* Dahabshiil boasts offices in London, Dubai
* Confidence growing in ragged Somali shilling
* Businesses operate amid poor security, clan rivalries
By Edmund Blair
NAIROBI, May 8 (Reuters) - Somalia's government must lure more investors to drive the private economy because business owners have an interest in cementing fragile security gains, the chief executive of Somalia's biggest financial firm said.
Abdirashid Duale's company, Dahabshiil - which with a handful of others has survived the anarchy of the past two decades - exemplifies a strong entrepreneurial spirit, he says.
Its flagship operation is an international money transfer business handling hundreds of millions of dollars a year sent to Somalia, a country still grappling with an Islamist insurgency.
"The more people invest in the country, the more they have ownership ... the more they will look after their security and have an interest in the future of their community," Duale said in a telephone interview.
He was speaking while attending a conference in London this week to attract international support for rebuilding Somalia, where guns are rife and a new government has only tenuous control beyond the limits of the capital Mogadishu.
Though still fragile, the leadership elected last September marks a dramatic advance after 20 years of turmoil when the nation fell apart. A patchwork of warlords gave way to Islamist militants, while transitional governments came and went.
That chaos swept away the state-run economy of dictator Mohamed Siad Barre and left a vacuum in which some innovative Somalis created private airlines, set up 3G mobile services and kept finances flowing without a functioning financial authority.
"The government can come and go, it is the people who stay in the country," said Duale, who joined his father's business while at school. "Somalis are very entrepreneurial."
His family business testifies to that view. Founded in 1970, Dahabshiil collapsed in 1988 when civil conflict took a hold, but has since been rebuilt with offices in Somalia, other African states, London and Dubai.
"There is a Somali style of dealing with challenges," Duale said, explaining how his company has faced hurdles few others in the financial world have to deal with.
His money transfer and banking business has had to build a high degree of trust from customers, who send their cash to a nation without a fully functioning regulator.
It requires overcoming suspicions between clans that were deepened by conflict. "We cross the clan line," said Duale, running what he calls Somalia's biggest private sector employer. "We employ lots of people who have local knowledge."
Dahabshiil relies on its own security arrangements for protection because the police force of poorly trained and low-paid officers struggles to impose the law.
A company office in Mogadishu was bombed last month and militants ordered it closed. Wary of threats, Dahabshiil does not divulge its financial details to avoid drawing "unwanted interest" that could endanger staff or the group's operations.
Instead, Duale referred to a U.N. estimate that $2 billion was sent to Somalia a year, and he said Dahabshiil handled a "large part of that amount" without being more specific.
The scale of the business is evident from the prominent Dahabshiil billboards across Mogadishu, although the Somali headquarters are in Hargeisa, the capital of the breakaway Somaliland region.
Other businesses are growing, too. Hotels, restaurants and the odd shopping mall are opening in Mogadishu and some Somali businesses accept Dahabshiil's debit card.
The card, a novelty for Somalia when launched in 2009, is a welcome alternative to the ragged Somali shilling banknotes printed in the 1980s that still circulate. Many use dollars.
The more stable outlook has helped boosted the shilling by some 80 percent since 2011 to around 18,000 to the dollar.
Other indicators are harder to come by, but officials say Somalia's average per capita income of $284 is higher than 12 nations below it with more stable governments. (Editing by Richard Lough, Ron Askew)