Business key to job creation and economic growth

BANGKOK – When it comes to doing business, there are few places worse, it seems, than the likes of Myanmar and Somalia.  That’s at least, according to the World Bank, which has Myanmar ranked as worst in Asia – at 182nd of 189 rated economies – on the ease of doing business.

Rounding out the “Top 5” for worst in Asia in The World Bank 2014 Doing Business report – the latest annual assessment of the ease of doing business in economies around the world – are Timor-Leste (179th), Afghanistan (164th), Laos (159th) and the Federated States of Micronesia (156th).

None of them though – and Afghanistan in particular – should take heart in the retort, “Well, at least we’re better than Somalia.”  Nor should they see investment from a relatively more risk-tolerant and resource-hungry China as a solution.

Clearly, investing in Somalia is not for the faint hearted.  Somalia is quite literally off the charts, as the World Bank report once again skips Somalia competely.  Lawlessness and lack of reliable data are no doubt two of the factors why Somalia continues to be absent in the rankings.  When it comes to security and information, Mogadishu, sadly, might have more akin to Kabul than we might hope.  

Yet, just as in the Top 5 ranked economies for ease of doing business – Singapore, Hong Kong, New Zealand, the United States and Denmark – there are lessons to be taken even from Somalia on how best to grow economies and address persistent poverty, whether in Africa or in Asia. 

More than ever, given dwindling government budgets and reduced foreign assistance dollars, the private sector – whether brave entrepreneurs, small- and medium-sized enterprises or well-established and deep-pocketed corporations – can play a critical role in fighting poverty. 

With well-thought-through partnerships, such efforts can be done in a way that is good for business and more sustainable than aid packages subject to donor fatigue and annual budget cuts.

Just ask Alisha Ryu and David Snelson, the two American business pioneers first spotlighted by me in Fortune.  The two entrepreneurs are behind a Mogadishu guesthouse and security firm, which employs nearly 40 Somali men and women, and by a conservative estimate, indirectly supports another 400 extended family members.

Ryu, a former combat journalist, and Snelson, a retired U.S. Army warrant officer, have been living and running their business in Mogadishu full time since 2011. Last year, the US news program 60 Minutes described their role in digging up and returning to the United States the remains of a helicopter shot down and made famous in the book and blockbuster Hollywood film "Blackhawk Down."  Both recount the U.S. military raid to capture a Somali warlord. A deadly battle ensued, killing hundreds of Somalis and 19 Americans 20 years ago in Mogadishu this past October.

That battle was just one of many tragedies in this restless nation on the Horn of Africa. Since then, Somalia has been by ravaged by clan warfare, and feared worldwide as a breeding ground for pirates and al-Shabaab militants.  

Ryu told me, “It was, and still is, our hope that by showing it is possible to do business in Somalia in a smart, knowledgeable way, others will follow our example.” Indeed, whether in Asia, Africa or the United States, it will be small businesses and entrepreneurs – regardless of nationality – who will drive long-term change and job creation.  

"Business investments that can make money and simultaneously empower communities at the grassroots level is key to economic growth and the reduction of poverty-related violence in Somalia and everywhere else in the world," Snelson says. 

For nearly four years, I served as U.S. Ambassador to and board member of the Asian Development Bank (ADB) – an international financial institution focused on poverty reduction and infrastructure investments – and there too, Ryu and Snelson’s message would have great relevance.

While development banks and aid agencies can provide incremental good, it is good governance and a strong rule of law that are critical to businesses and essential to job creation and long-term growth.  

The private sector must be a critical partner if we are to sustainably lift people out of poverty. 

Yet, too often, inept bureaucracy, poor or poorly enforced regulation, interventions by government and endemic corruption get in the way.  These challenges of the “little bric” may well be a longer-term constraint to growth and one of the biggest impediments to building better lives for people everywhere, including in Afghanistan and others of the world’s most fragile and conflict-affected states.

Few may have the nerve, or the heart, to do what Ryu and Snelson are trying to do in Somalia – building a business that can turn a profit while promoting economic growth. 

But by creating jobs for three dozen Somalis who would otherwise be prey for pirates and religious extremists, perhaps they offer a bit of hope and an example that a small business can have an impact, regardless of how long or how fleeting, even in the most troubled places in this world.