Gulf investors eyes lured by high return Business Venture In Somalia

SHARJAH, United Arab Emirates, Jan 27 (Reuters)
Gulf Arab investors are considering opportunities in war-torn Somalia in areas including energy and livestock, lured by high return possibilities.

Participants at a U.N.- sponsored conference on the role of the private sector in Somalia expressed hope on Monday that their investments could also help stability in the Africa country.

"What we're trying to do is promote stability by generating revenue for the state so it doesn't have to depend on aid and would have its own resources," said Sara Akbar, chief executive of Kuwait Energy, an independent exploration and production company which is looking to invest in Somalia's oil and gas sector.

"When you invest in high risk, you get high return," she told Reuters on the sidelines of the conference in Sharjah, in the United Arab Emirates.

KEC is 40 percent-owned by Kuwait's Global Investment House (GLOB.KW: Quote, Profile, Research), Aref Investment Group (AIGK.KW: Quote, Profile, Research) owns 37 percent, while a Chicago-based company owns 15 percent and the rest is held by small shareholders, Akbar has said.

Ahmad Bahafzallah, consultant for Saudi Arabia's private al-Jabri company which imports cattle from Somalia, said the country presented a competitive advantage.

"Our profit margin in Somalia is bigger than in Sudan for example as prices of cattle there are lower," Bahafzallah said.

"But also doing business in Somalia helps to create stability because we are paying taxes to Somaliland and Puntland, which go to building infrastructure, hospitals and school."

Somalia's Prime Minister Nur Hassan Hussein earlier this month named a new cabinet to replace one that fell apart in December over clan bickering.

Mired in anarchy since warlords toppled military leader Mohamed Siade Barre in 1991, Somalia lacks adequate legal framework and infrastructure and does not have a banking system.

"The lack of security and stability is a big challenge but we try to work in areas that are safe," Akbar said.

"What could be done is that a law has to be drafted to regulate the relationship between the government and investors and be fair to the people so they can get their share."

Conflict killed 6,500 civilians in the capital Mogadishu in 2007 and wounded 8,156 more, a local human rights group says. More than 600,000 people have fled their homes due to fighting that erupted when President Abdullahi Yusuf's government, with the aid of Ethiopian troops, unseated an Islamist movement. (Reporting by Ola Galal; Editing by Ron Askew)