By Rowan Philip
In April, the Wall Street Journal reported the seemingly astounding fact that American businessmen had invested in a seaside resort in war-torn Somalia.
With interests in security force training and real estate in post-conflict societies, Michael Stock revealed that his company, Bancroft Global Investment, poured $25 million into various Somali business startups. One business, a 212-room resort called International Campus, comes complete with its own armored bunker and trauma center.
Similar “frontline entrepreneurship” in Africa’s post-conflict zones has emerged as the driving force for economic recovery in at least three countries in the past decade.
Like Stock, some were forced to take financial and physical risk themselves.
While Rwanda’s civil war raged, Praveen Moman – who had grown up in Idi Amin’s Uganda – returned from exile in India to launch a high-end tourism business in one of Rwanda’s conflict zones.
Offering gorilla eco-tourism and luxury lodging, his Volcanoes Safaris outfit now attracts tourists from around the world including people like Chicago Mayor Rahm Emanuel and the president of Macy’s.
Most war zone entrepreneurs have sought the seemingly impossible – long-term loans. With little or no surviving collateral and the prospect that businesses could be seized at any moment at the point of a gun, this would appear insurmountable.
Despite the concern that renewed fighting might cause repayment defaults, a Dutch non-governmental organization, SPARK has arranged “soft loans” and training for war zone entrepreneurs in Burundi, Liberia and Rwanda.
According to a recent report by the U.S. Council on Foreign Relations, 70 percent of all businesses in Liberia started after the formal end of its brutal civil war in 2003.
Despite the war having diminished per capita gross domestic product by 90 percent, Liberia’s economy has since grown an average of 12 percent per year. The report highlighted the business of one Liberian man, George Howard, who lost almost everything in the war except his life and a broken Caterpillar front-end loader.
Like many war survivors, Howard – seeking to repair the equipment and tackle the rubble on Monrovia’s streets – applied for a post-conflict loan from the Liberian Enterprise Development Finance Corporation. The terms included training and allowed long-term repayment.
In 2012, Howard won a $1 million waste management contract from World Bank.
Liberia ranked in the top 20 percent and ranked No. 35 out of the 183 economies surveyed for ease of starting a business, according to a report by the International Finance Corporation in 2012.
Mozambique and Rwanda have shown similar growth. These countries were among the poorest and most chaotic in Africa in the 1990s.
Ten years ago, I met an entrepreneur in Maputo who had won a lucrative contract from a Scandinavian aid agency to find and eliminate the anti-personnel mines which he himself had laid as a rebel commander in Mozambique’s civil war.
At first glance, it seemed the most cynical business plan imaginable. But I came away from the meeting with the sense that post-conflict zones place their own unique imperatives on the laws of supply and demand, and that contracts like this were defensible. The ex-colonel wept openly in the interview, as he described how rural villages – abandoned for fear of mines – had been repopulated within months of the clearances; a whole agrarian way of life restarted for people who had, in some cases, resorted to begging on the streets of Maputo and Xai Xai.
Michael Stock faced similar criticism as a director of a twin company, Bancroft Global Development, which is training Somali security forces to combat the terror threat posed by the Al Shabab terror group.
Stock’s investment is unique because he has a direct role in reducing the risk to his resort. He is paid by the African Union and the United Nations to train roughly one-third of the 17,000 Amisom peacekeepers in Somalia.
Although rejecting the “mercenary” label, Stock admitted to the Wall Street Journal that business processes unheard-of in the west were required to make real estate deals work on the frontlines.
The Journal wrote: “It took dozens of meetings with government officials, clan leaders and neighbors of the properties. You have to spend a lot of time figuring out who is who…There is no formal contract for the land, but rather consensus building…that results in a verbal go-ahead from the collective parties.”
Moman had no such risk control when he relaunched tourism in Rwanda in 1997. For him, the risks faced by the endangered gorillas made his own physical risk seem minor.
In an interview with Caravan magazine, he recalled that, at the time, war-weary villagers were used to only three groups of people who took initiatives: government officials, soldiers and priests. Going door to door seeking staff and community partners for his venture, he was assumed to be a priest.
A two-year search for a plot of land near the gorilla’s habitat was followed by multi-party negotiations of the kind Stock described, as well as wildly unrealistic sale prices demanded for tiny tracts of private land.
Patience and earned respect are the principle negotiating qualities in common between Stock and Moman. Rwanda was so ravaged from the genocide that even basic plumbing items like toilets and basins, had to be imported. Now Moman has four lodges in Rwanda and Uganda.
In a Q&A with Adventure Travel magazine, Moman described the challenge of staffing in a post-civil war environment: “It is a challenge – especially in Rwanda where the memories of genocide can be stronger and staff can have fears about working with people from different groups. We try and work in a way that is ethnic and gender neutral and work to build bridges between human beings of all backgrounds.”
He added, “It takes a long time to do things in post-conflict areas as infrastructure, people, education, training skills have been destroyed and you have to start at zero. But the human spirit is strong and people want to pick themselves up and progress.”