Drinks giant Coca-Cola has announced plans to construct a bottling factory in the self-declared sovereign state of Somaliland.
The world’s largest soft-drink maker said that economic growth and stability in the breakaway region makes it an attractive business prospect. So far some $10 million has been invested in the venture.
Currently Coca-Cola beverages are supplied to the region by Egypt, Djibouti and the United Arab Emirates, with import costs making for a hefty price tag for the average Somalilander in comparison to local brands.
Local businessman Ahmed Osman Guelleh, owner of Somaliland Beverage Industries, saw the gap in the market and set about bringing Coca-Cola and their multi-millions to the region. He was given permission to run the bottling factory, which is currently under construction in the capital Hargeisa.
The plant is scheduled to be operational by end September 2011.
Somaliland declared independence from Somalia in 1991 in order to isolate itself from the violence of the ongoing civil war. The sovereignty of the region has not yet been recognized by any country.
Somaliland’s economy is currently dependent on financial contributions from Somali citizens working abroad, as well as livestock products and exports to North Africa and the Middle East. But the economic stability of the breakaway state is attracting more international players like Coca-Cola, which is contributing to Somaliland’s growth and building its status as an important economic hub in the region.
Ongoing Fighting a Business Roadblock
Coca-Cola was first bottled in Somalia in the capital Mogadishu in the 1980s, when the country was still united. The factory was later destroyed in the civil war.
In 2004, the drinks behemoth came back to the Somali capital with the largest single investment in the country since it fell apart in 1991. It was heralded as the beginning of a new era for Somalia, where foreign partners could return to do business without fear. However increased numbers of armed security forces surrounding the new bottling plant spoke otherwise.
The Somali government has been battling Islamist insurgents, including the al-Shabab militia, since 2007. Most of southern and central Somalia is under rebel control.
The recent upsurge in fighting has brought Coca-Cola’s production to an indefinite standstill in Mogadishu, as African Union and government troops attempt to drive Islamist rebels from the capital. Ndema Rukandema, Coca-Cola’s franchise manager for the Horn Islands and Middle Africa, says the drinks company’s trade agreement in mainland Somalia is currently not operational.
Investment in Community Initiatives
Coca-Cola is an established brand throughout Africa, having done business in countries like Nigeria for over 60 years. In 2001, the company established The Coca-Cola Africa Foundation (TCCAF), which invests in community programs and initiatives across the continent.
The TCCAF also launched the Replenish Africa Initiative (RAIN), targeted at developing infrastructure to implement sustainable, clean water facilities and practices in African communities.
The foundation also participates in community initiatives such as malaria and HIV/AIDS prevention, and education and employment opportunities programs.
Key Players – World Soft Drink Industry
- Pepsi Co, Coca-Cola Co, Cadbury Schweppes, Dr Pepper Snapple Group, Nestle, Princes Ltd., Cott Ltd, Britvic PLC