U.S. companies seeking to enter and invest in Somalia should understand the local context and market dynamics. Conducting market intelligence and research is critical for a strong business foundation.  This includes possible market channels, such as developing partnerships and relations with Somali companies through joint ventures.  Franchising is relatively new in Somalia, but it has been introduced and adopted by members of the returning diaspora.  The use of agents as distributors is also growing, with a few agents in heavy equipment such as tractors becoming common.  However, it is crucial to do due diligence and conduct background checks and verification of potential partners.  Regulation enforcement is weak, and business relationships are often informal.  Most large reputable Somali businesses are registered and have a presence in other countries in the region such as Kenya, Djibouti, and the UAE.  To increase the enforceability of contracts, some foreign investors enter partnerships through offshore relationships or entities registered outside Somalia.  It is also considered strongly advisable to seek local legal services before entering any business partnership.  Business relationships are based on trust, often informal and through acquittances.  Email correspondence is not common at the initial stages of business relationships.  Telephone and face-to-face meetings are generally the preferred ways of business communication and connection.

Somalia has strong business member organizations that can be good sources of business partnerships, networks, market intelligence, and due diligence on potential partners.  For example, the Somalia Chamber of Commerce and Industry is a reputable organization with a nationwide presence.  Due to years of conflict, Somali business leaders have established connections and presence across various countries and business hubs such as Kenya, Dubai, UAE, Turkey, Ethiopia, and Djibouti.  Business meetings commonly take place outside the country.

In advertising and outreach, the Somali language is the primary means of communication, and various local radio and TV stations exist.  Social media is commonly used for advertising and connecting with customers and buyers. Facebook, YouTube, Twitter, and Instagram are widely used nationwide. 

U.S. products and services are considered highly valuable and high quality despite having higher prices relative to counterfeit products.  Market research and media/communication strategies are considered essential for entry into the Somalia market.  Post-sales-service for maintenance and repair of products—especially electronics, machinery, and other capital goods—may be critical in some market segments to ensure customer satisfaction and engagement.  For services such as consulting and advising, it is generally considered crucial to have a presence or connection through local partners, franchises, or joint ventures.

Somalia is connected to international markets, and trade, shipping, and distribution are relatively efficient.  Several large global shipping companies operate and anchor in Somalia’s ports.  Maersk, MSC, and other major shippers typically dock in Berbera and Mogadishu, while smaller vessels land goods and products in Kismayo, Berbera, Bosasso, Garacad, and Hobyo.  Regional distribution hubs exist across the country, and delivery of goods and products to the hinterland is typically done through local agents and traders.  Local delivery companies exist that deliver light goods and products from regional capitals like Nairobi to other local towns in Somalia, including Mogadishu and Hargeisa.  Local flights are available from main cities such as Mogadishu and Hargeisa to several regional towns and cities.  Local airlines and travel agents exist, and delivery and distribution services are relatively accessible.  Large and heavy machinery that transits via roads can be challenging to move, especially in southern Somalia, due to lack of a proper road network, illegal checkpoints, and extortion leading to additional costs and risks.  Appropriate due diligence and market intelligence is required for such product delivery and distribution.

Somalia is composed of federal member states, and at times different regions require local licenses, business registration, and taxation irrespective of registration at the federal government level.  Hiring a local legal advisor or operating through local agents or a subsidiary or joint venture model makes some operational challenges relatively easier and may reduce risks and complications.