‘Will the Somali model help South Africa avoid recession?’ asks The Fringe, a headline that has to be surely one the more provocative in terms of shock value that I’ve seen in years.
This is in context of South Africa’s festering economic wounds. Its president, Jacob Zuma, is reported to have described South Africa’s economy as “sick.
What is really under discussion is the Somali entrepreneurs whose discount cash and carry retail stores are flourishing in Joburg’s townships. The Somalis, it seems, rely on rock bottom prices and slender inventories to make money.
What that seems to mean is that if you rarely carry a huge selection of items, you’re less likely to have made a bad investment in something that just doesn’t sell (or sell fast enough). Makes sense, for South Africa’s townships, the shanty towns that snuggle up to Indian cities. Jalousie, up in the hills above Port au Prince (it is the Caribbean’s largest slum). In other words, places where the cash flow is limited and the people’s needs are trimmed to match.
I’m not sure, however, that it’s a formula for entrepreneurial success almost anywhere else.