How Can Somalia-based Companies Sell Equity?

A year has elapsed since Somtel sold shares to the public at an event in Mogadishu. The telecommunications company of Dahabshiil Group went down in Somali business history as the first company to publicly sell shares. This will remain a competitive edge of Somtel’s until other companies follow suit.

Raising an equity capital is one of the ways a company takes advantage of growth opportunities in a saturated market. The decision to sell shares reflects realisation that Somalia-based conglomerates can no longer practise cronyism when selling equity. For a company to sell shares it has to ensure interested investors in any part of the country can buy shares. The business ecosystem of Somalia makes such a goal difficult to attain. Somalia does not have a Stock Exchange.

For investors to buy shares in a given sector they will need to make informed decisions. Types of shares sold and for what price are as a useful decision-making tool as dividends companies pay and the number of shareholders.

Somali businesses have entered a new phase. Companies selling equity will have to make disclosures.

Ranging from how the company is run to the economic case for raising a capital from the public. Wealth creation cannot by itself be a sound reason for increasing the number of shareholders.  If investors can buy shares they should be able to sell their shares if the need arises. The practice of holding a ceremony to publicise selling of shares to investors paves the way for the setting up of brokerages through which retail investors can buy or sell shares.

   Chairman of Dahabshiil Group

Saamiga (meaning the share in Somali) is a Puntland Post initiative to promote the creation of Somalia-based brokerages. It will follow the trend of selling shares.Saamiga aims to eventually become a brokerage. It will collaborate with business economists, commercial lawyers, accountants to help investors make sense of the wealth creation opportunities that buying shares in Somalia-based companies may provide.

© Puntland Post Monthly, 2019

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