Dauus is one of the flagship diaspora companies breaking into East African markets, filling needs that previously went unanswered. Their branded daipers and sanitary products can also be found on sale in the US. We've been speaking to them about how they operate and what inspires their business.
JD: I saw on your website that you were inspired to create the company by the difficulty of getting feminine hygiene products in East Africa. Could you tell us more about how you got from setting out to solve the problem to where you are today?
Dauus: It all started with a visit of young women from Minnesota to Hargeisa, Somaliland. She could not find high quality female pads. As a result, the idea of building high quality branded consumer packaged company was initiated. The first brand was Bilan female pads, we the logically followed it with NuNa premium baby diapers and NuNa baby wipes. These three lines of products are the core brand of Dauus.
In order to best market to Somalis back home - we initially launched all products in the US. The timing was perfect - July first Somali independence day in Minneapolis. we exclusively sponsored the whole event. This generated huge media coverage across all Somali communities around the world because it was the first time that Somali company exclusively financed the whole event. This allowed us to brand these products as high quality "made in USA" products. In the weeks following the event, over 50 retails stores in Minneapolis carried our products, many retail stores in other states followed. So we proved to ourselves that if we could sell it in America we can sell it to anywhere. We immediately started putting the strategic plan to start operations in Somalia. Today, in Hargeisa we serve over 350 stores every month.
September we plan on moving to Mogadishu to repeat the same process of building on the ground infrastructure.
JD: What are you aiming to achieve in the next five to ten years?
Dauus: There are 12 countries in the Horn of Africa with 300 million people. We want to be the brand of choice in the categories we compete. Currently, we have a plan to open distribution centers in Mombasa, Nairobi and AdisAbaba the next 18 months. We plan on serving over 1 million customers across these 5 cities.
In ten years, we will build full end to end production facility in the region. There are none today in Horn of Africa.
JD: There's something of a Somali investment boom going on right now. From an entrepreneurial point of view, what are the risks and rewards of investing in Somalia at the moment?
Dauus: This is very interesting question. Many of the so called investment boom is simply not true. 50% of the investment boom is based on perception/hype that is far from the reality. I spent the last 6 months in Hargeisa and Mogadishu (mostly in Hargeisa). I did not see above average new business start ups. However, I saw many Somalis from diaspora returning and exploring ways to invest, rebuild their homes and make difference. But this cannot not be equated with real dollar investment yet. So we should probably put the investment boom story in perspective.
On the risk/rewards in investing in Somalia are both high. Business that require high capital equipment and the acquisition of real assets like real estate are taking the highest risks because security is still below average in Mogadishu.
On the other side, we believe business like Dauus, whose assets are soft assets: brands, leased distribution centers and offices and human resources mitigate there risks much better while maximizing there rewards. For example, if the security of Mogadishu was to deteriorate - all we have at risk is our finished goods inventory! Everything else can easily be moved.
JD: Huge numbers of diaspora Somalis have been going home to start businesses. Do you think that they're changing Somali culture and society?
I don't necessarily believe just diaspora Somalis business owners are the only ones having positive and negative effect on Somali culture. There are other groups e.g. Religious groups financed by Arab countries that import Arabic norms, believes and values that are sometimes radically different than Somali culture. It feels like Somalia is the center of clash of civilization. S yes, huge changes of culture and society are underway but have not reached a tipping point for any side.
JD: You've been organizing investor events in various cities lately. What would you say are the differences between doing business in Mogadishu and in Hargeisa?
Dauus: Mogadishu: large market, very price sensitive, high risk, no middle class customer segment, either very rich or very poor in refugee camps
Hargeisa: mid size market, very stable and peaceful, quality matters and less price sensitive, high costs of doing business with regulation, high energy costs and high local government taxes.
JD: What changes in government policy would you like to see in the next few years to encourage business in Somalia and improve the economy?
Dauus: For Somaliland: efficient business friendly government agencies e.g. It can take more than 10 days and multiple visits to different government agencies to just incorporate and receive business license. They could simple house all 4 different government agencies in single office in one building rather than 4 different locations. The government should create free zone port in Berbera.
For Mogadishu: focus on security. Fix the security first. Transparency and equal playing field for all business. Current government gives indirect support to certain business giving competitive advantage to these business.
In general for all, anti- trust laws. Gigantic financial institutions often engage trading the same goods and services their customers are engaged in.
JD: Thank you!
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Somalia is the hot new investment destination. Have you got what it takes to make money doing business in Somalia?
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