Can One Woman Fix a Failed State?
Hodan Osman couldn’t stamp out Somalia’s endemic corruption. But she made sure the country’s soldiers got paid.
Hodan Osman on Harvard University’s campus in Cambridge, Massachusetts, on May 16, 2018. Natalie Montaner/Harvard Kennedy School
On the afternoon that Hodan Osman watched an acquaintance enter the central bank, she did a double take.
It wasn’t his army uniform that concerned her. Nor that he was flanked by his men. Hodan was used to soldiers; Somalia was fighting a jihadi insurgency. Explosions and gunfire were commonplace, and the capital Mogadishu was a lattice of nervy checkpoints.
It was his bag that got her. She watched him wheel a carry-on suitcase into the cash office and start to fill it up. “They were just piling millions of dollars into that battered bag,” recalls Hodan. “I thought: ‘My god, that’s what $3 million looks like. I just can’t believe this.’”
Hodan, who had recently started as a senior advisor at the central bank, watched the man take $200 from one pile and give it back to the cashier, a bribe as casual as his entrance and exit.
He drove away in a bulletproof truck, accompanied by two more mounted with machine guns. But Hodan was not watching a heist unfold; this was business as usual in Somalia. She learned that the money was for the entire national army’s soldiers’ monthly salaries. The catch was that no one seemed to know where it went next.
Hodan knew the man in charge, a colonel, was tasked with army logistics, not army finance. “He shouldn’t be the one picking up money and distributing it,” she said. “He shouldn’t even be touching money.”
For Hodan, this misguided official process was almost worse than a bank robbery. “Putting that much cash into the hands of people with guns can’t be right,” she said. “If you start with that much, every hand is going to take a bit off the top. Who knows how much is getting to the soldiers?”
Hodan saw many of the ills of a broken state in that single transaction, but she also felt urged to fix the process. She wanted protocols. She wanted automation. She wanted her country to work.
The central bank is the government’s banker. But in Mogadishu, banking for a near-penniless government in a broken state didn’t mean much. It was 2014, and Somalia did not work. Twenty-three years into civil war, the country hadn’t held a popular election in 45 years. A digitized accounting system at the central bank seemed the least of anyone’s worries.
The central bank hadn’t produced a financial statement in 24 years. Not a single record was held on a computer. It was infamous for corruption, in a country ranked the most corrupt in the world.
A former central bank governor printed currency that doubled as personal income. For years of war, businessmen, warlords, and breakaway states printed their own counterfeit currencies. The government said a few years later that “virtually all” notes in circulation were fake. In one baroque scam, a central bank cashier replaced $530,000 in the vault money that was his job to verify with rudimentary counterfeit dollars, pocketing the real cash.
The central bank was inside the carcass of what had been, in 1920, a newly built white edifice that became Banca d’Italia, Mogadishu’s first modern bank and a symbol of Italian colonial power. The two-story building had high arches, a cloistered veranda, breezy balcony, and palms, giving it the aura of a small palace.
Somalia’s stint under Italian control saw the arrival of pasta, piazzas, and plaster arches in place of medieval ruins. At peak, nearly half the population in “the white pearl of the Indian Ocean” was Italian. Spaghetti with camel meat sauce became a national staple. After independence in 1960, Banca d’Italia became Somalia’s national bank, operating for three decades until civil war closed it down for another two.
In 2009, the central bank reopened. Somalia was subject to sanctions for its failure to repay billions of dollars in debts dating back to the 1990s, but the African Development Bank gave the country $2 million to get it back up and running. The building was repainted an upbeat powder blue after the national flag. Beyond its façade of elegant arches, however, the building housed ramshackle rooms and records.
Government revenues were minimal. Taxes made up just 2 percent of GDP in Somalia, precipitously below the 15 percent average for Africa, which in turn far undercut the 34 percent in the West. The main source of revenue—the port and airport—was intended to pay civil servants and state employees and was meant to go via the central bank. But the militant group al-Shabab controlled both for three years, until 2012. Afterwards, more than $1 million in government revenue continued to disappear from the port every month. What little money did make it to the central bank regularly disappeared, too.
Hodan, a well-educated woman in her early thirties, had returned from Canada where her parents had taken the family, and had been working with a U.N. agency on bomb disposal in the capital. I met her there during a 2013 reporting trip, and we became friends. She was one of an increasing number of diaspora returnees in Mogadishu’s bureaucracy, who wanted to rebuild the country their parents had fled. In July 2013, she joined the central bank as a senior advisor, leaving the secure airport zone.
“I was very scared—afraid just to cross the street on my own—because I didn’t know what to expect,” she said. “I didn’t have connections the way other people had connections. I was just this little Canadian girl going out by myself.”
Days after Hodan started, the U.N. published its most scathing report into Somalia’s “pervasive corruption” yet. “Somalis did not consider looting national assets in customary law terms as stealing,” it said, pinpointing Hodan’s workplace. “At the heart of this system [of embezzlement and corruption] is the Central Bank of Somalia,” the report continued, describing the bank as a slush fund for individuals. It labelled her new boss, “key to irregularities.”
Within days of starting at the central bank, Hodan—used to liaising with officials—was blocked.
“People started cold-shouldering us—I couldn’t get anything done,” Hodan said. “I would send emails and people wouldn’t reply. Not the U.N., U.K, even the World Bank.”
Hodan’s family didn’t want her to be in Mogadishu. It is everything her father sought to extract his family from. At the beginning, they begged her not to go, and—once she had gone—to come back. But Hodan pursued her future in a way they learned to accommodate. Her father wired his Toronto television up to Somalia national television news to keep track of her. He spent his days on a low-slung sofa chair in a small den glued to the screen. Every time there was an attack in Mogadishu, Hodan’s family WhatsApp group started pinging incessantly.
The first time Hodan experienced an attack she was two days into her new job, having just rejected the safety of U.N. protection. “I came from a place where I had so many friends. Now I was completely by myself, I had no one.”
It was Ramadan, and Hodan was in the hotel room that had abruptly become her new home. Although it was one of the better protected places in Mogadishu, nowhere was failsafe. That afternoon, light-headed with fasting, Hodan felt the glare of a sudden bright yellow light as she realized she was reeling from the sound of an enormous explosion. The room was shaking. “Pieces of the car came right into the hotel,” she said. It could only be al-Shabab. “I thought that was it, they’re coming, you’re dead, you’re finished. I was completely sure, so certain, it was over.”
She waited, stiff. Nothing seemed to change. Later, she emerged to break her fast, shaken, at the hotel restaurant of plastic chairs around a simple plant-filled concrete courtyard. She saw two men well into their sixties, light-hearted and at ease.
One of them took kindly to her, explaining a convoy carrying the African Union Mission to Somalia (AMISOM)—the U.N.-backed peacekeeping troops—had been attacked. She had just met Awes Hagi Yusuf, one of the most important advisors in the president’s inner circle.
“She was very scared as we were scared,” Awes recalled of their first meeting. The noise was over, and the two men helped her realize her hotel had not been the target.
Awes was chief of policy to the president. The aging technocrat, who had previously worked at the ministry of planning, grew up as part of the first generation emerging from colonialism. Carrying the pride and hope of his country at independence, he took up arms during the civil war against dictator Siad Barre, brokered a peace deal, and was now, years later, senior presidential advisor. He was also said to be part of a shadowy Islamist religious clique in government that magnetized the president and powerful business leaders. Known as Damul Jadid (New Blood), it behaved as a Somali version of the Muslim Brotherhood and influenced the presidency in unclear ways.
Awes was sitting with Sheikh Issa, a jovial former teacher-turned-general, who was now the president’s national security advisor. Hodan’s luck was turning. The trio struck up an unlikely friendship. “You don’t know people unless you sit with them and know their ideas,” recalled Awes.
Hodan, bouncing back over subsequent meetings, was thrilled to hold forth about systems she thought should take hold in Somalia. Society was set against her by default. Influence in Somalia belonged to elderly male warlords. She was the wrong clan, age, gender, and she wanted the wrong thing: reform. But Awes, unusually for a Somali elder, listened.
“We were housing in the same hotel. In the evening we sit together and discuss. I was responsible for the whole policy area in Somalia—economic, political, social—so what she said would catch my attention.”
Hodan wasn’t afraid to disagree with a man 27 years her senior with a role at the heart of government. When she heard a local school was being constructed with foreign materials, she challenged him on whether that prevented local development. When the discussion turned to paying soldiers, she argued for pay grades by rank.
“She really did assist us,” Awes told me. Hodan discovered all non-commissioned officers were paid a flat rate and argued instead for hierarchical salaries. Awes said a monthly pay scale was then introduced that went from $50 for privates up to $1,500 for senior ranks.
Awes opened doors for Hodan and instilled in her a sense of pride in her country. He despised corruption and incompetence, but bristled too at intervention from donors who didn’t understand what life in Somalia was really like. “I think I carried this voice of suspicion and distrust with me,” Hodan reflected later, saying he built up in her a self-righteous confidence with regard to donors.
Hodan, deciding she was in Mogadishu for the long haul, set about making her place feel like home. She had her room painted yellow. She got a treadmill. She imported Ikea furniture and framed old postcards of a peaceful, Italianate, 1970s Mogadishu. “If I went home to something that looked like everywhere else in Mogadishu every day, I would not mentally survive,” she said.
Hodan worked a six-day week and was usually up and working by 5 a.m., sometimes 4 a.m. if she was trying to finish something. She would work from bed on her laptop for hours and then go to the office in a four-wheel-drive vehicle provided by the presidency. But unlike her U.N. days, her vehicle was not bulletproof.
Her emotional driver refused to carry a gun. “Hodan, if I have a gun, I will use it!” he would cry. He was so “crazy and confrontational” that Hodan preferred that he drive unarmed. “He gets upset and yells at everyone. The cool, collected driver—he’s the one who should carry a gun; not this crazy guy,” she said.
One day she gave Awes her mother’s telephone number. “I was affected by that,” Awes said. “All of us in Mogadishu, we were more protected than Hodan and we worried about that. Anything can happen.”
Once, Hodan was in the office when a bullet flew right through. Just like that. Another time, the roof crashed in. The windows smashed. “I was working on my laptop and I just moved and continued with the email. I had a deadline,” she recalls.
Another time, Hodan rang the minister of finance from Nairobi, where she was attending meetings to discuss fiscal and reform data due to be submitted to the IMF. The minister told Hodan that their offices no longer existed. Al-Shabab had just detonated a truck bomb outside the ministry building.
Hodan discovered that her team who had survived the explosion had snuck out of the building to find a way to get the report out. “People are running for their lives, attending funerals, my office is completely destroyed, and we submit the report completely on time. We were offering condolences and asking if we got the numbers in the same sentence.”
Only when Hodan leaves Mogadishu does something approaching shellshock get her. The following month, she went to Washington, D.C., to see the IMF and met her colleague Abdulkadir for coffee on the way to work. There was a loud sound as someone put something into a dumpster. “It made a bam, like a big click.” The pair jumped. They stopped breathing. Abdulkadir’s left side went numb. He thought he was having a heart attack.
“I said, ‘It’s OK, Abdulkadir, we’re in America.”
Hodan is the second eldest of nine siblings, seven of them girls. Neither of her parents went to school. Neither could read and write. “I come from a long line of nomads,” Hodan said simply.
Somaliland, the region to the northwest of Somalia where Hodan’s family comes from, declared its opposition to the Mogadishu government in 1989. Its reward was a relentless bombing campaign by Mogadishu. Her mother Zahra, then heavily pregnant, headed for Canada as a refugee, taking with her seven children under the age of ten. Zahra didn’t eat for 24 hours; she was so nervous whether she would succeed in getting her family across the border. Hodan was nine.
Hodan’s father Aden—known as Adam—joined later, but neither parent ever quite caught the language or decent work. More than 20 years later, Hodan’s mother still prefers speaking Somali. Her English is forced and uncomfortable. Her father, who arrived in Toronto aged 55, tried whatever job he could find. He worked as a door-to-door salesman, a valet, and a painter. (He died in 2018.)
At their six-bedroomed newbuild in Markham, a Toronto suburb with streets named Karachi Drive and Lahore Crescent, the produce might come from a local supermarket, but it sings of Hargeisa (the capital of Somaliland). When I visited in 2016, the kitchen was stacked high with boxes of watermelon, papaya, and dates, along with huge vats of oil. Tea came steeped in cardamom and cinnamon, boiled up in full-fat milk. While Hodan eats with a fork, her mother tends to eat with her hands. She misses camel milk.
Growing up, they often slept four or five to a room. They moved around, initially tied to the welfare system but soon living from their own pinched pockets. Eventually, her parents bought their first small, crowded home, ten years after settling in Canada. “My parents are the most responsible people you will ever meet in your life,” Hodan said.
Adam and Zahra worked together like partners of a company; their children were their business. “I think they basically put all their ambitions into us, all their drive: ‘We’re just going to work on you guys.’ My father saw the value in education that only an uneducated man can understand. We didn’t realize we were poor because we were so busy entertaining each other, growing up close and sharing,” Hodan said.
“Our children have done in one generation what should take six generations,” Adam exclaimed one morning, breathing pride in place of air. Hodan’s older sister was an oncologist. “From nomad to doctor!”
Where other children had bicycles, Hodan’s siblings played at make-believe justice, establishing the court system missing in bombed-out Somaliland, playing judge, jury, lawyer, and accused. Hodan was never one of the accused in her family; she tended to be the character witness—a voice not of judgement, punishment, or accusation but reliably reasonable.
It was Hodan who attended parents’ evenings at school, took her siblings to the doctors, held meetings at banks, filled out official government forms and helped four of her siblings get their first job out of school. She grew to value being someone who could fix things. She finished any task she started and rarely asked for help.
At 18, she went back to Hargeisa on her own, to visit a family she could not remember except from stories. Seeing the rubble nine years after the war, she wrote that she found herself “mourning for this jigsaw city that I have never known.”
After university, she worked at the Bank of Montreal. Hodan was tasked with explaining to senior executives the implications of the 2002 Sarbanes-Oxley Act, a U.S. law introduced in the wake of the 2001 Enron scandal to improve corporate governance. For the first time, senior corporate officials risked prison over inaccurate financial information. They listened to Hodan.
She flew first class, travelled by limousine, wore sharp suits, and stayed in serviced apartments with wide-windowed views.
In the early years, she was promoted so fast in a world that was so white, male, and old, that she was slow to shed a feeling she describes as “this insecure little African girl.” Regularly the only black person in the room, and most junior, she noticed she was less assertive than some of her white male colleagues. Men she saw bragged about their achievements, argued for more money, claimed successes, took up their seniors’ time, and stood their ground.
“These kinds of behaviors didn’t come naturally to me; I didn’t feel that sense of entitlement,” she recalls. Along with another dark-skinned female colleague at the bank, the duo came up with a phrase that has guided her since: “What would a TWM do?” TWM referred to Tall White Man. They would joke over it, asking themselves the question in corridors, conferring each time they hit a stumbling block.
“The TWM way of doing things went against my nature, but I made myself do it, because I saw that is the behavior that is rewarded,” she said.
Her earliest memory of putting it into action came when a male colleague with whom she shared an office one day asked her to leave so he could make a call in private. “I was about to say, ‘Oh fine,’ as naturally I like to be accommodating, when I remembered a TWM would never do this. So I asked him to book a room to make his call elsewhere.”
The Somali National Army took up half the entire—and meager—government budget. Of the $69 million government spent on security in 2014, $42 million supposedly went to wages and salaries. But the information stopped there.
“It was a black box,” Hodan told me. “We had no idea how many soldiers there really were, we didn’t know the number of units, we didn’t know who really got the money.”
Officially, there were 30,000 soldiers. A suspiciously round number. A U.N. report later said the government “systematically inflated their troop numbers in order to secure greater funding for salaries and rations.”
Somalia’s army was already one of Africa’s largest. It swelled during the Cold War under the competitive tutelage of first the Soviets then the Americans. Clan favoritism hindered the creation of a genuinely national institution. Somalia was home to four main clan groups, each of which had multiple subclans. The civil war pitted Siad Barre’s Darod subclan against Hawiye subclans. Once a bastion for Barre’s and other Darod subclans, the Mogadishu ranks of the army morphed into a stronghold for Hawiye subclans by the late-2000s. The same group controlled the lucrative logistics departments that ran payments. That had security ramifications: al-Shabab tried to solicit support from underdog clans in the regions to undermine Mogadishu.
Hodan tried to tackle the issue at the central bank and was told to back down. She moved to the ministry of finance in 2014, becoming head of strategy. But two consecutive finance ministers initially refused her plea to take up the cause.
By then, the situation was dire. The government was $11.5 million behind on payments. Some soldiers had not been paid for at least six months. They went without uniforms, bulletproof vests, or armored vehicles. Local commanders complained that their own troops would not obey them. Soldiers were starting to strike. They set up illegal roadblocks to expropriate money from the people they were meant to protect. Al-Shabab paid off disgruntled soldiers to get past security checkpoints and smuggle bombs into the city.
It was also disastrous for the donors who kept the country’s security afloat. Mogadishu seemed to be stealing their money, the army couldn’t defend against jihadis and there was no prospect the international peacekeeping mission they funded could withdraw.
“If AMISOM walked out of Somalia tomorrow, al-Shabab would just take over again,” a regional security expert told me. Many donors wanted to construct a new Somali state around a rebuilt military. They saw restoration of the army’s monopoly on violence as core to nation-building.
“The whole Somali state can go overnight,” a Western donor told me, mindful of the Arab Spring and the fate of Afghanistan. “Mishandled payments of the army are an existential threat: In Iraq, the army melted away and the whole country nearly melted away after it.”
But the army was not interested. “The military personnel see themselves as a mighty force—they belittle anything other than themselves,” Mohamed Adan Ibrahim, then finance minister and Hodan’s new boss, told me.
He instructed Hodan to give up before she even started. “We needed big reform, but we could see a lot of resistance and I was not optimistic,” he said.
Hodan wanted a single list of soldiers verified by biometrics. He eventually gave the go-ahead for her to send out a team to survey the entire army, and found a bank and telephone company to pay salaries directly to each soldier via mobile money transfer.
“The technology wasn’t as difficult as it sounded … It was about agreeing who should go on the list and how you go about cleaning it,” said the Western donor, who was involved in the process. “It was the politics.”
The U.S., U.K. and Emirati governments were already all giving tens of millions of dollars for top-up stipends of $100 each a month for tens of thousands of soldiers. But they worked from different lists with different aims and refused to share their data with Hodan. The EU, Turkey, Qatar, and Djibouti also gave money and equipment.
“Everyone had their pet sector,” said an exasperated development worker. The United States and U.K. routed their stipend payments not through government systems but via the U.N. logistics agency UNOPS, which charged them 40 cents for every dollar sent to a Somali soldier and refused to share their database with Mogadishu.
Hodan forced a review. A consultancy entrusted with all three lists revealed the UNOPS database matched only 1.2 per cent of names held by the army. The UAE used a list with more overlap, but which still included thousands of different names.
“There was no correlation,” said the Western donor. “It was a mess.”
Donors even disagreed over what they were trying to do. Foreign militaries wanted to build armies because that is what they knew how to do. Some governments courted influence. Others dismissed paying bribes as a necessary evil for aid delivery. Others said planting trees would be a better support to long-term security. Development agencies argued the army was the wrong institution to displace al-Shabab’s hold over local communities.
Some donors pushed to move thousands of soldiers to balance out clan bias. A U.N. report said that “ill-conceived and poorly implemented donor interventions” in the military were contributing to the country’s insecurity. Donors were making things worse.
Hodan was frustrated by esoteric arguments from outsiders about clan and nation-building. She believed infrastructure investment was the best route to security and preferred to keep solely to technical arguments based on establishing payroll.
But she learned up close the power of clan. “You try and replace someone, then 15 people of his clan come in and ask you to keep him,” she said. “People are itching for an opportunity to go fight for the clan.”
Hodan became head of a new government taskforce that would automate salary payments. The chief of defense forces blew up.
“Young lady, you were born yesterday!” the greying army chief screeched at her in front of 24 men around a table. “I don’t know technology; I only know war!”
The general said illegal checkpoints were operated not by disgruntled soldiers but by civilians who bought uniforms on the open market and posed as soldiers. “If you automate payments you will end up paying soldiers who don’t even show up to work!”
His ferocious lecture lasted an hour. Hodan kept silent, deciding to establish the true number of soldiers in the army. No one in her own ministry or the defense ministry responded. Her own accountant general refused to help.
“I hadn’t had to deal with being not liked until I came to Somalia,” she said. “There are people who want it to fail and who are working for it to fail.”
Hodan visited army headquarters herself. She got chatting to the personnel clerks, who eventually let her go through the files. She handled each one, finding breakdowns scrawled by rank and unit. She found that the army comprised not the 30,000 the government was paying, but 23,080. Nearly a quarter fewer than claimed, they were overpaying by more than $10 million a year. Many were also long past retirement age, members of the band, dead soldiers’ widows, or orphans. “My director-general was completely shocked. That’s the day I’m told I earned her respect.”
She ran into the general’s advisors at the airport. No audience this time. She spoke to Awes and Sheikh Issa, who passed on her message in military circles. “I didn’t help her exactly,” Awes said, “but I introduce her, and I always just say to people: ‘Listen.’”
People began to recognize her behind-the-scenes clout. She could count on the friendship of Awes and had started accompanying the president on international delegations. Four years in Mogadishu made Hodan one of the longest-serving government officials.
“She has no fear,” said her colleague Jafar, head of revenue in Mogadishu. Hodan never called anybody Excellency. “She talks to the president the same way she talks to us.”
A few weeks later she delivered a report for the chief of defense forces. She met him again, this time in private, to lay out her plan. I spoke to Hodan that evening. I could hear her beaming down the line. “He said, by the end, ‘Where do I sign?’”
Many remain befuddled about the best path forward for Somalia. But several years, twists, and turns on—including Hodan facing widely debunked corruption accusations herself—most Somali soldiers are now paid by electronic transfer, according to biometric identifiers held on vetted lists. This March, the IMF approved debt relief for Somalia, due within three years.
“It shows how long it takes. Slowly you address the issues, but you have to reach critical mass,” she told me. “Once we automate payments there is no way we can go back to cash payments. No one is going to start paying wages in cash again.”
In mid-2017, she started a stint at Harvard University, where she processed her time in Mogadishu. She worked again on military finance reform briefly last year. Now based in Nairobi, as a consultant working on local leadership in Africa, she describes herself as an Afro-optimist.
But she believes relentless outside focus on corruption in Somalia remains misplaced. “It’s like fixing your bathroom before you’ve even got a house,” she said. “You have to build up a system and maintain it.”
Hodan wants more, but she is ready to accept that progress comes in fits and irreversible starts. “It’s still a rogue kind of nation. The most I can do is this: Fix a corner. That corner’s clean.”
Katrina Manson is the U.S. foreign policy and defense correspondent for the Financial Times. She was the FT's East Africa correspondent from 2011-2015. Twitter: @KatrinaManson
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