.300 5.200 5.200 5.800 2.600 2.900 2.800 2.800 5.533
Index (base 1975–1977 ¼ 100) 110.2 95.8 94.0 94.0 104.8 47.0 52.4 50.6 50.6 100.0
4.533
81.9
2.833
51.2
(c) Technical means, which often had to be imported from abroad, to be made available to producers at more or less favourable conditions; (d) Priority to be given to the cultivation of bananas in the use of aid from one or more countries (or one or more international organizations) The companies which cultivated bananas were mostly of a considerable size and worked by waged employees and differed generally from most agricultural companies in the area, which were usually small or very small and run on a family basis. When the military regime proclaimed scientific socialism in 1970, the economy of bananas in the valleys of the two rivers was the most developed capitalist production in the whole country. Both labour and the agricultural land of the region, especially of the plantations, were highly commercialized. The plantation system in the south of Somalia provided an opportunity to put into practice “the received idea” of socialism. Following the principles of the doctrine, but also aware of the limitations imposed by the underdeveloped structure of the economy, the regime could have addressed the question of the plantations in a number of ways. It could have used the classic doctrinaire approach by simply appropriating the plantations and transforming them into farms. As an alternative, they could have gradually transformed these lands into firms producing food and made them almost public agencies by promoting self-sustainment and food selfsufficiency. Another possibility was that the regime passed legislation on agricultural work to increase the market power and well-being of agricultural workers. Lastly, an agrarian reform could have been introduced and put into practice. The military regime, surprisingly however, did not adopt any strategy of agrarian reform. Its first legislative act concerning the economy of the plantations was to transform the commercial apparatus of bananas that had previously been run by a
2.5 Banana Plantations: Profitable Agriculture or Not?
73
colonial organization and create a National Banana Board. Whatever its real function was supposed to be, it had little positive impact on the plantation economy. The production of bananas increased from 145,000 t in 1970 to 168,300 t in 1973, whilst the area cultivated grew from 6,500 ha to 9,500. This growth was the result of investments and improvements made before 1969 and immediately after the regime had seized power. The regime held all the main landowners in its power; and the state’s general condemnation of the formation of unions of independent workers and industrial action, together with the severity of military justice, prevented any possibility of progressive social improvement in the plantation economy. Working conditions were not very different from those during the period of colonization. Furthermore, the social relations and inherited property of the Italian fascist system still lay at the heart of the plantation system. The growth and expansion of the banana economy in the 1960s was followed by a downward trend in 1974. The area of cultivation diminished by more than 50% from 9,500 ha in 1973, the year in which it reached its maximum level, to 3,600 ha in 1981 (Table 2.10). The yield per hectare fell substantially until 1978–1979 and this reflects the state of extreme negligence experienced by Somali banana farming in the early 1970s. From 1979 onwards, however, the official statistics show a net inversion of the trend: the yields increased rapidly until 1983 when they reached values that were about twice those recorded in the 3-year period 1975–1977. This inversion in trend was due to a drastic decrease in the area cultivated with bananas between 1978 and 1981, almost indicating the will to abandon marginal banana plantations. Furthermore, there were new consistent investments made in the sector in the early 1980s, together with some radical changes in Somali banana policy. One of the most critical periods was in 1981 with 59,000 t, which was less than a third of the quantity in 1973. The collapse in production can be explained by a number of factors55: 1. 2. 3. 4.
The loss of technical skills, as a result of the departure of many Italian producers; An increase in the salinity of the soil, as a result of poor drainage systems; The lack of a good supervision of the soil; The poor use of fertilisers (about 100 kg per hectare as opposed to the standard of 800 kg per hectare); 5. Low export prices and the increase in internal production costs, such as packaging and transport. The economy of bananas was in a stagnant phase and in great difficulty in the early 1980s. The diplomatic break between the regime and the USSR in the late 1970s, the realignment of economic policy with the West and the adoption of structural adjustments as a strategy for development changed the destiny of the plantation economy. It was, in fact, in this period that the Somali government
55
Samatar 1994, p. 82.
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2 Analysis of the Economic System of Somalia
believed it was opportune to raise the purchasing price level of bananas for export and to radically modify the organization of the banana sector. These circumstances led to the beginning of a liberal economic policy, which called on Italian interests to start new negotiations with the government for private investment in the banana sector. As a result, the Somalfruit, a joint venture managed by the Italian De Nadai group, was set up in 1983. The De Nadai group took its name from the head of the family Guido De Nadai, who was invited by Siad Barre in 1980 to straighten out the economy that was almost on its knees. De Nadai invested 136 billion lire, levelled out land with a special laser machine, agreed on credit to farmers, provided the necessary agricultural machinery and invested in irrigation and marketing. Production increased from 40,000 to 120,000 t. Thus Somalfruit was set up with 51% belonging to the family, 20% to the government and the remaining 29% to the association of producers (143 firms). De Nadai also bought a share in the INCAS company which produced material for tinning and joined in the direct production of bananas in Lower Juba. Exports in the same year were entrusted to the De Nadai fleet which had 14 banana ships. With the outbreak of the civil war, however, almost all the firms in the Lower Juba were destroyed, putting Somalia back half a century. The De Nadai family continues to run what has become a multinational with interests and companies in the United States, Costa Rica, Chile, Turkey and the Philippines operating in the production and processing of fruit and refrigerated warehouses. Although De Nadai investments enabled a transformation of the plantation system and increased its profits, the benefits from the growth and expansion of the industry had only a little impact on the wellbeing of those who worked in the fields. The problem of the banana economy was that the greatest gains from the agricultural land went to the advantage of the older members of the old regime, Italian companies and less than 200 Somali owners. The production of bananas is highly intensive work and there are more than 15 essential tasks that have to be done regularly from the moment of planting to harvesting. Most of this work was done by children aged between 8 and 15. The large sums of money invested directly in the sector and the good will with which the cultivators planned to expand their activities indicate that the industry was heading towards better conditions. Without doubt, therefore, the plantation economy reacted in the best possible way to the economic crisis in Somalia from the 1980s onwards. The problems of the economy of bananas were not only those linked to stagnation, but also arose from the use of the precious, but limited irrigated land for exports, three quarters of whose value left the country. Theoretically banana exports helped to lift the economy of the country, but the advantages remained in the hands of foreigners. The economic impact of the industry on the accumulation of capital in the country was marginal and, in spite of the growth in banana exports, workers did not benefit from higher wages or better working conditions.
Chapter 3
Companies and Firms in Italian Somalia
The main objective of the SAIS was to create a real base for development, a school that was deliberately innovating and rich in human feeling, almost of a revolutionary flavour for the masses who approached the discipline, duties and rights of organized work for the first time.1
Colonisation and trusteeship were important stages in the Italian experience in Somalia, which can be observed through the story of Italian firms and their activities. However, their story has never been studied in literature in depth.
3.1
Towards Independence?
It was clear from the period of the Italian trusteeship that Italy would not be able to oversee the economic development of Somalia alone, but its task was seen to be the preparation and application of a set of norms to create the prerequisites for healthy economic development on a private basis. This involved facilitating the work of private entrepreneurs who were attracted to those sectors considered to be the most suitable and profitable, whilst discouraging schemes that were not convincing. These private businesses had to have sufficient economic means, be run by staff who were completely aware of the economic problems they would have to face and be capable of establishing the necessary international financial and commercial relations for the planned schemes. As a consequence, the “Compagnia generale africana”2 was set up with its own financial means to promote and guide schemes in the four sectors of agriculture, industry, trade and banking in Somalia, with branches in neighbouring African countries and in the areas of the Middle East on the Red Sea and the Indian Ocean.
1 2
Maugini (Societa` Agricola Italo-Somala) 1970, p. VII. ASBI, Banca d’Italia, Studi, pratt. n. 1004, fasc. 1.
D. Strangio, The Reasons for Underdevelopment, Contributions to Economics, DOI 10.1007/978-3-7908-2778-1_3, # Springer-Verlag Berlin Heidelberg 2012
75
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3 Companies and Firms in Italian Somalia
The company was formed with both the direct and indirect investment of Italian investors and took the form of a private holding that aimed to operate in a harmonious and coordinated way in the four distinct sectors and also in any other similar or collateral business that economic reasons and experience suggested as being suitable. The experience of the pre- and post-war periods had shown that private enterprise in the agricultural, industrial and commercial sectors was not able to produce efficiently or to pull through in moments of difficulty when it was isolated and organised in small units, as past Italian administrations had encouraged. In contrast, the most successful schemes were those organized on a solid industrial basis of an appropriate size which allowed risks to be spread across complementary and coordinated activities and was able to resist and recover from a crisis by introducing new programmes of production that were appropriate to the new situation. The best example was the SAIS, which had been founded by the legendary figure of the Duca degli Abruzzi and whose agricultural, industrial and commercial activities were centred on the Villaggio Duca degli Abruzzi. It represented in great part the new Somali economy. The “Compagnia”, therefore, relied at first on the group of firms represented by the SAIS and its subsidiaries to extend its business. The SAIS ran a large agricultural business on an industrial basis, whilst the real industrial sector was run by the Societa` Saccarifera Somala and the commercial business by the Societa` Commerciale ItaloSomala which worked through numerous Italian and foreign firms.
3.2
The Societa` Agricola Italo Somala
A description of colonial agriculture will help us to understand the connection between colonialism and the main problems that still plague the country today. The first attempts to exploit Somali agricultural resources date back to the end of the nineteenth century, but it was only 30 years later that this work produced results and was integrated into the local economy. In the period between 1893 and 1896 southern Somalia was administered by a concessionaire company, the Compagnia Filonardi, which was primarily interested in the administration of ports and the control of trade.3 The Company soon went bankrupt, as it was unable to cover the costs of what amounted to a paramilitary presence in the country to impose its authority on the local population. The Societa` del Benadir, which was supported by some industrialists interested in the production of cotton, took over from the Compagnia Filonardi. They were hoping to invest in and develop agriculture as well as collect the revenue from the taxes levied on trade. But the Societa` Benadir soon found itself faced with
3 Varotti A (1989), Il ciclo del mais nell’economia somala: strutture aziendali e dinamiche nell’agricoltura del Basso Scebeli, Gangemi Editore, Roma.
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77
insurmountable problems in starting small scale private agriculture and the Somali economy basically remained unchanged. This led to the end of this form of administration in 1905 when the Italian government took over direct responsibility for the Somali colony. In the following years the Italian government started it first attempts to promote agricultural development. Between 1907 and 1909 concessions of about 45,000 ha were granted to Italians along the Jubba and Shebelle Rivers. As a result 15 concessions of a considerable size were created, but within a few years, in spite of a very favourable contract, about half of these companies were abandoned. The contract, in fact, was supposed to last 60 years and the concessionaire was obliged to cultivate only 20% of all the area within 5 years. He was exempt from paying taxes for 5 years and later would have had to pay a very low rate for the following 20 years. However, the failure of these settlements can be explained by the inadequate economic potential of the single firms to face the enormous investments necessary to start production and the marked lack of infrastructure at the time. In 1912 the Azienda sperimentale (Experimental Company) was set up, which started a systematic investigation into agricultural and livestock resources in the Genale area and studied the main economic and technical problems of Somali agriculture. This phase of experimentation was followed by another marked by the Italian administration’s growing awareness of the need to intervene with more financial means in the agricultural sector, to reclaim more land and create new transport infrastructure to ease the difficulty of reaching the coast. As a result it was hoped after the war of 1915–1918 that a land reclamation firm could be set up to invest in and develop agricultural production. Whilst travelling in Africa in 1918, the Duca degli Abruzzi4 spent a lot of time in Somalia where he was very taken by the population and the countryside. He came across land near the village of Giohar-Eilo in the Scidle region5 that could be easily exploited and was suitable for a big agricultural company, especially as a large workforce was available. The Duca immediately realized that it was essential to establish cordial relations with the local chief and the leading figures in the area as he would have to negotiate an agreement on the question of the availability of the land over a long period of time. One thing was clear: the need to start some basic works. In November 1920 the SAIS was established with limited liabilities, which obtained a concession of 25,000 ha from Somalia in a very fertile territory on the two banks of the River
4
Luigi Amedeo di Savoia (Aosta), Madrid 1873 – Villaggio Duca Abruzzi (Somalia) 1933. Naval officer, mountaineer, explorer: Monte S. Elia, Alaska 1897; Arctic polar expedition on the Stella Polare, 1899–1900; Ruwenzori, Uganda, 1906; Karakoram (Indian Empire, 1909; sources and course of the River Shebelle (Ethiopia-Somalia), 1928–1929. 5 Scidle was an area in the district of Mahaddei Uen (Middle Shebelle basin) of approx. 1,000 km2, inhabited by a population of freedmen along the rivers, with 23,000 inhabitants in 49 villages close to and 25 far from the river; today, the same name indicates more or less the area between the villages of Baarow Weyn to the north and Xawaadley to the south.
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Shebelle. Its aims were clearly expressed in article 3 of its statute: “The objective of the Societa` is to enhance a part of the Scidle Region on the River Shebelle and transform the present cultivations into large scale crops in order to help the Motherland and to stimulate the potential wealth of those lands”.6 A main irrigation canal was built, 6 km long and 450 m wide, from which secondary canals branched off towards the single farms. The flow of water was regulated by a damn. At the same time woodland was transformed into a cultivable plain served by canals and roads. The S.A.I.S. land had an internal network of 148 km of roads and was divided into seven farms,7 each of 1,000 ha that included market gardens, nurseries and experimental fields. The project immediately got underway under the personal direction of the Duca, who was president and chief executive of the company. In spite of the optimistic start, there were fears about the success of the project from the very outset, because of the distance from Italy, the slowness of sea transport, the precarious nature of land transport, as well as thousands of other environmental difficulties aggravated by the general lack of organization in the colony. The expenses for the initial works had also been much higher than estimated in spite of the help given by the Italian government in granting war surplus and other left over material to Somalia. The S.A.I.S. was the first company in Somalia to tackle the complex organizational problems of a big firm and its interests gradually extended from purely productive questions into the social, civil and human sphere. Consequently, schemes were organized to establish new working relations with the Somali workforce, introduce the cultivation of cane sugar and many other crops, such as cotton, peanuts, bananas and maize, over vast areas, set up sugar refineries, conduct experimental research on a wide scale, mechanize agriculture and introduce the processing of products (oil mills, distilleries, shellers for cotton, hand operated shellers for peanuts, soap factories). It was the Duca himself8 who personally tried to solve the problems of river transport by creating some weather stations and making hydrometric studies on the average flow of the river and the composition of the water at various times of the year. He was also involved in the commercialization of bananas as soon as mass production became a real possibility. But, without doubt, what was most striking was his commitment to the social and human aspects of the programme, as he was convinced of the importance of the psychological reflexes the new forms of agricultural work would have on the Somali and the need to maintain excellent relations with the Somali leaders of the area. His first objective was not to create an agricultural firm, as many already existed, but to create a real base for development.9
6
From the “Statuto 1920-21”, printed in Turin, cited in Milanese 1995, pp. 67–122. ASBI, Banca d’Italia, Direttorio-Formentini, cart. 11, fasc. 2. 8 ASBI, banca d’Italia, IspGen 385, 6, Mogadiscio 1934/1952). 9 Maugini (Societa` Agricola Italo-Somala) 1970. 7
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On his death in 1933 his project was widely praised and acclaimed; it was acknowledged that “the company had, among other things, offered workers the possibility to evolve, to get to know themselves better, to improve themselves, to favour the movement of the more talented and ambitious from the humble beginnings as farm workers and herdsmen to tractor drivers, mechanics, irrigation workers and other positions at higher levels”.10 The numerous successes obtained are to be attributed to Luigi di Savoia and his strong belief, mostly put into practice, that irrigation could succeed in compensating for the lack or irregularity of rainfall and that water could be found in the area near to the farms by drilling wells. In this way it was possible to breed animals for use in agriculture, which, together with machinery, could increase yields and lighten the workload. Lastly, he was convinced that monoculture had to be abandoned and a wide range of crops introduced, without neglecting animal husbandry, and all should be accompanied by an adequate industrial organisation to obtain the best possible processing of products. These innovations led to the success, improvements and survival of the SAIS.
3.2.1
The Expansion of the SAIS and the Work of Luigi di Savoia
At the beginning of the activity of the firm, the main crops were cotton, cereals and forage for animals. After 1925, as cotton prices remained low, the production of sugar cane was increased in order to reduce the technical risks of monoculture, in spite of a new line of action in Italian economic policy which aimed to increase the area of cereal production.11 Another fundamental change took place as farm animals were gradually replaced with machinery, which left most of the area used to cultivate forage free. This period of reorganisation around sugar cane and cotton, together with some oils and, of course, cereals for subsistence, was interrupted by the war in Ethiopia, which not only disturbed the fragile economy of the country, but also significantly changed expectations and prospects in the new Italian East Africa. This situation lasted until the beginning of the Second World War and the British occupation. The history of the company up to the Second World War can therefore be divided into three periods: land reclamation and setting up (1922–1926); the changeover from cotton to sugar cane, with growing mechanization; stabilization after 1936. When Luigi di Savoia died in March 1933, the company had already reached an economic and financial equilibrium and, alongside the usual crops,
10
Ibidem, p. XI. This happened because often the increase in the area cultivated with cereals following the government’s policy was at the expense of sugar beet.
11
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bananas had been introduced for exportation.12 The main innovation of the company was the great moral effort and creativity with which Luigi di Savoia managed to solve problems by finding new opportunities for production and alternative crops.
3.2.2
The Problem of Employment and the Workforce
The company was run by a body of about 80 white members of staff, all Italian.13 The native workforce was mostly nomadic and therefore varied according to the season. During the preparatory work (deforestation, tillage, building) the flow of workers was promising and they seemed to easily adapt to the new jobs. The freed workers, who used to farm the land for their masters and receive in exchange what was necessary for their subsistence, continued to farm, but produced just what was necessary for their own consumption. Later, it became increasingly difficult to find workers for both the building work and for the first crops, as bad weather caused health problems and many farmers returned to their place of origin. As had always happened in Somalia, when workers earned sufficient money, they tended to return to their home village either because they were homesick or simply wanted a change, perhaps even at the most crucial of times, as for example during the sowing or harvesting seasons. The personal influence of the Duca over the population was more often than not sufficient to solve these difficulties. At other times, however, the government was asked to help with the compulsory recruitment of workers and with the reorganization of the company, as for example, with a declaration of the public utility of the work undertaken, which gave greater control over the situation of the workforce that was available locally. It became immediately obvious, however, that some new form of collaboration had to be worked out, or better defined, to avoid differentiation between the local people of the ‘pact’14 and the new arrivals who were either permanent or seasonal. The farm contract, applied from 1924 onwards and changed marginally a few years later, succeeded in overcoming the doubts and diffidence of the early years and created new equilibriums which guaranteed a workforce for many years, also thanks to growing mechanization and agricultural and industrial development.
12
For reasons of organization and the vicinity of the port of Merca the banana plantations were concentrated in Genale. 13 ASBI, Banca d’Italia, Studi, pratt., 1005, fasc. 5. 14 A ‘pact’ with the heads of villages had been signed on March 19, 1921. Certainly it led to contrasting interpretations and was perhaps the result of excessive optimism on the part of Luigi di Savoia.
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The contract, however, has been the object of harsh criticism and considered both ‘slavist’ and ‘paternalist’.15 Given these premises, a great improvement was inevitable. The contract was considered the best form of management that could be chosen at the time of the creation of the firm. But it had to be adapted to the local way of thinking and allowed to evolve as farming techniques and new needs emerged with the rapid economic changes resulting from the development of the SAIS. This meant that the level of the total family income was taken into consideration. Within a short time (4–5 years), in fact, the economy moved from a subsistence level that generated occasional surpluses which were cornered by Somali masters or Arab traders, to a good mixed remuneration partly in money and partly in kind, with the possibility of actually saving. It was necessary therefore, on the one hand, to stop the flight of workers as soon as they reached a certain amount of money and, on the other, to find contractual conditions and other incentives that would lead to the shaping of a new mentality and new working habits as the development of industrial farming and better yields of cereals increased food security and monetary income (health assistance and hygiene provisions, opening of shops, credit concessions, primary schools, educational opportunities, etc.). As many women were part of the workforce, especially during the cotton harvest, the management of the Societa` wanted to enhance the work of women with special rewards and other means that were, however, said to be rather insignificant.
3.2.3
Agriculture and Types of Crops
A careful analysis of SAIS’s agricultural and, in parallel, industrial activities during its fruitful existence, reveals at least four distinct phases, which correspond to four historical and political periods: an initial period of building and early management from 1920 to 1940; a period of depression from 1940 to 1950 following the Second World War and British occupation; a period of recovery that coincided with the Italian Trusteeship of Somalia between 1950 and 1960; and the last phase of independent Somalia that ends with the creation of the S.N.A.I. in 1963. The various technical and social problems the SAIS had to deal with were mostly caused by the continuous need to adapt its activities to the periodic changes in the general situation. In the early years the company concentrated on just a few main crops that could guarantee large exportable production and on maize, which was essential for the daily diet of farming families. Cotton continued to be one of the fundamental crops for the Societa`, though at times the area cultivated decreased, whilst sugar cane
15
Milanese 2007, pp. 201–230.
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3 Companies and Firms in Italian Somalia
became increasingly important. In 1927 620 q of sugar cane were produced in an area of 154 ha for the first time and in 1928 more than 500 ha were cultivated with production levels reaching 10,000 q of raw material. The Societa` Saccarifera Somala (SSS) was created with capital amounting to 3,200,000 lire,16 paid equally by the SAIS and by the Consorzio Nazionale Produttori Zucchero (National Consortium of Sugar Producers) in April 1926 in order to process the cane directly on the spot. The area of production gradually increased to stabilize at a level that was suitable for the needs and capacity of the industrial plant. Numerous changes also took place in the cultivation of bananas. In 1933, following the Consortium’s success with exports, its trade organization and transport system, the SSS was taken over by the Societa` Anonima Visconti of Milan which after just a few months sold it to two companies, the Societa` Anonima Banane Italiane (SABI) and the Societa` Anonima Navigazione Italo-Somala (SANIS). SABI was responsible for purchasing the product in Somalia and its sale in Italy and was granted a monopoly by the government. The other company, SANIS, was responsible for the transport of the fruit to Italy. The binominal SABISANIS worked well with a continuous increase in the quantities of bananas exported until January 1, 1936, when the whole organization was closed by the government and replaced by the Regia Azienda Monopolio Banane (Royal Banana Monopoly Company). In the same year a banana lot of 495 ha was granted to the SAIS at Berdit in the Genale area to produce bananas that could be exported through the nearby port of Merca. With Decree of May 23, 1939, no. 117, the SAIS then became part of the export trade of the “Consorzio di Colonizzazione” (Consortium of Colonization), which had been set up in the area. As a consequence, from 1936 onwards the production of bananas for exportation was gradually abandoned at the Villaggio Duca degli Abruzzi, with just a few hectares left for internal consumption, and transferred to Berdit. This concession was officially granted with the Governor’s Decree of March 31, 1938 no.13501/02 and therefore became free property with the AFIS decree n.2 of February 1952.17 The difficult political situation in Somalia after the war, aggravated by uncertainty about the future of the country, led to clashes between the local population and resident Italians, who by now had considerable influence over the economic development of the company. The company therefore studied a plan of adaptation to the new economic situation which included a reduction in the white personnel and the mechanization of the various crops, but it came up against a number of difficulties in finding workers to replace old staff members.18 During the Trusteeship the country made a good recovery from the disastrous conditions it had been left in after almost 10 years of British occupation, first
16
Lavoro e sperimentazione agricola in Somalia 2000. Maugini (Societa` agricola italo somala), p. 73. 18 ASBI, Banca d’Italia, Studi, pratt., n. 1005, fasc. 5. 17
3.2 The Societa` Agricola Italo Somala
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military and then civil. The SAIS immediately felt the benefits as the political situation stabilized, the regulation of the local workforce was normalized, credit and other banking services were reopened and Somalia was introduced into the international aid system. At this moment of great economic recovery for the country, the company had to decide about the numerous projects necessary for the reclamation of land and agriculture, which had suffered the most from the state of abandon resulting from the shortage of workers and the reduction in the area cultivated. In the cotton sector, work began in a climate of great optimism. The Korean war was continuing with its ups and downs which kept prices at the high level they had reached in the world market the year before. The SAIS extended its cotton production in collaboration with Somali farmers, but also extended its own production as far as possible, which was certainly more productive, though more burdensome than previously. The year 1951–1952 was a rather promising year. In response to the high prices of cotton, about 20,000 ha were sown in Somalia, of which 2,300 directly by Italian companies and the rest in a system of collaboration with Somali farmers. However, the results were generally mediocre or disappointing and only the persistence of favourable prices meant that there was some hope of recovering losses in the following years. But in 1953 the situation changed for the worse. Peace in Asia, the beginning of a period of relative stability in international relations, the selling off of cotton reserves accumulated in the years before the threat of war, all brought the quotations for cotton to such low levels that cotton production in Somalia was no longer in a position to survive. The crop was therefore practically abandoned. But there still remained the need to maintain a crop other than sugar cane for crop rotation and therefore in 1951 the SAIS had restarted its production methodically by applying rational farming principles and the latest techniques to fight parasites. In spite of the persistence of modest prices, the areas cultivated with cotton testified to the enormous and constant efforts of the Company in the last years of the decade which proved that the cultivation of this plant could still be profitable, on condition that it was looked after following modern and rational principles. In this sector, therefore, the SAIS once again led the country with its example of financial sacrifice and enterprise for those who wanted to draw inspiration. The figures for the areas cultivated year by year show that sugar cane did not increase consistently over the decade of the trusteeship. However, by the year 1954–1955 the quantity of land cultivated was actually twice that of the previous decade and sugar cane farming was being developed in all its aspects, which led to a very strong increase in the production of sugar. Maize, which had been completely abandoned in the early years of the trusteeship, was re-introduced, though in small quantities, on the advice of the general wheat policy authorities which wanted to create reserves for the civil population. In the banana sector exports had been interrupted by the outbreak of war, but were started again in 1948 thanks to the determination of Italian agriculturalists who had survived the long depression in the economy. Production was once again
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3 Companies and Firms in Italian Somalia
organised in a collective form, with businesses joining the Societa` Anonima Cooperativa Agricola (SACA), which had been set up in 1943 in the Genale area and to which the SAIS belonged with its company at Berdit, whilst those in Jubaland were part of the Societa` Agricoltori Giuba (SAG) set up in 1945. The SACA wanted to be a model and practical school for business in the country and, together with its sister company, the SAG, enhanced the work of Italians in Somalia19 by: 1. Creating jobs and livelihoods for local people, including Italians; 2. Providing significant revenue for the Italian trusteeship with the payment of customs duties on exported products and various imported materials, the payment of taxes for loading and unloading, voluntary contributions (3 lire per kg of fruit exported) and revenue from income tax which was to be introduced shortly; 3. Helping the AMB in Italy to earn about 2 billion lire annually with the price differential on the sale to sellers of the exported bananas which, once it was handed over to the Italian tax offices, greatly eased the burden of the enormous amounts of money Italy spent in Somalia annually. The reopening of exports was accompanied by the re-establishment of the trade and sales monopoly through the creation of the Azienda Monopolio Banane (AMB). For these reasons the SAIS gradually increased the area cultivated at Berdit up to the maximum capacity for the company and the quantity of bananas that could be exported as fixed by the SACA. The SACA successfully developed the Genale area, which had been completely destroyed by the impounding and confiscation of agricultural machinery and Great Britain’s harsh war policy. Through its tenacious preparation both in the actual work of the companies and in the political field at Mogadishu-Nairobi and Rome, the SACA succeeded in re-organising what had been the most successful activity in earlier times: the exportation of bananas from Somalia. But it was exactly on this point that many criticisms were lodged against the SACA and the SAG, claiming that they had become fossilised in the cultivation of bananas because they held the monopoly. The President of the SACA, Falcone, writing in the Meridiano Somalo,20 stated that this was not true, as it had been shown on numerous occasions how Italian agriculture at Genale was not limited to the monoculture of bananas, but also included the production of other crops. The case of the SAIS, however, showed how difficult it was to obtain high and consistent levels of production because of the frequently disastrous and irregular supply of water in the River Shebelle. In the attempt to remedy these difficulties it was decided in 1953 to build a reservoir basin of 75 ha, the equivalent of 500,000 m3 of water, and therefore capable of guaranteeing the existing banana plantations
19 20
ASBI, Banca d’Italia, Studi, pratt., n. 1005, fasc. 3. Ibidem, p. 8.
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a couple of emergency irrigations, but it was not very successful. As a consequence, a new and more appropriate location for banana production had to be found that could regularly cover the large quota of exports assigned to the company. Investigations and studies led to the takeover of the Societa` Romana di Colonizzazione in Somalia based in Belet Amin on the Jubba in August 1957 and to the project, approved by the governmental organs, to transfer the SAIS banana production there and leave Berdit to other types of production. The business in Belet Amin was one of the oldest concessions in Somalia and had always produced cotton with only a small area for the cultivation of bananas. Apart from the business proper, the SAIS also bought land in Giamama (Margherita) on which the Societa` Romana had built an extensive industrial complex for the stockpiling and shelling of cotton. Traces of the SAIS’s new plan can be seen in the annual investment figures referring to Berdit which recorded the progressive reduction in banana production from the year 1956–1957 until its disappearance in 1958–1959. From this year onwards banana production did not appear in the SAIS’s agricultural plans and statistics, except for a very small quantity for internal consumption. The Societa` Romana, though largely the property of the SAIS, did in fact have a separate administration and therefore everything concerning the SAIS group’s activity, including banana production, was the subject of reports external to the company’s affairs at the Villaggio Duca degli Abruzzi. However, the “BANANSOMALA” company, a cooperative for the export of bananas and Somali agricultural products with limited responsibility, was created by Law no. 7275 on March 25, 1958 with its base at Merca.21 In the decade of the Italian trusteeship the problem of the workforce improved over the whole country and also for the SAIS. This was thanks to the thoughtful and decisive action taken by the AFIS following the recommendations of the United Nations Protection Council to regulate employer-employee relations from all points of view. Within the SAIS the system of co-partnership was stopped, because of the new political and social situation and because of the changes that had taken place in the company’s strategy. The cultivation of sugar cane required, as did other crops such as cotton, peanuts and bananas, intense and careful procedures which meant Somali farmers could be involved only under the direct control of company experts. However, from the early years of the exceptional development of cotton in Somalia onwards, the company still maintained the system of co-partnership with cotton farmers in a vast area that covered the Middle and High Shebelle, Dafet and the regions of Baidoa and Bur Hakaba, investing large amounts of materials and money. Following the changed market conditions for cotton, the system was progressively reduced to within the limits of the traditionally favourable areas for its cultivation and continued, with ups and downs, without any excessive efforts
21
Bollettino ufficiale della Somalia 1957–1960.
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Table 3.1 Workforce employed in agriculture
Year Agricultural jobs 1951 450,200 1952 570,800 1953 446,700 1954 527,152 1955 578,211 1956 577,103 1957 494,848 1958 590,884 1959 593,072 1960 448,388 Source: Maugini (Societa` Agricola Italo-Somala) 1970, p. 92
needed by the company. In 1957 a centre for the harvesting of cotton was set up in Berdit after the end of banana production. As proposed in the new productive plans of the company, mechanization in the agricultural and industrial sectors was intensified during the 10-year period of the trusteeship. The flow of workers towards the company’s own production was satisfactory over the 10-year period and did not cause any significant problems. The number of workers in agricultural jobs in these years was as follows (Table 3.1): One problem that persisted, however, was the obsolescence of machinery, so that studies were made into how local entrepreneurs could be used to prepare the land until investments could be made in new machinery. From 1951 a mechanization scheme was implemented in all parts of the company, which continued until September 1956 and concerned not only the agricultural, but also the industrial, transport and general services sectors, for a total cost of 16,265,302 somali.22 In the same year, following the results of a study conducted in the sugar cane areas in the south of the United States of America, equipment was purchased for the mechanical harvesting of sugar cane to solve the problems caused by the frequent fluctuations in the workforce. There were also considerable improvements in fertilizers.
3.2.4
Independent Somalia and the Transformation of the SAIS into SNAI 1960–1963
By the end of the fourth decade of the company both the SAIS and Somalia had entered a phase of great change.
1 somalo ¼ Lit. 87.50. The somalo was replaced by the Somali shilling, of the same value, with the Legislative Decree no. 294 of 20-12-1962. See Strangio 2010.
22
3.2 The Societa` Agricola Italo Somala
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Italy had begun introducing Somali officials into state affairs from 1952 onwards, which led in 1956, somewhat earlier than planned, to the formation of a Somali government endowed with sovereign and independent powers in order to promote and establish the political and economic institutions that were a prequisite for a modern state This strategy, which was widely praised internationally, led to an ever growing group of Somali executive officials being trained and gradually placed in the leading positions of responsibility. Elections were called to form the government organs, local leaders were taught and helped in international relations and given greater powers. And lastly, the laborious procedures necessary for the passage from the old to the new order were started under close guidance in order to avoid the risk of continuity that would have endangered the public and private life of the country. These fundamental political events were accompanied naturally by a very important series of economic measures which aimed to guarantee assistance from friendly nations, and in particular Italy, in its first steps as a new independent nation. Many measures were taken by the United Nations and by the European Economic Community to provide technical and financial aid. Italy cancelled the deficit of the state balance of payments at the time of the transfer of powers and Italian public bodies handed over the ownership of a lot of equipment and property in Somalia (INCIS, INAIL, Cassa per la circolazione monetaria della Somalia, etc.). Furthermore, Italy was to continue to provide technical assistance with 250 experts with various skills until 196523 and also to purchase growing quantities of Somali bananas with preferential treatment at least to the end of 1965.24 Independence was achieved in a climate of general collaboration, without any incidents. A smooth changeover also took place within the SAIS, even though at a later time the ferment created by the new political situation gave rise to a series of union claims by company workers. It led to the signing of a collective contract with the Somali Confederation of Workers, which came into force on June 1, 1961 and inevitably produced increased costs for the company. In the meantime two interesting schemes were started with broad social and economic repercussions. The first concerned the selection of local personnel to continue the gradual Somalisation of services throughout the agricultural and industrial complex by organizing special courses and encouraging Italian employees to help train Somali workers. The second scheme concerned an extension of the plant to enable the company to face the growing demand in the country as well as covering most of the needs of the ex-Somaliland that had joined the new independent Somali state. This scheme, however, required a large amount of capital and consequently needed adequate guarantees of the lasting economic viability of investments, that is, in practice, whether the sale price of sugar would be sufficient to cover all production costs.
23 24
The period was extended to June 30, 1967 and then to the end of 1970. This period was also extended, first to the end of 1967 and then to the end of 1969.
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3 Companies and Firms in Italian Somalia
On more than one occasion the Somali authorities had asked for a reduction in the sale price of sugar cane, not only independently of any reduction in production costs that could be achieved only through the extension of the plant, but also without considering the substantial increases in the costs of all the factors of production, especially labour, recorded in that period. The situation worsened drastically as a consequence of the Decree of the President of the Somali Republic on March 31, 1962 that came into force on April 15, which led to the price of sugar being reduced by a third, falling from 130.90 somali to 88 somali per quintal. This price was then applied not only to the present production, but also to the enormous reserves that had been lying in warehouses for some time. It became immediately obvious that the social policy of the company could no longer be continued. As a consequence, whilst the management began to prepare its case to show it could not objectively bear the costs of applying the Decree, emergency measures were taken to deal with the situation and drastically limit expenditure in the complex business organization until a solution to the crisis could be found and thus avoid the irreparable damage the end of sugar production would cause the company and the whole country. These measures included the dismissal of Italian and Somali personnel, the cancellation of development plans and new schemes and a marked reduction in all activities. Only the sugar cane that was already in the fields was to be cultivated for immediate use and the sale of sugar was suspended, whilst waiting to know the outcome of the request for a price revision. Even in the tense situation created by these events, the SAIS managers succeeded in keeping alive discussions with the Somali authorities which, in the meantime, were coming round to the idea that it was inopportune and dangerous to depend exclusively on imports to satisfy the sugar needs of the population and that local production should be progressively expanded to reduce costs and cover growing levels of consumption. As the risk of the company totally abandoning its incalculable economic and social work after so many years of activity became more urgent and after long and laborious negotiations, it was proposed that a new company be created to develop the sugar industry, to which the SAIS would transfer its complex of agriculture and industrial plants located in the Villaggio Duca degli Abruzzi. The conditions of the cession were undoubtedly a big loss for the company and its shareholders because the real value and the cost of setting up the business was much higher than the price that had been agreed. Nevertheless, this was considered to be the best solution because it safeguarded both the interests of the shareholders and the objectives the Somali government intended to reach, as well as reflecting the original wishes of the founder of the SAIS. This solution was made operative with a convention signed at Mogadishu on November 3, 1962 with the Somali government and these were the main points25:
25
Maugini (Societa` Agricola Italo Somala) 1970, p. 99.
3.2 The Societa` Agricola Italo Somala
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1. Commitment on the part of the Somali government to create or promote the creation of a company for sugar production in Somalia by December 31, 1962 to be located in the area of the Villaggio Duca degli Abruzzi and its agricultural and industrial facilities at a price of 30,000,000 somali. The new company was to start its business on May 1, 1963. Half of the payment, i.e., 15,000,000, was to be made in cash and the remaining half in shares of the new company at their nominal value and for a quota of 50% of share capital. The SAIS was authorized to immediately transfer to Italy all its assets after all debts had been paid and to remain as a partner for 50% in the new company. It was also obliged to transfer to the Somali government a minimum of 60% up to a total of all its shares in the company at their nominal value if asked within 5 years. 2. The following were excluded from the cession: (a) The reserves of sugar produced before April 30, 1963, as well as other products in the warehouses on that date, and the fuel, oil and other goods held in deposits; (b) Property of special historical or religious significance, such as the palace of the Duca degli Abruzzi and its museum, including the garden, the Catholic church, the rectory, the nuns’ convent, the grave of the Duca and the Catholic cemetery. These were donated to the Sovereign Military Order of Malta which operated in Somalia giving assistance. (c) The “A.Cecchi” and the “Luigi di Savoia” hospitals and their services and the primary school which were to be donated to the Somali government. 3. From the date of the signing of the convention, that is November 3, 1962, the price of sugar, which had been lowered to 88 somali, was increased to 110 somali by changing the tax on manufacturing and the customs on imports without any negative repercussions for the consumer. As soon as the convention was signed and the new price came into force, the SAIS withdrew its appeal to the supreme court. 4. When the SAIS took over 50% ownership of the shares in the new company, the Board of Administration was made up of an equal number of members appointed by the two parts, whilst the president and the managing director were chosen by common agreement. 5. The administrators and managers of the new company had to follow strictly economic technical and organizational criteria. Given these premises the Somali government set up the Societa` Nazionale Agricola Industriale (SNAI) with 1,000,000 somali and it had the basic task of continuing sugar production in Somalia, initially relying on the already existing facilities in the Villaggio Duca degli Abruzzi and later promoting their expansion. The capital was later increased from 1 million somali to 30 million somali, divided into 300,000 shares of 100 somali each, half of which remained in the hands of the SAIS as established in the agreement. On April 30, 1963 the transfer of the SAIS’s agricultural and industrial plant and the materials, stocks and spare parts kept in the warehouses was completed, so that
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the SNAI could start its work without delay. On May 11, 1963 at Mogadishu, the formal act of donating the property of special historical and religious interest mentioned above at point 2b was signed. Once these obligations of the convention were fulfilled, some practical problems were solved in a spirit of collaboration and reciprocal trust so that the operations to settle questions between the SAIS and SNAI could be completed more quickly. These measures included the sale of the stocks of sugar in the SAIS warehouses and technical assistance for the expansionary plan of the SNAI. The SAIS, in fact, willingly collaborated by preparing a detailed programme for the integration of the existing plant and then giving it to the SNAI which was very appreciative. This form of assistance and collaboration, together with the decisive financial collaboration of the Banca Nazionale della Somalia, produced excellent results in a short time. By the end of July 1965 the new company was able to complete the extension of the sugar factory to guarantee sufficient production to cover the internal demand for sugar. The new Chief Executive, Ahmed Dahir, stated in his inauguration speech at the sugar factory, which was reported in the Corriere della Somalia on August 1, 1965, that: “From today we are beginning an annual production of about 400,000 q of sugar, knowing full well that domestic consumption is about 300,000 q a year. The number of specialized workers will be increased from 800 to 1,200 units and an increase in agricultural employment from 2,000 to 4,000 units daily, with obvious advantages for the well being of neighbouring communities. We will sell the excess production in the international market, thus guaranteeing the country a good inflow of currency and contributing to an improvement in our balance of payments”.26 In its first year of activity, 1966, even though it only reached 200,000 q of sugar, a significant increase in production was recorded, thus confirming the forecast of a growth trend. The SNAI was nationalized on May 7, 1970. The SAIS in its long experience up to 1970 had succeeded in giving an industrialized and modern form to sugar production in Somalia, so much so that from 1954 onwards, for a few years the sugar produced in the Villaggio Duca degli Abruzzi had made Somalia self-sufficient in this sector. Naturally this production was not the only one to record a net improvement. The SAIS was an important perpetrator of progress for the country and its importance came from the deep significance of its many works, which were often much more than of a purely economic interest. From a social point of view it constantly followed a policy of uplifting Somali workers by ennobling the agricultural activities of their families and by providing and stimulating at the same time the production of more agricultural food for direct consumption that benefitted the general state of health for many years. In the civil evolution of the country the SAIS played an important role in opening, perhaps for the very first time in the history of Somalia, a dialogue
26
Lavoro 2000, p. 36.
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based on respect, dignity and collaboration with the Somali people. This dialogue started with the Duca’s first individual contracts on land and labour problems and developed along democratic lines. One noteworthy example was the agreement made with the cabila of the Ualamoi on August 17, 1952 about the northern borders of the area and the creation of the “Advisory council” with Somali as members to find a solution to problems of common interest to the SAIS and the local population. There were many services and agricultural, industrial, mechanical and building activities that the company maintained for more than 40 years. It is worth remembering that it started from a situation of total backwardness and ended by employing a large number of Somali workers who, thanks to good professional training, became increasingly specialized in a number of activities. The contribution of the company to the economic development of Somalia is proof of how much direct action through capital investment and inventiveness can exploit the resources of an environment that, no matter how difficult it may be to manage, can morally and socially lift up a population, and which, in this case, had been desired for such a long time. With his work the Duca restored trust in the belief that the agricultural resources of the country could be successfully exploited by Italians with positive effects on the economy and standards of living of the local population.
3.3
The Societa` Saccarifera Somala and the Importance of Sugar
As mentioned above, the main industrial activity of the SAIS was sugar cane. Most of the finance came from the Societa` Saccarifera Somala27 (SSS), the sugar refinery that was created and managed by a subsidiary of the SAIS. A periodical fee was paid to the SSS for the management of the sugar factory. The sugar refinery with its distillery, which was run directly by the SAIS, could process 3,500 q of cane a day and an annual production of about 60,000 q. Although we have already discussed the role played by this company, especially in view of its importance within the SNAI, it is worth remembering a particularly prestigious project realized during the Trusteeship between 1952 and 1953. This project was very important locally and concerned the setting up of a promotional committee for “SUGAR GIUBA Co.”, which laid the foundations for the building and running of a new sugar refinery on the banks of the River Jubba for export and, if necessary, the integration of domestic demand when the SAIS refinery could not satisfy it. The proposal for the project pointed out first and foremost how the tropical climate of Somalia and its environmental conditions had always encouraged the
27
ASBI, Banca d’Italia, Studi, pratt., n. 1005, fasc. 5.
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3 Companies and Firms in Italian Somalia
native populations, with Arab and Indian infiltrations, to make great use of sugar. The people living along the long coastal area on the Indian Ocean had appreciated the use of sugar, especially with tea, coffee and other various uses, for centuries. In 1925 it was calculated that Somalia, with about one million inhabitants, consumed less than 30,000 q of sugar a year. Then as Italy intensified its economic and social activities and created a local sugar refinery, consumption increased to more than 80,000 q a year in 1939 for a population of about 1,500,000. In this way the consumption of sugar increased from 2 kg to about 5 kg per person a year over a 15 year period. Consumption had been limited to about a half of that during the war and for a few years after, obviously because of the economic difficulties facing the population. In 1951, in spite of all the problems connected with availability, currency and transport, consumption reached almost 90,000 q. Even a price increase did not limit consumption: the price of locally produced yellow sugar in warehouses increased to 171.25 somali a quintal, and imported white sugar to 211 somali a quintal. The strong demand of consumers and a shortage of sugar often led to a black market for this product. In the peripheral areas, in particular, prices became uncontrollable and the retail price often exceeded 3 or 4 somali a kilogram. When the supply of sugar became sufficient to meet the demand in the country and the retail price settled at the local price marked up to include the right percentages for transport, traders and reasonable taxes, the consumption of sugar in Somalia exceeded 50/60,000 q, a quantity that was not to be surpassed in the future. The closest sugar refineries were in Kenya in Nairobi and Kisumo, which could not produce sufficient amounts for the needs of their markets. Others were in Uganda and in Tanganyika, but they too were inadequate for domestic demand. The construction of the large sugar refinery on the Jubba, given the new and old economic relations that had been established following the war, had a number of objectives: 1. To satisfy the country’s demand for a first necessity good; 2. To supply nearby markets by land, such as South-east Abyssinia with profitable exchanges and good neighbourliness. Given the short distance to Kismayo it would be easy and economic to supply the coastal towns in the area up to the Red Sea and Persian Gulf, guaranteeing competition in a the vast hinterland; 3. To use the natural, more favourable conditions in Somalia for a first necessity industrial crop, which could be integrated into the economy of the European agricultural firms that were already equipped to rapidly supply the necessary cane to be refined, as experimentation had already proved; 4. To guarantee the Somali government a considerable source of taxation, to save on foreign currency that would otherwise have been spent on the purchase of sugar that was not produced locally and lastly, to export sugar against an inflow of foreign currency. The establishment of a sugar refinery in Lower Juba did, in fact, provide a lot of revenue for the government, which was used for public works, especially infrastructures that were still lacking in the region. The development of economic
3.4 The Societa` Romana in Somalia
93
and commercial activity and new trade relations with neighbouring countries made new openings towards the Indian Ocean and Italian entrepreneurs were eager to take part in this process. An ambitious programme was prepared by a small group of Italian agriculturalists who defied the adverse natural, political and economic conditions of the Jubba and developed their firms by reclaiming the land, equipping them mechanically, experimenting and setting targets for the cultivation of sugar cane. In just 2 years they managed to deliver raw sugar cane for the refineries. As each new firm required a considerable amount of capital it was obvious that this project, which was of great public utility for Somalia, had initially to be encouraged and helped by exemption of customs duties on equipment, low income tax for a minimum number of years and certainty of ownership, even in the case of a change in the political powers of the area. Furthermore, as Abyssinia was practically controlled by American finance and Somalia was closely linked to it for geographical and economic reasons, it was agreed to partially finance the sugar refinery with American capital. In this way Somalia would not only benefit from expensive modern plant, but also link itself politically to the richest and most powerful country in the world. In addition, American capital gave its support to the Trusteeship and guaranteed a valid collaboration in the protection of economic interests both at that time and in the future. To conclude, it can be argued that this plant effectively contributed to the consolidation of a healthy economy in the region, bringing benefits to all those involved without substantially contrasting other interests.28 The planning of this project was accompanied by the ever continuing improvements in the cultivation of sugar cane, as can be seen from the SAIS’s books.29 For example, the 1957 report shows that sugar cane produced an average profit of 13.32% as against 12.80% in the previous year. It was exactly then that the big changes were made in the sugar refinery to bring the plant up to the level of efficiency that could satisfy the forecasted increases in consumption.
3.4
The Societa` Romana in Somalia
The Societa` Romana, which was based in Kismayo and had 3,000,000 somali in share capital, became one the most important sister companies of the SAIS, especially in banana production. The books of the company in the Archivio Storico della Banca d’Italia show the number and size of the land reclamation projects and improvements that had been made by June 30, 1959,30 especially in the 3 year
28
ASBI, Banca d’Italia, Studi, pratt., n. 1005, fasc. 3. ASBI, Banca d’Italia, Studi, pratt., n. 1005, fasc. 5. 30 ASBI, Banca d’Italia, Studi, pratt., n. 1009, fasc. 1. 29
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3 Companies and Firms in Italian Somalia
period 1956–1959 when the company reached levels that were quite exceptional in the area. As the banana production was the most important in the company, the report stressed with great satisfaction that there had been a big increase in the number of businesses run by Somali and that mixed businesses were also recorded. The Societa` Romana and the SAIS believed that the best way to consolidate the banana plantations was the creation of a port at Kismayo that was really worthy of this name and could enable rapid development. The premise for it existed, what was missing was the real will on the part of those directly interested to set the project in motion. In the previous chapter it was said that banana exports suffered because of the lack of a solid port base which could have lowered the high cost of fob. Loading the goods took too long, because the vessels used had a smaller cargo capacity than was economically advantageous and throughout the year the goods had to be transferred from lorries to ‘chiatte’31 and then from these to the ships. Thus the unit costs of these operations rose quickly and substantially and affected the final outcome because of the torment the fruit was subjected to and the losses that resulted. Another objective was to improve certain qualitative characteristics of the fruit and especially to increase its resistance during transportation by replacing the usual packaging (which was also more expensive because of its intrinsic cost, the labour needed and the space occupied) with the cheaper and lighter wrappings of transparent resin used by the most important exporting markets. It was obvious that the advantages of this project were not only for the production of bananas, but would also spill over into all primary activities, including the transformation and trading of products, services that already existed and, above all, for those who might be encouraged by this long awaited and more rational infrastructure to take on new calculated risks and ambitious entrepreneurial plans. The Societa` Romana also promoted the organization of a special study mission to investigate the problems of the banana sector. The delegation was to identify the most modern and efficient methods in the storage, packaging, refrigeration, loading, transport and retail distribution of this product. The study was also intended to assess the possible industrial uses of the non exportable “surplus” and its by-products. Particular attention was given to new varieties of banana that could be experimented and possibly produced in Somalia, as well as a research programme for new crops that could require new plantations in Somalia as an alternative to those previously used. The mission first visited the most important areas of production in French East Africa and Central America and then agricultural and trade bodies and organizations in the United States between mid-July to mid-September 1958. Important results were achieved in public works, such as the water system of the Descek UAMO, which involved an area of 10,000 ha. Water had often brought disaster and malaria, but now it began to fulfil its principal function again that, as the Somali language says, is linked to the very origins of life. This was an enormous project, which had been planned for a long time and only partly started, but was
31
A‘chiatta’ is a large boat or raft (generally rectangular or square) usually made of wood (but sometimes also of metal), without an engine, sometimes with sails.
3.4 The Societa` Romana in Somalia
95
now completed with joint Italian-American financing through the “Fondo di Valorizzazione Somalia” made up equally of I.C.A. (International Cooperation Administration) and ASES (Agenzia per lo Sviluppo Economico della SomaliaAgency for the economic development of Somalia) funds for the Italian contribution. There were considerable economic and social advantages for the local population, especially for those involved in animal husbandry. Instead of having to practice transhumance to safeguard their herds, they now had water and food for their animals and an incentive to grow cotton and oily seeds. The construction of the damn-bridge in reinforced cement, more than 50 m long, favoured a more rational use of the Jubba’s water and finally joined the two banks of the river, thus making it easier to integrate production and trade, as well as draw on the labour of the hard-working people along the two banks. The relative closeness of the port of Kismayo, which had the poorly developed area of the Descek UAMO as its hinterland, meant agricultural production could be developed more quickly and cheaply for trade. At Belet-Amin the preparation of deforested, tilled, levelled and irrigated land was made possible by the purchase of new areas for the necessary rotation of crops. Apart from those areas that were already in production, there was a further reserve of lands that had been previously deforested for possible future expansion of the agricultural activities of the business which added up to 400 ha. Further improvements were made for the cultivation of bananas by levelling out areas of land to make a more suitable and regular distribution of irrigated water. Draining canals were also built in all the banana areas and positioned in such a way as to allow excess water to flow easily away into the nearby woods. In 1959 a large number of Somali workers were employed in the Societa` Romana in spite of many periods of drought that had hindered the traditional farming of people in the area. This meant much basic hard work needed in the care of banana plantations, which had not been possible in previous years because of the shortage of labour, could now be done together with routine farming and harvesting activities. The reduction in investments in bananas, which was made possible by the adoption of higher density cultivation and special agricultural practices, was a basic incentive to adapt the use of labour to the general situation (characterized by an habitual shortage) and the needs of the company. In the last months of the company’s activities the Italian staff was gradually eliminated. In the company’s business at Belet Amin the banana sector covered an area of 261.10 ha. From January 1, 1958 the whole banana export quota of the SAIS at Berdit was transferred to the company at Belet Amin, a quota that amounted to about 17,500 q per year, in addition to the Societa` Romana’s normal quota of 8,850 approximately.32 Exports totalled 28,006 q at fob compared with 20,883 q sent in
32
ASBI, Banca d’Italia, Studi, pratt., n. 1009, fasc. 1, p. 19.
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the previous year. 8,597.66 of the 28,006 q were assigned to the SAIS’s quota and 16,525.25 q to “ROMANA”. The actual shipping was respectively 9,584 q for the “ROMANA” and 18,422 q for the SAIS. Even though at the end of this year 7,000 q of fruit in excess had been calculated, the economic results of the harvest were particularly disappointing. There was a drop in the unit income from exports, because of the effect of the annual and progressive reduction in the buying price applied by the AMB in relation to the increased quantity bought, and above all because of the losses and waste calculated in Italy according to very arbitrary criteria which raised many serious and justified concerns. This fall can also be explained in part by internal reasons and the considerable effort made by the extensive use of labour. The plants had to be revitalized because they had fallen into decline after the forced abandonment by the previous unfortunate management. And this was on land at a high altitude with old plants that were only modestly productive. New trees were planted following a net intensive approach through the adoption of ‘narrow rows’, which initially puzzled experts and concessionaires. This type of cultivation required particular attention and care and had already been experimented on a limited scale at the Azienda Romana. Its validity was confirmed by the observations made by the technical mission. This method, which brought advantages in productivity, was the ideal point of arrival for the transformation that was taking place in the banana complex at Belet Amin. In short, it can be said that the work done by the company had been overall positive; the losses were reabsorbed and amortization restarted.
3.5
The Societa` Commerciale Italo Somala
Another subsidiary of the SAIS was the Societa` Commerciale Italo Somala (SCIS), established in 1950 with 1,000,000 somali of share capital based in Mogadishu and initially concerned with the storing of goods in warehouses.33 Between April 15 and April 30, 1959 the share capital was increased by 500,000 somali to 1,000,000 somali, as decided in 1957. The financial report for 1958 closed with a credit of 7,717.76 somali that gave a dividend of 10% on the 650,000 somali of capital invested.34 To compensate for the fall in income in the sugar sector following the development of Somali Cooperatives which had increased their share of the sugar market between 1958 and 1959 until it covered 82.56% of all sales, the Societa` Commerciale Italo Somala increased its business in the trade of the SAIS’s
33 34
ASBI, Banca d’Italia, Direttorio - Formentini, cart. 11, fasc. 2. ASBI, Banca d’Italia, Studi, pratt., n. 1010 fasc. 1.
3.6 Nationalization: The Birth of Cooperatives
97
agricultural and industrial production that was not absorbed by other sales organizations in Somalia or abroad. This business concentrated mostly on cotton, oil seeds, alcohol, molasses and oxygen. The company was also responsible for giving the biggest impulse to the development project for the ports of Kismayo, Merca and Mogadishu and was the first to succeed in establishing a direct relationship with foreign companies.
3.6
Nationalization: The Birth of Cooperatives
In 1963 the SAIS was transformed into the SNAI and its work continued until 1970 when it was finally nationalized. The first radical government programmes for changing the economic-social structures of the country date back only to 1970 after Somalia had been proclaimed a Socialist Republic in 1969. The new dictatorial regime set itself the objective of becoming self-sufficient by creating a market economy for exports through the adoption of techniques that could be easily adapted to the local communities which were still deeply rooted to traditional lifestyles and by trying to strengthen rural areas. There was therefore a very strong need to group together and collaborate, which could best be achieved by forming cooperatives. It is easy to imagine how the need to collaborate was felt even more in the agricultural sector than in other economic sectors. Cooperatives were considered the backbone of the socialist economy that they wanted to create and therefore were formed in every field. Cooperatives had the objective of promoting economic development and the social uplifting of its members through activities which the members themselves had to take part in, either by providing products, investing their own labour or using its services. For this reason credit for agricultural cooperatives was of fundamental importance. Aid directed towards this sector was considered essential for the indirect influence it had on the development of the economy as a whole. The increases in agricultural exports that credit could determine were an essential objective of the economic policy of the country. With the passing of Law no. 40 of October 4, 197335 it was decided that cooperation could proceed through different stages, which, with time and the evolution of the country, would move from forms that did not involve individuals so much to forms that engaged them entirely. The following are the forms of cooperatives foreseen for the agricultural sector by Law no. 40: • Multi-purpose cooperatives • Group-farm cooperatives • Cooperative farms.
35
Castellani 1983.
98
3.6.1
3 Companies and Firms in Italian Somalia
Multi-purpose Cooperatives
These cooperatives can generally be considered as “service” cooperatives. They usually had at least 100 members and their activities extended over two to six villages and a population of 1,000–2,000 people. The individual members maintained their own independence and were linked to the cooperative essentially by a series of services that it provided. Their task was to: • • • • •
Provide individual members with machines and tools; Provide their members with seed, fertilizers and insecticides; Give direct or indirect technical assistance; Organize cultural activities, Promote the formation of group-farm cooperatives among their members and assist them; • Provide credit for its members. In return members were expected to buy tools and machinery, make use of services for agriculture and sell their agricultural products only through the cooperative they belonged to. The sources of financing for the multipurpose cooperatives were guaranteed by: • Credit from the banking system; • Members’ subscriptions36; • Funds put to one side on the basis of the annual results of the single cooperatives. 25% of the profits of each cooperative went into funds, 30% to cooperative investments, 15% to emergency services, 15% to cultural and social activities and the remaining 15% to the national cooperative fund.
3.6.2
Group-Farm Cooperatives
This type of cooperative had about 14,000 members and extended over approximately 32,000 ha of agricultural land. They were voluntary organizations of a “semi-collective” type, each one with a minimum number of 25 members that farmed the land together. The members could continue to farm their own land personally and also in this case the cooperative was obliged to give assistance. The land worked by the cooperative, which had been reclaimed and tilled, was mostly
36
Each member had to pay the cooperative a fixed subscription of a minimal amount, given that the statute stated that it was limited to 5 shillings, as well as another fee which varied according to the area farmed (equal to 10 shillings/ha farmed but not irrigated).
3.7 Internal Organization of the Cooperatives
99
given for use by the state for the duration of the cooperative. It was normally in a single lot, to which other land given by individual members could be added. People who did not have their own land could also join the cooperative. In this case the state allowed them to use a certain area of land personally, whose size did not exceed what was normally owned by the other members of the cooperative. The local multi-purpose cooperatives could assist the group-farm cooperatives in their administration, organization, sale of products, provision of mechanization services and book-keeping, which was almost non-existent. The members of the cooperatives worked the land and took decisions about the running of the cooperative together, though they were obliged to use their own tools, machinery and even their working animals for the benefit of the cooperative. The cooperative members had to provide all the necessary manual labour and only in exceptional cases, and for limited periods of time, could specialized technicians who did not belong to the cooperative be employed. Once all expenses had been paid and the quotas for particular funds had been covered, the earnings from the sale of products produced by the cooperative were shared out between the individual members in relation to the amount of labour that had been supplied, both in qualitative and quantitative terms. The quotas to be given to the particular funds were established by statute, depending on the income of the cooperative, as follows: • • • •
Mutual assistance fund (1–2% of earnings) Investment fund (15–20% of earnings); Fund for cultural and social activities (1–2% of earnings); Fund for the purchase of seed (in variable percentages according to needs).
3.6.3
Cooperative Farms
These cooperatives should have been the most evolved stage of the system in the country, as a transformation of the group-farm cooperatives. Its members would have given their labour and all the means necessary for production for common use in the cooperative. A recompense was also foreseen in this form of cooperative that reflected certain quantitative and qualitative parameters. However, this type of cooperatives was never formed.
3.7
Internal Organization of the Cooperatives
This brief description of the cooperatives in the country has, on more than one occasion, implied that they were regulated by statutes. But, in fact, most of them did not follow in detail what the statutes provided for and adapted the content to their various needs.
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This was particularly true for the use of the cooperatives’ funds, which were rarely distributed in the percentages described above because of the lack of organization and administration within the cooperatives. Most of them, in fact, did not succeed in keeping regular and accurate accounts, which meant the administrative plans for their development could not be followed. At the same time the cooperatives needed good and continuous technical assistance, to be understood in the broadest sense of technical, economic and social assistance. Equally important was the need to reduce production costs, which should have been possible because the cooperatives usually allowed economies of scale that were not possible for an individual farmer. Basically it can be said that the political choices made by the government placed great importance on the development of the cooperatives in various sectors, and especially in agriculture. But as time went by, it became obvious that the quantitative objectives achieved were not always followed by the qualitative results that were hoped for. Although some cooperatives were severely criticized for their functioning and the results obtained, cooperatives were considered to be the prime objective (and at the same time instrument) of the national economic policy, and of agriculture in particular. However, many believed that there was no real intention to support them, because they were given credit conditions, especially interest rates that were generally no more favourable than those for individual businesses. What should have been done to make sure the cooperatives became a pillar of the Somali agricultural economy was to form only really economically viable cooperatives and thus avoid creating those that were to achieve very little in practice. Once this choice had been made, more favourable interest rates could have been applied.
Chapter 4
International Aid to Somalia
We have to declare the cooperation developed in bilateral agreements a failure. It has not served at all, it does not help those who need us. Let’s give the money we spend in the world to the EEC. There we will have the political power to direct the resources, but also to agree on their global use together with our European partners.1
It will be useful to complete this view of the difficult economic path of Somalia in the post-war period by examining the relationship between Somalia and Italy after the end of the Trusteeship. Somalia has always been a focal point for Italian cooperation, from the colonial period up to the time of the Trusteeship and on to the present day. But the period of greatest commitment was during the decade 1950–1960 when attempts were made to create not only the state of Somalia and a public administration, but also the conditions necessary for the economic development of a country that was still backward and basically without resources. This is part of a tradition that today has become well-known as the fight against hunger and underdevelopment. Sources in the Archivio Storico della Banca d’Italia can once again help us to reconstruct the history of aid and the policies adopted in Somalia over a period that goes from 1950 to 1973. In this way it can be seen how Italy reluctantly and in the face of great difficulty, and at times of political ambiguity, tried to realize a policy that today is generally referred to as international cooperation.
4.1
Attempts at a Policy of Italian International Cooperation
Economic development became a priority from 1953 onwards, after the first years of the trusteeship had been dedicated to the state organization of the country. The possible choices for development were proposed along the following lines:
1
La Repubblica, August 24, 1992. From a speech by the Deputy Mario Raffaelli.
D. Strangio, The Reasons for Underdevelopment, Contributions to Economics, DOI 10.1007/978-3-7908-2778-1_4, # Springer-Verlag Berlin Heidelberg 2012
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• The creation of essential public works and services, especially for improvements in human and social conditions through education and hygiene and health measures; • The encouragement and coordination of private enterprise, with particular attention to new entrepreneurs and native businesses; • The consolidation of political, institutional, technical and financial organizations for public and private works. The results did not live up to expectations in many cases, but were still significant, especially in the field of education. Primary schools were opened throughout the country, professional training was provided to form a class of Somali teachers and vocational schools were set up, as indeed a school for political and administrative training. Over the 10 years of the trusteeship Italy provided about 90 billion lire with an extra 10 billion lire in private investments. With the proclamation of independence collaboration between Italy and Somalia continued and was confirmed by the signing of important agreements for the economy and development aid which were integrated and made more organic by Law no. 1376 of 23.12.1967 called “Assistenza tecnica, culturale, economica e finanziaria alla Somalia”. Between 1961 and 1969 public loans, financial and commercial credit, subsidies and special levels of duties as well as forms of indirect help (especially the subsidizing of bananas) were granted for a total of about 23 billion lire. Between 1967 and 1971 17.1 billion lire in funds were given to Somalia, of which 12.6 billion were from the budget of the Foreign Ministry and the rest the budgets of other ministries. Even after the revolution of 1969 relations between the two countries continued to be close and were redefined in Law no. 1222 of 15.12.1971 on technical cooperation for developing countries. It regulated the basic aspects of the policy to help development by integrating all ongoing cooperation and providing special measures for Somalia (articles 37–38) and funds amounting to 2.7 billion lire a year for 1972, 1973 and 1974.2 These special measures were the result of negotiations between the Somali government and Italy when Mogadishu had proposed a series of requests. One request, for example, was that the volume of measures should be decided for a 5-year period starting from 1972. International assistance to Somalia can be classified into three main categories: bilateral, multilateral and OPEC countries. Italy, though not alone, was the country which donated the most to Somalia. Its commitments in bilateral donations consisted in rather large sums throughout the period as follows: (a) 544,000 dollars for the economic and social development of Somalia (Law no. 1376 of 23.12.1967);
2
NOMISMA October 1983.
4.1 Attempts at a Policy of Italian International Cooperation
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(b) 14,609,000 dollars for technical assistance; (c) 7,449,000 dollars for reparations and indemnification; (d) 2,240,000 dollars to balance the 1970 Somali budget (Law no. 1376 of 23.12.1967). Furthermore, 25,000 dollars were to be given to help economic development plans in Somalia and 179,000 dollars to repay the loan for the reduction in banana production costs granted to Somalia following the agreement of 18.12.1962. The average annual aid has been calculated at 29.1 million dollars for the period 1971–1982; this figure rose to 66.7 million dollars in the period 1979–1982, which was much higher than the USA’s contribution (42.8 million dollars) and Germany (35.2 million dollars). Among the multilateral organizations, the United Nations spent 63.5 million dollars in the 3 years 1979–1982, whilst OPEC countries contributed 104 million dollars in the same period. Bilateral cooperation in Somalia can be distinguished into two distinct periods, before and after 1977. The watershed year was marked by the break with the USSR and the search for technical and financial assistance from other donors. The Soviet Union had made massive contributions to infrastructure, which were characterized by: • Large scale projects; • Projects aimed at the use of domestic resources; • The possibility of exporting to Soviet markets. Apart from the very large amounts of aid from Italy, Somalia had also managed to establish very close relations with other countries. Ties to the USA intensified after the breakdown of relations with the USSR and the concession of a naval base at Berbera. Relations with countries in the Persian Gulf were also very important, as they were all members of the Arab League which, in addition to aid, also gave certain trade advantages. In 1974 the special conditions reserved for Somalia by Italy came to an end and all cooperation was regulated by a new law. Aid to Somalia in 1981 was organized in a 3-year Country Programme (CP 1981–1983). Development aid is, without doubt, a political, social and economic problem, all at the same time. It is of great importance in international, multilateral and bilateral politics and is one of the most effective instruments in foreign policy. It is a factor of prestige and status for those countries that succeed in providing it organically, with precise objectives, method and continuity, whilst it is a source of doubtless benefits, both political and economic, for the receiving country if followed with farsightedness and awareness. Italian aid policy in Somalia, however, received numerous criticisms from both industrialized and developing countries. The former complained about the failure to implement an aid policy that reflected the high degree of industrialization Italy had achieved by that time and the level of its GDP. Not only was the quantitative aspect clearly inadequate, but the qualitative aspect was even more so, because it had aimed at objectives of obvious national interest, thereby creating particularly
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4 International Aid to Somalia
burdensome conditions for the countries receiving the aid. The developing countries said that the policy followed by Italy was directed, above all, at the conquest of trading positions and therefore could not qualify as real aid policy. The justification given by Italy for years was that it had found itself in the impossible position of having to implement a policy that had to conform to international indications and requests, pointing out some particular negative aspects of its own national economic system: • Regional differences, differences between sectors, distortions in the distribution of income; • The structural nature of these differences had become deeply rooted in Italian society over the centuries and the difficulties associated with eliminating them in a short period of time had become a permanent feature of the system.
4.2
The Political and Financial Organization of Somalia During the Trusteeship
The internationally regulated governmental system of Somalia was established by the Agreement for the Protectorate approved by the General Assembly of the United Nations on December 2, 1950 and then ratified by the Italian parliament on November 4, 1951 with the Law no. 1301. Relations between the Italian government and the Administration of the territory were regulated by Decrees nos. 2357, 2358 and 2359 of December, 1952, which established the powers of the Administrator and the administrative and economic organization of Somalia. The legislative powers lay with the Legislative Assembly created with Ordinance no. 1 of January 5, 1956; the executive powers, limited to the internal administration of the country, were devolved to the Government of Somalia, which was formed with Law no. 1 of May 1, 1956.3 The economic and financial organization of the country was regulated by both the government and the AFIS. As far as the government was concerned, questions to do with the economy of the country and the economic and financial organization were dealt with by an Inter-ministerial Committee for Economic Development of the Ministries for Financial Affairs and for Economic Affairs, which was divided into the following departments: industry, transport and communications, public works, agriculture and animal husbandry, trade and currency. The Gruppo Assistenza alla Somalia4 (Somali Development Aid Committee – DAC)5 operated outside the administration and provided development aid by
3
ASBI, Banca d’Italia, Studi, pratt., n. 1009, fasc. 1. ASBI, Banca d’Italia, Studi, pratt., n. 363, fasc. 1. 5 The development aid group was set up at the Paris Conference on January 12–13, 1960 and joined the OECD under the name of the Development Aid Committee (DAC). 4
4.2 The Political and Financial Organization of Somalia During the Trusteeship
105
systematically financing support programmes through public sources and at more favourable conditions than the normal ones in the market (grants, loans payable in local currency and loans payable in the currency of the lender, but at a low interest rate and with a long amortization period). In 1952 the Fondo per lo sviluppo della Somalia6 (Fund for the development of Somalia) was set up as a juridical entity to be monitored by the Ministry of Foreign Affairs and the Treasury in order to assist medium and long term credit for the economic development of the country under trusteeship and give the country a balanced Balance of Payments. The Treasury was authorized to give a state guarantee for medium and long term loans in Somalia for a maximum of 10 years. The Fondo used credit institutes in Italy and Somalia for its management. When the Fondo had to give loans directly, the credit institute in whose name the operation was being made, was obliged to be responsible for 15% of a possible loss. At the end of the trusteeship the Fondo was to be liquidated and its assets shared out among the lenders in their respective proportions. Other bodies also worked under the AFIS. From January 1, 1957 the Ufficio della Pianificazione (Planning Office) and the Agenzia per lo Sviluppo Economico della Somalia7 (ASES) studied, coordinated, financed and carried out plans and works for the economic progress of Somalia. The Fondo per la valorizzazione della Somalia (FVS – Fund for the development of Somalia), which had been set up by an agreement signed on June 28, 1954 between the Italian government and the United States of America, half financed by Italy and half by America, was responsible for development programmes in agriculture and animal husbandry. Their revenue and public expenditure figured in the budget of Somalia which was divided into two parts in 1955. One part belonged to the government, in which the expenditure that had to continue after 1960 was recorded, such as the maintenance of public works, and the other part belonged to the Trusteeship, which included expenditure for the protectorate and would cease once the mandate ended. The same budget also included expenditure for foreign workers, mostly technicians, who after 1960 were to be replaced by native workers, whilst the AFIS budget included expenditure for Italian staff, both civil and military. Below the line expenditure was also linked to the execution of development plans. The revenue was made up mostly of indirect taxes, especially on textiles and sugar, whilst direct taxes were paid mostly by employees of the AFIS and banana producers. Since expenditure was usually greater than revenue, the difference was covered by the Italian state. The main contributors to the above mentioned Fondo per la valorizzaione della Somalia were Italy and the United States. The first contribution amounted to 8.6 million Somali (750 million lire), of which 375 million lire was paid by the AFIS and 375 million by the American organization, the ICA. The second
6 7
ASBI, Banca d’Italia, Studi, pratt., n. 979, fasc. 5. ASBI, Banca d’Italia, Studi, pratt., n. 999, fasc. 1.
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4 International Aid to Somalia
contribution of 4.2 million Somali (365 million lire) was paid in equal parts by Italy and the United States through the FAO. The ICA provided funds in dollars for numerous technical missions and the programme for drilling irrigation wells and watering places for animals. In particular, in 1956 the ICA allocated 300,000 dollars (approximately 188 million lire) for the payment of wages to American technicians and in 1956, in addition to continuing to pay salaries, gave 135 million lire in “counterpart funds” for work on wells. 248 million lire were added to these sums in 1957, of which 180 for expenditure on the purchase of technical material and 68 on technical-administrative costs. This is the only foreign aid that reached Somalia, because the United Nations’ support was limited to technical assistance in collaboration with the AFIS. Among the minor, so to speak, contributions was a rather large quantity of agricultural surplus given to Italy by the United States which was then sold to Somalia and its earnings (1 million dollars) were deposited in the Fondo per la valorizzazione della Somalia and an indirect subsidy from the purchase of Somali bananas by Italy at a higher price than the cost of bananas from the Canaries and Guinea, as we saw in Chap. 3.
4.3
International Cooperation in Somalia
The size of Italian intervention and aid in Somalia varied in time and motivations. Immediately after the end of the trusteeship it was clear that Italy could not withdraw its support when the mandate expired. Without Italy’s help after 1960, Somalia would have had to: • Reduce the development plan whilst it was still in progress; • Restrict public services and reduce private ones too; • Give up on the chance to develop and make the most of what the country had. However, it was decided that external aid would be extended for at least 20 years after independence in order to complete the consolidation of existing economic resources, and possibly increase them. This contribution was quantified as follows: • If Italy continued to absorb the production of bananas: Integration of domestic budget 15 million somali Economic development 10 million somali Foreign experts and technicians 7 million somali Total 32 million somali Source: ASBI, Banca d’Italia, Studi, pratt., n. 1009, fasc. 1, p. 18
2.1 million dollars 1.4 million dollars 1.0 million dollars 4.5 million dollars
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• If Italy did not continue to absorb the production of bananas: Integration of domestic budget 28 million somali Economic development 10 million somali Foreign experts and technicians 7 million somali Total 45 million somali Source: ASBI, Banca d’Italia, Studi, pratt., n. 1009, fasc. 1, p. 18
3.9 million dollars 1.4 million dollars 1.0 million dollars 6.3 million dollars
In the latter case Italy would have intervened by providing a financial subsidy for a certain amount,8 with disadvantages for most Italian agricultural businesses in Somalia and a consequent reduction in the role played by Italian interests in the country. For these reasons the AFIS, together with the Somali government, informed the Protection Council (ONU) of the amount of aid that Somalia would need from 1960 onwards. All in all, the financial help that Somalia needed amounted to approximately 5 million dollars a year (about 3 billion lire). Without it the Somali economy would have collapsed (a fear that actually came true later). The most worrying risk was political, in the sense that some authoritarian currents could emerge in the country. The last IBRD mission to visit the country stated that contributions should be issued only in the form of subsidies, because the limited development of Somalia would make a loan system inappropriate. Furthermore, the aid itself should be issued in advance so that the projects could be accompanied by the certainty of the necessary funds. Budget LOCAL DEFICIT So. 15.5 million CONTINUATION OF DEVELOPMENT So. 10.5 million PROGRAMME FOREIGN TECHNICIANS AND EXPERTS So. 10.0 million TOTAL So. 36.0 million Source: ASBI, Banca d’Italia, Studi, pratt., n. 1009, fasc. 1, p. 18 Balance of payments TRADE DEFICIT So. 18.5 INVISIBLES DEFICIT So. 17.5 TOTAL So. 36.0 Source: ASBI, Banca d’Italia, Studi, pratt., n. 1009, fasc. 1, p. 18
2,170 million dollars 1,470 million dollars 1,400 million dollars 5,040 million dollars
2,590 million dollars 1,450 million dollars 5,040 million dollars
Naturally the funds had to come from other powers, not only from Italy. In fact, the United States’ contribution consisted mostly in technical assistance, whilst Britain guaranteed aid in education and cultural activities. From the very beginning America was one of the few countries that was prepared to support Somalia and showed a growing interest in the country.
8 This was about 1.1 billion lire with the presumed onus of a preferential price of about 0.3 billion lire.
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Although American aid was concentrated in technical assistance and no return benefits were expected within the terms of the agreement with the administrative authorities, it is clear that, apart from some initial hope of finding oil resources in the country, America had immediately placed great importance on future relations with Somalia because of its geographical and strategic position. Certainly there was the idea of creating a military base there, which would be paid for with annual subsidies. Italy announced that its contribution would not just include the absorption of the banana production, but it would be accompanied by extensive technical assistance, as already agreed upon, with 250 Italian experts to be sent to Somalia and 80–100 scholarships for Somali students for an annual expenditure equivalent to 1,500,000 dollars (937.5 million lire). A financial contribution was also to be made worth 500,000 dollars (312.5 million lire). Another proposal came from India and Guatemala, which put forward the idea of a special fund for Somalia at the United Nations and the United Arab Republic expressly offered to take part in it. This raised many concerns that the decision of eastern states, which were officially “unaligned”, to take part in this project veiled their intention to “draw” Somalia over to their side in an attempt to subtract it from Western influence, thus moving the question from an economic onto a political plane. The words of the President of the Legislative Assembly, Aben Abdullah Osman, were clear on this point. In answer to the question “Are you confident of getting the necessary external financial and technical assistance for an efficient economic existence?”, he replied, “Yes, but we will have to see where it will come from and that is, whether it is in the form we have requested (through the United Nations) or directly from individual powers and on what condition, because we will not accept aid in exchange for joining blocs or having to accept ideologies that are unnatural for the Somali people”.9 Equally eloquent was the answer given by the Prime Minister, Abdullahi Issa, when asked to explain the role Somalia would have in relation to other independent African states. “The Somali people are Africans and as such cannot help but have a strong feeling for other peoples in the African continent who fight for freedom and March towards independence. Obviously the role of an independent Somalia will be to associate with other independent African countries”.10 In other words, the Somali people wanted to stress that they would rather lower their standard of living and give up development plans than lose their independence.11 The following statement made by the Somali Council of Ministers to Deputy Fanfani on October 2, 1958 has, therefore, to be seen in this context. “The decisions on technical and financial aid and the absorption of the banana
9
Corriere della Somalia, August 18, 1958. Corriere della Somalia, August 19, 1958. 11 Poveri ma liberi [Poor, but free], in Corriere della Somalia, September 4, 1958. 10
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109
production taken by the Council of Ministers of the Italian Republic on September 16, 1958 have eliminated all uncertainty about the continued economic development of Somalia after 1960. They have confirmed the hope that lay in the heart of every Somali that he would be able to count on the support, understanding and help of Italy after independence in an atmosphere of fraternal and affectionate cooperation that will confirm to the world the spirit and exclusively moral and sentimental value with which Italy has taken on and fulfilled the mandate of the United Nations to set our country on the road to independence”.12
4.4
The Trade and Payment Agreement Between Italy and Somalia
The first Trade, Payment and Economic and Technical Collaboration Agreement between Italy and Somalia was signed at Mogadishu on July 1, 1960 and later modified on October 9, 1967. The ratification of the Agreement followed the Italian decision to start a policy that would bring a new organic approach to aid from June 30, 1967 and would introduce it into a broader, multilateral context (UN, EEC and other donor countries). For this reason one single piece of legislation was passed, composite and global at the same time, which grouped together all the various forms of economic, financial, technical, scientific and cultural cooperation, which were granted 4 billion lire in 1967. The Agreement contained general rules to regulate the current exchanges between the two countries and measures intended to promote the industrial development of Somalia through technical assistance, the provision of Italian industrial plant with deferred payments and the investment of Italian capital in Somalia. Somali exports to Italy were mostly bananas and other products from the land, such as skins, fish and meat, whilst Italian exports included mostly food, industrial, chemical and other products. With the 1967 Agreement13 Italy wanted to give a special contribution to boost the importation of goods from Somalia and reserved a special preferential customs regime for them, on condition that this was authorized by GATT and the EEC. Payments were to continue to be made in Italian lire or in other convertible currencies in accordance with the currency regulations in force in the two countries. The commitments undertaken by Italy at an international level can be summarized as follows: Aid to Somalia was to take the following forms: (a) Trade Assistance. To cope with the enormous damage suffered by the Somali banana business as a result of the long closure of the Suez Canal and the
12 13
ASBI, Banca d’Italia, Studi, pratt., n. 1009, fasc. 1. ASBI, Banca d’Italia, Studi, pratt., n. 791, fasc. 2, sfasc. 6.
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suppression of the banana monopoly, Italy decided to maintain the special fiscal concession given to imported Somali bananas in Italy until December 31, 1969 and for an annual quantity of 100,000 t, on condition that it was approved by GATT and the EEC. These concessions consisted in reducing the duty applied to imported bananas by 30 lire per kg. It meant an annual cost of about 5 million dollars for Italy each year. (b) Balancing Somalia’s national accounts. Somalia was granted 6 million dollars for the years 1963–1964 by the Law no. 90 of 19.02.1965. (c) Italy’s contribution to the economic and social development plans of Somalia. Somalia was granted 2.2 million dollars for the years 1963–1964 by Law no. 91 of 19.02.1965. (d) Technical assistance. In addition to all the benefits that Somalia received from the funds of various countries (scholarships, schools), a special law no. 1528 of 29.12.1961 provided for the financing of a plan for technical assistance that would gradually decrease over a number of years. Italy’s contribution amounted to 1.2 million dollars for 1965 and 1.0 million dollars for 1966 and 0.4 million dollars for 1967. The financial assistance offered to Somalia by Italy was equally substantial. Financial aid towards Somalia in the form of grants and loans followed a trend with two basic characteristics: • It grew very rapidly, though discontinuously over the years; • It had a high per capita value, even though refugees were included in the population. Aid remained at fairly low levels until 1973. The first significant increase was recorded after 1973 in connection with the emergency caused by the drought of 1974–1975. Between 1977 and 1980 the contributions of the United States and multilateral organizations grew, but intervention was still substantially a response to the crises that hit the country. In the attempt to continue to provide the type of financial assistance given to Somalia during the Trusteeship, Italy decided to grant aid of various kinds on the basis of special laws and budgets and also for credit insurance. From 1961 to 1967 aid, including the benefits from the special concessions for the importation of Somali bananas, amounted to about 7.8 billion lire a year. In particular: (a) The funds for technical assistance provided for in Law 29/12/1961 no. 1528 amounted to a total of 5,420 million lire, with the highest figures for the first years. (b) Participation in the economic and social development plans of Somalia led to funds being set aside for a total of 3,300 million lire, of which: • 600 million for 1961, Law June 4, 1962 no. 602; • 600 million for 1962, Law March 2, 1963 no. 380; • 1,400 million for 1963–1964, Law February 19, 1965 no. 91;
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111
• 700 million for 1965, Law July 1, 1966 no. 531. (c) The contributions to balance the accounts involved a total amount of 11,254 million lire, divided as follows: • • • • •
1,700 million for 1960, Law 30.1.1962 no. 86; 1,984 million for 1961, Law 16.12.1961 no. 1526; 2,170 million for 1962, Law 2.3.1963 no. 363; 3,700 million for 1963–64, Law 19.2.1965 no. 90; 1,700 million for 1965, Law 26.5.1966 no. 360.
(d) Special laws were also passed for further funds in the budget for a total of 3,504 million lire for the following purposes: • 1,534 million lire for administrative, technical and financial assistance for 1960–1961, Law 9.3.1961 no. 157; • 1,470 million lire for technical-military assistance; • 500 million lire for special aid. (e) Two loans were granted with Law 5.7.1961 no. 635. The first, decided during the Convention of 21.12.1962, was for 2 billion lire, at an interest rate of 5.50% per year, for the development of sugar production and the reconstruction of the banana plantations. The second of 1 billion lire was decided during the Convention of 18.12.1962 and was to be paid back over 9 years at an interest rate of 7.50% per year. It was to be used to rebuild and develop Italian and Somali businesses destroyed or damaged during the 1961 flood.14 In 1969 Parliament passed a law which set aside 11,200,000 dollars as special funds for Somalia to be given over 4 years as follows15: 1970 1971 1972 1973
4.000.000 dollars 3.200.000 dollars 2.400.000 dollars 1.600.000 dollars
These funds were for the purposes indicated in article 1 of Law 23/12/1967 no. 1376, that is the special law for Somalia. In accordance with what was decided in article 1, Somalia was to receive funds, in addition to those provided by Law 1376, for financial and technical aid, especially for the reconstruction of the banana sector which was in difficulty. Enormous funds were allocated to technical assistance for the country in 1970. 108 units, 34 of which were made up of super-experts, were working in Somalia, compared with 95 in 1969. This sector was continuously evolving and was
14 15
ASBI, Banca d’Italia, Studi, pratt., n. 791, fasc. 2, sfasc. 6. ASBI, Banca d’Italia, Studi, pratt., n. 793, fasc. 1.
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subjected to many changes both from a legal point of view and in its organization and practical work. Specialised technicians were provided by big companies, especially in the fields of economic and agricultural planning. These changes were all the more marked because they tended to reflect the efforts that were being made to answer the calls for greater commitment to development from industrialized countries, both bilaterally and multilaterally, at an international level.
4.5
Development Plans
Italians believed that development plans would lead to a better use of domestic resources and, at the same time, help to integrate resources from abroad following a specific order of priorities so that the country could move as quickly as possible towards independence and prepare the way for future collaboration between the two states. The premise for a more efficient use of foreign aid was created with the multi-year plans which aimed to consolidate at an economic level the great successes achieved at the political level, so that the process could later be continued almost autonomously by Somalia. In the attempt to stabilize an economic situation that had been severely tested by colonial domination, the first development plans were introduced in 1954 at the request of Deputy Malagodi who had visited Somalia the previous year to examine the real possibility of developing the country and thus directing the action of the administration from the political to the economic field. The 7-year plan for 1954–1960 required a total expenditure of 10.9 billion lire, of which 8 came from public investment and 2.5 from private investment. This project followed the plans outlined in previous years, when large investments had been made in the social services. Public investments between 1950 and 1953 amounted to 1,225 million lire, half of which was spent on the construction of schools, hospitals and other public buildings, and the other half on roads and ports; in the same period investments added up to about 785 million lire, and a third was spent on communications and two thirds on construction work. This plan was estimated to have created investments for 7 billion lire (64.8% of forecasts) in 1957, of which 5.4 billion (64% of forecasts) were public and 1.6 billion (67.3% of forecasts) private, and the sources of the financing for the various investments were estimated, as in Table 4.1. There were a number of investments in the different sectors: 1. Public investments: (a) Agriculture. The 2,670 million lire set aside for this sector went to an area of 95,770 ha; some of the most important work was to build 2,600 model farms in the interfluvial region (13,000 ha) for a cost of 214 million lire; the building of canals and irrigation in the regions of the Middle and Lower Shebelle (40,000 ha) at a cost of 683 million lire; the building of canals and
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Table 4.1 Sources of finance for development plan investments made by December 31, 1957 (in millions of lire) Financing body Sectors financed Non-profit Basic Investments in Total investment investments production investment City council of Urbanization _ 44.0 _ 44.0 Mogadishu A.F.I.S. All 71.8 1,474.2 1,820.0 3,366.0 A.S.E.S. All (except skilled 75.8 320.2 237.4 633.4 trades) F.V.S. Agriculture and 60.7 197.7 811.6 1,070.0 animal husbandry U.S.O.M. (1) Animal husbandry _ _ 198.3 198.3 S.A.I.S. (1) Communications _ 41.1 _ 41.1 S.A.C.A (1) Animal husbandry _ 30.6 _ 30.6 S.A.G (1) Communications _ _ _ _ Total public 208.3 2,107.8 3,067.3 5,383.4 investments Private 272.6 _ 1,387.8 1660.4 investments Total 480.9 2,107.8 4,455.1 7,043.8 Source: ASBI, Banca d’Italia, Studi, pratt., n. 1009, fasc. 1 Note: (1) Only for public investment by companies
irrigation in the regions of the Middle and Lower Juba (17,000 ha) for 329 million lire; work in native agricultural centres (15,000 ha) for 251 million lire. By 1957 58 “uars” (small basins) and 111 model farms had been built, as well as seven agricultural information centres in the interfluvial area (4,265 ha of reclaimed land); reclamation work, irrigation and land transformation in the areas of the Middle and Lower Shebelle (5,325 ha of reclaimed land) and native agricultural centres (2,430 ha of reclaimed land). (b) Animal husbandry. The main works: opening and repairing of open wells for 228 million lire; construction of river basins for 70 million lire. (c) Communications. The programme included the building of roads and tracks for 1640 million lire, the improvement of ports and coasting routes for 672 million, the building of airports for 193 million, telephone networks and other telecommunication services for 171 million lire. (d) Town refurbishment. Most of the works concerned the improvement of the residential areas of Mogadishu. (e) Skilled trades. The works concerned technical and financial assistance for tradesmen. (f) Industry. These investments concerned only fishing equipment, building and the repair of fishing boats, carpenters’ training, etc. (g) Trade. This sector had an expected expenditure of 184 million lire for the advertising, distribution and sale of Somali products abroad. (h) Credit. Investments in the credit sector were 4% higher than expected in the plan, as 18 million lire were paid in advance for the creation of an
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endowment fund for the construction sector with the same bank, in addition to the 411 million allocated to the endowment fund for Somali credit. 2. Private investments: (a) Town refurbishment. Private investments in this sector were 62% higher than public investments. (b) Industry. Among the main investments in the programme were those for cotton manufacturing (437 million lire) and for the SAIS sugar refinery (394 million), as well as 350 million for leather tanning and 438 million for fuel deposits. (c) Credit. A sum of 105 million lire was paid in 1954 as the contribution of the S.A.G. and S.A.C.A. to the endowment fund of Somali credit. In July 1963 the First Five-year Development Plan (1963–1967) was approved, in which the guidelines were laid out for the solid development of the Somali economy. This document was a serious attempt to list the main needs of the country in the various sectors and to estimate the financial cost of intervention. The plan provided for infrastructural and production investments for a total of 1,400 million Somali shillings, aid that should have come from international organizations and friendly countries. The list of expenditure broken down by sector in Table 4.2 shows, apart from the enormous squandering of resources, the attempt to do what Querini calls “balanced development”.16 This type of development meant investments had to be made simultaneously and in a number of different sectors so that wages could adapt the total demand to the new higher level of production. The plan proposed for this type of development, however, could not be easily adapted to the situation in Somalia, because the modern sector was still limited and its nuclei were too heterogeneous and geographically spread out over the vast territory of the country to be able to bear the weight of a simultaneous extension of productive capacity over a number of different sectors. Even if they had succeeded in finding the necessary capital to carry out the programme, the positive effects on employment and the purchasing power of the new wage-earners would have been almost annulled by the increase in the costs as a result of the growing scarcity of some strategic factors of production, such as entrepreneurship, specialized labour and public services. Table 4.2 above shows another great constraint on the programme, because the planners (Somali guided by foreign experts) decided that the greatest concentration of investments, 29% of the total expenditure, should go to the transport sector, whilst only 17.8% to agriculture. Basically, therefore, it can be said that what had been planned was not achieved and that this depended to a great extent on the fact that most of the contributions
16
Querini 1969, p. 164.
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Table 4.2 Investment forecast for the first 5-year plan in Somalia (1963–1967) Millions of Somali shillings % Agriculture 250.0 17.8 Irrigation. water reclamation and channelling 90.0 6.4 Industry 220.0 15.7 Fuel and Energy 25.0 1.8 Tourism 2.0 0.1 Transport 410.0 29.3 Post and Telecommunications 16.0 1.4 Settlement of people. town building and supply of water 115.0 8.2 State education 92.0 6.5 Health and veterinary services 43.0 3.0 Social assistance and community development 6.0 0.4 Information 10.0 0.7 Statistics 6.0 0.4 Studies, investigations and research 40.0 2.9 Banking and credit sector 75.0 5.4 1,400.0 100.0 Source: Commissione per la Pianificazione: Primo Piano Quinquennale (1963–1967), Mogadiscio 1963, p. 11
came from foreign sources and had been decided primarily for reasons other than the search for maximum economic efficiency. The real problems of the country persisted, such as the shortage of qualified workers for the running and maintenance of public works. Furthermore, the unskilled workforce could not adapt to certain types of jobs organized in a hierarchical structure, which contrasted with the ancient habits of nomadic life and clashed, therefore, with the logistics of activities run by foreign businesses with modern techniques. A small fund was set aside for the nomadic population and their settlements, though at times it seemed almost nonexistent as far as land development projects in their favour were concerned, which shows a “surprising indifference to the problem of the nomadic population”.17 But, in fact, this indifference fitted in perfectly with the plan that favoured a certain form and a certain type of development and reflected the firm desire, as clearly expressed in its introductory report, to stimulate large private investments by offering all the concessions possible which were then to be channelled “into industries that had a good chance of being remunerative”. All this indicates a great opening to foreign capital. Following the failure of the plan, which was very evident as only 35.6% of the projects were completed, it was decided to tackle this shortcoming by starting a short term development plan in 1968 to compensate for the lack of earlier results. But unfortunately it actually reinforced the criteria for the distribution of expenditure. In this development programme only 7.7% and 6.5% of total financing went to agriculture and animal husbandry respectively, whilst the infrastructure sector
17
Pestalozza 1973.
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(transport, ports, water supply) received approximately 70% (705 million shillings). It also has to be said that the projects for this sector were aimed primarily to favour those areas where foreign companies were based, such as the banana plantations in the southern regions, which in any case absorbed almost all the funds set aside for agriculture. Even the short term development plan officially admitted that the funds from foreign aid had been used in unproductive or superfluous investments. Basically the 2-year plan, launched in 1968, worsened the imbalances in the economy, because of the biased allocation of expenditure. Once again internal financing amounted to only 12.5% and therefore the very increase in foreign aid (87.5%) shows how it had been conceived, under the guidance of West German experts, to try to rationalize the neo-colonial penetration of Somalia and make it more efficient. Nevertheless, investments in infrastructures (roads, bridges, telecommunications, etc.), though not immediately productive, are anything but “unproductive and superfluous investments”. They represent the starting point for any future economic and social development project. Aid was concentrated in big infrastructural works with a view to intensifying trade between towns and countryside, creating a rational division of labour on a national scale, lowering the costs of exportable goods and making them more competitive in international markets. However, it led to the population being spread out over vast areas and prevented the natural resources from being used more intensively and, consequently, an adequate agricultural surplus from being created. In this way the factors of production were also spread out and the continuing migration towards towns hindered the transformation of nomadic herdsmen into settled farmers and increased unemployment. These funds neglected the infrastructural investments necessary to increase the productivity of traditional agriculture and favoured urbanization. Another negative element was the fact that most of the infrastructural works were made by foreign companies, which used techniques with a high capital-labour ratio and foreign skilled labour. The tendency to use foreign assistance to realize the infrastructures, instead of using them in productive activities that exploited locally available resources, resulted from the fear of not using them effectively. All these observations about the difficulties rather than the advantages of the use of foreign aid only underline what was said at the beginning of this chapter. The best way for donor organizations to intervene would have been not to strictly link the granting of aid to specific projects, but rather to have allowed the Somali government greater autonomy in deciding their use and therefore to have given them the chance to make mistakes and at the same time learn from them. This point which is based on the analysis of data from the past is still very true today. In the short term the use of aid by the government could perhaps have led to less efficiency, but in the long run when its members realized they were responsible for their own destinies and to have finally broken with all ties of “direct” dependence, both political and economic, they would have contributed much more to the formation of a Somali ruling class than any educational programme or technical assistance through international experts.
4.6 Development Plans and International Cooperation
4.6
117
Development Plans and International Cooperation During the Somali Socialist Republic
Five development plans were prepared after the peaceful revolution of 1969, which led to the establishment of the Somali Socialist Republic with the socialist party the only political force in power18: • • • • •
Short Term Development Programme 1968–1970; Development Programme 1971–1973; Five Year Plan 1974–1978; Three Year Development Plan 1979–1981; Five Year Development Plan 1982–1986. The development strategies adopted after the 1969 revolution19 were aimed at:
(a) Increasing the standard of living of the population to the highest level possible; (b) Providing employment opportunities for the work force; (c) Creating a society based on social justice and individual freedom within a socialist system. The first two were deeply influenced in their approach by the Revolution that had just taken place. The economic policy decisions and choices were focused mainly on reaching food self-sufficiency through domestic agricultural production and the development of an efficient industrial system capable of “putting Somalia among the top African nations”.20 In addition to the general economic lines and the optimistic declarations about the future of the nation, the first two plans insisted on the importance of education and investment in human resources. The 3-year development plan for 1971–1973 was officially announced on July 22, 1971. There are two fundamental elements to be pointed out21: 1. It was a realistic plan with feasible objectives based on the reorganization of finance and increase in foreign aid, which was fundamental, but would not be accepted at any price; 2. Socialist development naturally determined the priorities in choices about production, the strengthening of the public sector and the subordination of the private sector to planning, but it also aimed at a political orientation and the growth of cooperatives, self-help and decentralization. One of the most important results was obtained in the agricultural sector with the formation of 419 cooperatives in the arid areas (150 ha each) and 69 in the irrigated areas (300 ha each). 8,385 farming families benefitted from assistance given to
18
NOMISMA October 1983. NOMISMA December 1984. 20 Ibidem, p. 169. 21 Pestalozza 1973, p. 37. 19
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develop agriculture by improving farmers’ knowledge about farming methods and how to run a business, providing technical means, assistance, etc. The objective was to convert farmers to more rational and productive methods and thereby put into practice the guidelines of the plan, that is, the enhancement of the human factor, moral encouragement and political orientation. The main points of the agricultural programme concerned support for farming communities, the formation of state farms, the drive given to the crash programme and the cooperatives to encourage the diversification of production and a radical change in the countryside, in the sense of extending the area of cultivated land to both avoid dependence on one single crop and reach self-sufficiency. The Five Year Plan 1974–1978 was the first with detailed economic objectives, both general and sectoral, and with indications about the instruments to be used to develop the economy. It also stated that loans and aid would come mostly from socialist countries.22 The funds provided amounted to 3,863 million shillings and the agricultural sector was given priority (36.6% of total funds, of which 79% for the cultivation of basic products) rather than economic infrastructure (31.6%); a small quota was given to industry (16.4%) and social infrastructures (12.3%). The fundamental idea was to improve the infrastructure of the country in the attempt to reach self-sufficiency in food. This project was, however, slowed down by two events that occurred in the 2-year period between 1974 and 1975. The first was the increase in international prices following the oil crisis; the second concerned the famine that hit the country. In this difficult situation the government found itself obliged to review the objectives set for expenditure in the plan and increase the monetary mass of investment funds because of the distortion in costs; the 4 million shillings that had already been decided upon almost doubled to 7 million. In this situation it was decided to favour the industrial sector (31.3%), but there was also an increase in the funds for agriculture (26% of total expenditure). The Three Year Development Plan 1979–1981 initially provided for an expenditure of 7,100 million shillings for 311 projects. After the drafting of the plan another 29 projects were added, for a total cost of 523 million shillings. In the course of the 3 years 97 projects were abandoned, 209 were started, but only 52 completed, adding up to real expenditure of 3,692 million shillings equal to 52% of the amount originally planned.23 Of the total amount of investments made agriculture received 30.4% of the funds, industry 21.1% and economic infrastructure 33.3%, showing that agriculture was becoming increasingly important. 68.3% of the total real expenditure came from foreign financing, of which 59% in the form of loans, 35% as grants and the rest as export credit, whilst the remaining 1,170.1 million were domestic.24
22
Istituto Italo-Africano 1975. It is important to remember that this expenditure did not necessarily implicate the execution of the works as programmed. There was still no assessment of the real investments in their physical and organisational realization. 24 The biggest percentage, 75%, came from the government’s budget. 23
4.6 Development Plans and International Cooperation
119
The Five Year Development Plan 1982–1986 provided for investments for a total of 16,298.2 million shillings: foreign financing amounted to 13,099 million shillings, whilst 3,199 million were collected from domestic sources. The funds were allocated to the different sectors in the following way: agriculture received 47.2%,25 industry 16.2%, economic infrastructure 18.7% and very small percentages to other sectors. What immediately becomes evident is a net intensification of intervention in agriculture, which shows how the government intended to trigger off economic recovery through the satisfaction of basic food needs. The innovating feature of this plan was the parallel drafting of a Programme for Public Investments (PPI) which drew up a list of projects that were to be given priority in the period between 1982 and 1986. Total investment expenditure for the PPI projects was 16,048 million shillings (equal to 1,066 dollars), which was less than the budget for the Five Year Plan. The first draft of the PPI was characterized by its undeniable effort to synchronize with the Plan, though still concentrating on new development projects. The PPI set itself the following objectives: (a) To accelerate the growth of total production by guaranteeing a rapid increase in per capita income; (b) To reduce the gap between rural areas and urban centres in income and access to social services for reasons of social equality, but also to limit urbanization and therefore urban unemployment; (c) To protect the environment and repair the deterioration of the land that was leading to the desertification of certain areas of the country in order to guarantee and improve the continuity of production on which the life of the country depended; (d) To encourage self-determination and popular participation in development. The weak point of the programme, which soon became evident, was the contradiction between the realistic, moderate strategy underlying the plans and the costly investment programme that was presented. For the first time, the government set itself objectives that differed from previous ones, as for example, the importance of the active role that the private sector could play and the need to rehabilitate and restructure the “old” plants instead of building new ones. But the main problem lay in the size of the expenditure forecast which turned out to be much greater than the most optimistic forecasts (2,307 million dollars were estimated at 1982 prices!). Another fault can be found in the type of projects, because the government placed greater importance on large scale projects with sophisticated technology and a great demand for materials and spare parts, when in fact it should have preferred small scale investments with rapid returns and a wide use of local inputs. This analysis of development plans in Somalia shows how changes in the strategy of the allocation of resources did take place, but, on the other hand, some
25
50% of these funds were for irrigation projects, whilst other large scale projects in fishing and animal husbandry accounted for 29%.
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4 International Aid to Somalia
aspects were recurrent. The sectors which received the most attention were industry and agriculture and agriculture, in particular, was to become increasingly important in later years.26 The development plans generally contained all the projects that could be potentially realized in the country, without expressing any priority in view of the discrepancy between the few financial resources available (of the country and donors) and the real need for investment funds. This failure to indicate intervention priorities weakened the efficiency of the programmes and ended by increasing inequality in the country. To conclude, we will quote the very explicit words of Ozay Mehmet, who said: “The lesson that we can draw from the experience of Somalia with foreign aid is that aid is always far from being disinterested gifts from benevolent donors. As one commentator has observed, aid today is so permeated with the egoistic interests of donor countries that it is not clear who is helping and who is being helped”.27
26
Somali industry basically transforms agricultural products, so that agricultural productivity directly influences industrial productivity. 27 Mehmed 1971.
Chapter 5
Conclusions
What has been presented in this book is an ethnically, culturally and socially complex situation, dominated for years, indeed centuries, by various power groups. The ordinary people of Somalia move on in an almost autonomous way. With no real power because of the poor mechanisms of representation in government, they have only the traditional system based on a subsistence economy to rely on. Without a change in direction and policy to give social classes and other nations the possibility to actively take part in the recovery of Somalia, there will never be a real chance to create internal unity. The economic situation of the country has always been difficult: it is one of the poorest countries in the world, weakened even further by foreign domination and, as a consequence, totally dependent on humanitarian aid. The Italian trusteeship was characterized by some quite substantial changes. In the first 8 years Italy provided Somalia with 54 billion lire, plus about 500 million paid to the personnel of the Italian state, therefore weighing on the budgets of various administrations. Italy’s involvement has, therefore, positively influenced the living conditions of the Somali people, with less imported food, an increase in taxes and other revenue for the state accounts and an increase in private bank deposits. Great progress was also made by Somalia both in the political sector with the functioning of the Legislative Assembly and local governments that proved to be responsible and fair, in the administrative field with the transfer of many civil and military offices to Somali and in the social field, especially in education and health. All this meant a great deal of prestige for Italy, not only in the eyes of the Somali people, but all African peoples. It was exactly this element that gave rise to doubts about the real reason that led Italy to intervene in such a devastated country and this can be seen in the words pronounced by Deputy Vedovato1 to the Chamber of Deputies when he presented a
1
Giuseppe Vedovato was a Christian Democrat deputy and senator from 1953 to 1976. President of the Parliamentary Assembly of the Council of Europe from 1972 to 1975, President of the National Association of ex-Parliamentarians of the Italian Republic, founder and editor of Rivista D. Strangio, The Reasons for Underdevelopment, Contributions to Economics, DOI 10.1007/978-3-7908-2778-1_5, # Springer-Verlag Berlin Heidelberg 2012
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bill on the state of the budget for the Ministry of Foreign Affairs for the year 1957–1958.2 According to the Deputy the trusteeship of Somalia was requested by Italy more for internal political repercussions or general politics than for a real interest in an Italian policy in Somalia and in Africa. However, it is well to remember the particular Italian political climate of 1948 which was characterized at an international level by a still ill-defined position for Italy at the table of the great international powers and at a national level by the sensitivity of public opinion at that time. The trusteeship was taken on almost as an end in itself, without preparing a programme to harmonize the work of the mandate in the pursuit of possible Italian interests or objectives in Africa. For a certain period most of the attention of the trusteeship was directed at the solution of immediate problems of a political nature, rather than with the defence of potential interests in Somalia. The economy of the country was based on trade that was strongly in contrast with the subsistence level of local activities. During the trusteeship Italian agricultural firms produced about three-quarters of the value of the production that could be sold, Italian industrial firms produced seven-eighths of the total value and Italian traders owned about half the commercial activities in the country, all with large quotas. The value of Italian goods in Somalia was estimated at 46 billion lire, but it fell to about 24–25 billion at market value, because of the general lack of purchasers and uncertainty about the fate of European property after 1960. The data shows, however, that the total value of Italian goods was lower than the figure spent on governing the protectorate, the Italian community was getting smaller as the time for independence approached and Italian exports to Somalia depended on the importation of Somali products, especially for bananas at preferential prices. Consequently, doubts grew about the advantages of continuing aid for Somalia after 1960. In view of all this, it seems quite logical to place the economic purpose of Italian policy in Somalia within a broader contest and to link it to the intent to extend its influence throughout the African continent, which was extremely rich in minerals and raw materials. In this sense Italian intervention was a failure, partly because of the fact that the personnel of the AFIS was mostly made up of officials from the ex-fascist colonial administration, but mainly because of the many errors made by the Italian administration that can be summarized as follows: • The creation of an excessively large bureaucratic-administrative organization that reproduced the defects of the Italian one and included institutes that were alien to the Somali situation.
di Studi Politici Internazionali. He was Emeritus Professor of History of Treaties at the University of Rome. He wrote many articles on international politics and led diplomatic missions to many African, Asian and Latin American countries. 2 ASBI, Banca d’Italia, Studi, pratt., n. 1009, fasc. 1.
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• The adoption of a constitution written by Italian jurists that was difficult to apply and was to remain a declaration of intent. • The unconditional support of a single crop, the banana, which favoured Italian concessionaires. • The failure to define the border with Ethiopia, which in time was to encourage Pansomalism and create the premise for Siad Barre’s disastrous adventure in Ogaden.3 The only positive point in this context was the organization of an embryonic Western-type banking system, sustained by a central bank, which regulated monetary flows. These flows were based on one currency, “the somalo”. The creation of the monetary system was thanks to the technical ability of the Banca d’Italia. The great attention given to banana plantations was not dictated by a real desire to improve the internal conditions of the country, but rather by acquiescence to Italian groups interested in maintaining the preferential treatment for the importation of Somali bananas. This, on the one hand, favoured an increase in profits for Italy and on the other limited the development of the total quantity of exports. Insistence on the development of the plantations responded to purely mercantile needs, because bananas were not only the main items in the balance of payments, but also one of the fundamental sources of revenue for the state accounts thanks to the various taxes and duties levied directly or indirectly on production. There was an urgent need for factors of production that were particularly scarce in Somalia, such as fuel, fertilizers and skilled labour, with the additional problem that labour was used in jobs that were highly seasonal. There was also little opportunity to absorb the relatively abundant factors of production, namely nonirrigated land and unskilled urban labour.4 Another problem for the commercialization of bananas was the fact that they perished in a very short time and therefore required a capillary network of infrastructures to quickly harvest and transport them to the coastal commercial centres for loading and stowage. Equally important was the need for great entrepreneurial ability and capital which were then directed away from alternative uses that better absorbed local resources. One of the greatest problems facing the plantations in starting an accumulative process of development was the limited possibility of creating local value added, because the exported good was produced mostly by foreign operators with modern capital goods and skilled workforce, whilst very few underemployed factors of production were absorbed. After independence things did not change much. Production went through a series of crises and recoveries. Attempts were seemingly made to improve the situation by increasing the number of Somali businesses as compared with Italian ones and by letting them run them as autonomously as possible. But, all in all, this
3 4
Corriere della Sera, July 9, 1993, p. 9. From an interview with Angelo Del Boca. Querini 1969, p. 204.
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did not really happen because, even though they were more numerous, they actually worked a much smaller area. Attempts to improve the plantation system continued under Siad Barre’s government within the view of a “socialist revisitation”, but even in this case no significant results were obtained because the long awaited agrarian reform was never implemented. The regime continued to maintain power over the main landowners and the state’s general condemnation of the formation of independent workers’ unions and industrial action, together with harsh military justice, blocked any chance of progressive social improvement in the plantation economy. Working conditions were not very different to those during the period of colonization. Basically it can be said that the situation in Somalia, instead of improving, actually deteriorated. Italy once again began to take an interest in the sector in 1983 with the setting up of Somalfruit, a joint venture run by the De Nadai group, which had created a real multinational, almost suggesting that it was fate that had decided Italy should manage this crop. Theoretically, the exportation of bananas helped to revive the economy of the country. But, in practice, profits remained the prerogative of foreigners and, in spite of the growth of banana exports, the workers in the sector did not receive any benefits in either wage rises or working conditions. This research has shown the very particular profile of the role played by the many Italian firms present in Somalia which were aiming at economic development driven by private enterprise. Their initial objectives were dictated by the most noble of intentions, such as promoting the agricultural activities of workers’ families and stimulating at the same time a greater production in agricultural produce for direct consumption. These programmes were made possible by the great commitment of the founder of the SAIS. But, even in this case, as often happened with Italian projects, the good intentions were lost along the way. The situation of the SAIS began to change immediately after the death of its founder until it was transformed into the SNAI in 1963, later to be nationalized in the 1970s and then followed by the formation of cooperatives. Cooperatives too aimed to promote economic development and the social advancement of its members, who had to actively take part in the cooperatives by contributing their products, giving their labour or using its services. Even in this case, however, the hoped-for development did not happen. This was once again because of the lack of financial support, since the credit conditions for the cooperatives, especially the interest rates, generally were no more favourable than those for individual firms or partnerships. The socio-economic situation in Somalia certainly did not improve in the period of Siad Barre’s dictatorship, not so much as a result of his real despotism, but because of Italy’s total lack of interest in its ex-colony. Siad Barre, on his part, complained continuously, together with his minister, about the insensibility of Italy, saying that “I can frankly and sincerely say that we have continuously received Italians here in Somalia over the last 11 years. When they are here with us they make so many promises, but when they leave and go back to Italy, nothing
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materializes and we don’t know why”.5 These words indicate how some fundamental faults underlay political-economic cooperation between Italy and Somalia that could not be solved in the short term. From the period of the trusteeship in the attempt to put Italian aid to as much practical use as possible, development plans were drawn up with bilateral agreements, which should have brought the country out of its heavy underdevelopment, but instead ended by making conditions worse in some cases. In short, dependence on foreign aid increased, which in many cases was motivated by reasons other than the search for maximum economic efficiency.6 It did not even manage to deal with the real problems, such as the lack of personnel necessary for the functioning and maintenance of public works and the productive activities of foreign companies with state-of-the-art techniques. Very often these companies came up against logistic problems, as for example unskilled labour that was unable to adapt to certain types of jobs organized in an excessively hierarchical structure, because it was still tied to the ancient customs of nomadic life. The words of Jean He´le`ne, a well-known French journalist specialized in African affairs, are emblematic. She said, “Italians have opted for indiscriminate aid: a few tons of food deposited here and there in big Somali towns. According to observers, the Italian attitude, incomprehensible to many, meant that Rome would give more, if the Somali made more effort to reunite the country”.7 In conclusion, Italy had returned to Somalia without knowing why and remained there without declaring a real policy, which can in part explain the many difficulties, uncertainties and delays in decisions taken in Rome, especially as Italian economic interests in Somalia were extremely limited and did not alone really justify a serious aid policy in the country. Therefore Somalia could not help but become a terrain for “experiments” for various international organizations and different foreign countries. And as Giampaolo Calchi Novati has written, “The policy that Italy followed with a tenacity close to an obsession lies under the ruins of Mogadishu, whilst there was a real need for so much criticism and self-criticism”.8
5
Del Boca 1993, p. 17. Even if it deserves more consideration, the recent considerations of Jean Touadi, on the African continent in general, are very important: “By violence to ourselves, we must have the courage to admit that we were not able to follow the rules set by the winners, and try to play our game according to rules to be negotiated with our partners. Rather than beg for aid from the West African political leaders should negotiate with their partners the need to leave the single thought of development” (Touadı` 2006, pp. 145–146). 7 Speech quoted in Del Boca 1993, p. 82. 8 Rinascita, January 20, 1991. From an article: Barre: perche´ cade una dittatura. 6
.
Appendix A
Summary Sheets: The Independence of Africa 1960 Benin (1) Name: Republic of Benin Capital: Porto Novo Population: 7,041,490 Independent Date: June 1, 1960 Burkina Faso (2) Name: Burkina Faso Capital: Ouagadougou Population: 15,224,780 Independent Date: August 5, 1960 Cameroon (3) Name: Republic of Cameroon Capital: Yaounde Population: 18,000,000 Independent Date: January 1, 1960 Chad (4) Name: Republic of Chad Capital: N’Djamena Population: 11,175,915 Independent Date: August 11, 1960 Ivory Cost (5) Name: Republic of Ivory Cost Capital: Yamoussoukroounde´ Population: 18,154,000 Independent Date: August 7, 1960
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Gabon (6) Name: Republic of Gabon Capital: Libreville Population: 1,424,906 Independent Date: August 17, 1960 Madagascar (7) Name: Republic of Madagascar Capital: Antananarivo Population: 16,473,477 Independent Date: June 26, 1960 Mali (8) Name: Republic of Mali Capital: Bamako Population: 14,517,576 Independent Date: September 22, 1960 Mauritania (9) Name: Islamic Republic of Mauritania Capital: Nouakchott Population: 2,667,859 Independent Date: November 28, 1960 Niger (10) Name: Republic of Niger Capital: Niamey Population: 10,075,511 Independent Date: August 3, 1960 Nigeria (11) Name: Federal Republic of Nigeria Capital: Abuja Population: 148,092,542 Independent Date: October 1, 1960 Central African Republic (12) Name: Central African Republic Capital: Bangui Population: 3,683,358 Independent Date: August 13, 1960 Republic of Congo (or Congo-Brazzaville) (13) Name: Republic of Congo Capital: Brazzaville Population: 2,954,258 Independent Date: August 15 Democratic republic of Congo (formerly Zaire) (14) Name: Democratic Republic of Congo
Appendix
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Capital: Kinshasa Population: 55,225,478 Independent Date: June 30, 1960 Senegal (15) Name: Republic of Senegal Capital: Dakar Population: 13,711,597 Independent Date: August 20, 1960 Somalia (16) Name: Somalia Capital: Mogadishu Population: 10,000,700 Independent Date: June 26, 1960 From United Kingdom, Republic of Italy from July 1, 1960 Colonial period: the Italian Somalia was, from 1889 to 1905, a protectorate, an Italian colony since 1905. From 1941 to 1950 was occupied by the United Kingdom. From 1950 to 1960 was under the AFIS for the UN. From 1960 to 1969: war with Ethiopia. From 1969 to 1991: the dictatorship of Siad Barre. From 1991 to 2004: UN mission failed and chaotic situation. From 2004 to 2006: transitional government, Islamic Courts and Ethiopia’s intervention. From 2007 to today: the humanitarian tragedy and piracy. The eastern Somalia is born as an independent state in 1960 (unification of Italian Somalia and British Somalia). It is currently divided into 18 regions called gobolka (gobollada), 6 of which have declared themselves independent states or autonomous within Somalia: Galmudug (autonomous state within Somalia in 2006) Maakhir (autonomous state within Somalia in 2007 but not recognized by the federal government of transition) Northland (autonomous state within Somalia in 2008 but not recognized by the Transitional Federal Government) Puntland (autonomous state within Somalia in 1998) Southwestern (autonomous state within Somalia from 2002 to 2006) Somaliland (self-proclaimed independent State of Somalia in 1991 but not recognized by the Transitional Federal Government)
Togo (17) Name: Republic of Togo Capital: Lome´ Population: 5,548,702 Independent Date: April 27, 1960
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Africa’s Map 1960
Appendix
Appendix B
Organizations and Treaties of the African Continent (From 1960 to the Present Day) The political field: • Belgrade Conference (September 1–6, 1961) of non-aligned countries)1 Members: Yugoslavia, India, the United Arab Republic, Afghanistan, Burma, Cambodia, Ceylon, Indonesia, Nepal, Saudi Arabia, Cyprus, Iraq, Lebanon, Yemen, Cuba, Morocco, Tunisia, Algeria, Republic of the Congo, Ethiopia, Ghana, Guinea , Somalia, Sudan, Mali. • Organization of African Unity (May 25, 1963–July 9, 2002)2 Members: Algeria, Angola, Benin, Botwana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad Comoros, Democratic Republic of Congo, Cote D’Ivoire, Djibouti, Egypt, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Libya, Madagascar, Mali, Malawi, Morocco (released in 1984) Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Saharawi Arab Democratic Republic (from 1984), Sao Tome and Principe, Senegal, Seychelles,
1
This followed the Cairo Conference of 1964, according to the non-aligned countries, involving 18 other African states, one of Lusaka in 1970 and the fourth, of Algiers in 1973. 2 The OAU was preceded by the formation of various groups formed by only a few African countries that represented the first attempts to build a continental federation. They are: the Group of Brazzaville (December 1960), which brought together most of the French-speaking countries and was conducive to a partnership with France, the African Union and Seychelles Islands – UAM – (Spring 1961), which has become, in March 1964, in the African and Malagasy Union for Economic Co-operation – UAMCE – and finally in the African and Malagasy Common Organization – OCam – supported by de Gaulle. At the other end of the political chessboard of the leftist regimes (Morocco, Ghana, Mali, Guinea, United Arab Republic) had created the group in Casablanca (January 7, 1961) against neo-colonialism, and the twelve members of the Commonwealth established the Group of Monrovia, a moderate trend. D. Strangio, The Reasons for Underdevelopment, Contributions to Economics, DOI 10.1007/978-3-7908-2778-1, # Springer-Verlag Berlin Heidelberg 2012
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Sierra Leone, Somalia, South Africa (since 1994), Sudan, Swaziland, Tanzania, Togo, Tunisia, Uganda, Zambia, Zimbabwe. • African Union (July 9, 2002) Members: Algeria, Angola, Benin, Botwana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad Comoros, Democratic Republic of Congo, Cote D’Ivoire, Djibouti, Egypt, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Libya, Madagascar, Mali, Malawi, Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Saharawi Arab Democratic Republic (since 1984), Sao Tome and Principe, Senegal, Seychelles, Sierra Leone, Somalia, South Africa (since 1994), Sudan, Swaziland, Tanzania, Togo, Tunisia, Uganda, Zambia, Zimbabwe. Human rights: • • • • •
Universal Declaration of the right of peoples or Charter of Algiers (July 4, 1976) African Charter on Human and Peoples’ Rights (June 28, 1981) African Charter on the Rights and Welfare of Children (November 1990) African Charter on Human and Peoples’ Rights (June 10, 1998)3 Maputo Protocol on the Rights of Women (July 11, 2003)
Economic context: • Yaounde´ Convention (20 July 1963–1969) Members: European Economic Community and SAMA (African and Malagasy States associated)4 • African Development Bank (1964) • East African Economic Community (1967–1977)5 Members: Kenya, Tanzania, Uganda • Arusha Agreement (1969) Members: European Economic Community and East African Economic Community • Lome´ Convention (Febraury 1975)6 Members: European Union and the countries belonging to the ACP (Africa, Caribbean, Pacific) • Lagos Plan of Action for African Economic Development (April 1980–2000) Members: Organization of African Unity
3
Provided by the Additional Protocol to the African Charter of Human Rights. They, in 1971, with the second Yaounde Convention, also joined the island of Mauritius. 5 Will be re-established in 2000, keeping the same name, by the three founding countries, Rwanda and Burundi. 6 The Convention has since been renewed every 5 years until 1995, that date were 55 participants. 4
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• Abuja Treaty (June 3, 1991)7 Members: Organization of African Unity • NEPAD (New Partnership for Africa’s Development) (October 2009) Members: African Union • Paris Declaration on Aid Effectiveness (March 2, 2005) • ACCRA Conference on Aid Effectiveness (September 2–4, 2008)
7 This treaty established the African Economic Community (AEC) who poses as an objective the creation of free trade areas, customs unions, a single market, a central bank, a common currency.
.
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