Famine in Africa

An ‘informal economy’ in Kenya

Scott Tong Nov 16, 2011
Famine in Africa

An ‘informal economy’ in Kenya

Scott Tong Nov 16, 2011

Steve Chiotakis: This week the United Nation’s Childrens Agency UNICEF said an increasing number of kids in Somalia are getting caught in the crossfire in violence there.

Somalia’s been in shambles for more than 20 years now. A lot of people have left, giving rise to an informal economy next door in Nairobi, Kenya — in a place called ‘Little Mogadishu’ — the first of 3 stories from East Africa.

And Marketplace’s Scott Tong filed this report.

Scott Tong: Here in Kenya, the big topic is immigration from Somalia. Most Somalis land in an edgy part of Nairobi called Eastleigh.

Local economic analyst Robert Shaw.

Robert Shaw: It is almost like a state within a state. You can go there, you can get almost anything.

Tong: You mean, legal and illegal?

Shaw: I’m sure there’s both.

Cell phones, bootleg DVDs, what appear to be designer clothes.

Tong: I’ll give you a thousand for all that.

Vendor: It’s not possible, brother. We can’t even get profit.

Eastleigh is booming, but the investment is hard to track. Eastleigh native Hussein Farah says deals here tend to be off-the-books.

Hussein Farah: In the Somali community, we don’t go into a lot of writings. We work on what is known as mutual trust.

At least part of Eastleigh comes from what you and I would call the bad guys. Here’s analyst Peter Pham at the Atlantic Council.

Peter Pham: There was an explosion of development that somehow coincidentally was timed to the same time as the explosion in piracy and explosion of ransoms.

It’s not just pirates and ransom. Somalia’s radical Islamist group Al-Shabaab has crafted a complex web of illegal trade linked, of all things, to kebabs. First, Shabaab suppliers chop down Somali trees for charcoal, which then gets exported, says Rashid Abdi of the International Crisis Group.

Rashad Abdi: The key destinations are actually the Middle East. And it’s primarily used in the hotel industry for charcoal grilling.

The proceeds buy sugar, which Al-Shabaab smuggles into Kenya and sells on the black market.

Abdi: The sugar you will be having in a restaurant in Nairobi will probably be sugar that was imported through a business that is now increasingly controlled by Al-Shabaab.

It seems an open secret here in Little Mogadishu, the nefarious stirred in with the legit. But Abdi doesn’t expect a crackdown. Why? Because the gray economy here is booming. Even in Kenya, it comes down to jobs.

In Nairobi, I’m Scott Tong for Marketplace.

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