Is Somaliland a model for regional development?

Source: Wikimedia Commons

Somaliland is a thriving and relatively stable part of a region plagued by crime and political violence and offers many investment opportunities. Could the breakaway region become a blueprint for development in Somalia?

In 1991, the northern enclave of Somaliland separated from the rest of Somalia after the collapse of Siad Barre’s authoritarian regime. Somaliland established its own currency and its government has transitioned through several peaceful elections. The autonomous region is struggling to gain international de jure recognition, but that may change soon.

Somaliland’s Foreign Minister, Mohamed Bihi Yonis, has said that with the new government in Somalia as a willing negotiating partner, he is confident that bilateral recognition would soon follow. Turkey has taken the lead in facilitating negotiations between Somalia and Somaliland in Istanbul.

Despite these promising signs, bilateral recognition may still be some time off. Somalia wishes to regain control of the region’s airspace and questions its right to issue oil licenses. Furthermore, sources reported that Somalia still intends to retain a policy of national unification. In addition, bitter border disputes and political tension continues between Somaliland and its fellow autonomous region of Puntland.

Renewed interest in oil resources

Tony Hayward, the former BP CEO, has recently reappeared unexpectedly on the oil scene in Somaliland working with the Turkish-owned Genel Energy. The company has temporarily halted expanding its operations in Somaliland due to the security situation in Somalia but visits by Genel officials indicate that exploration and further ventures are set to resume. Somaliland’s Minister of Energy and Minerals Hussein Abdi Dualeh expressed his belief that Somaliland may have billions of barrels of oil in reserves.

According to Jamal Hassan with the Justice and Welfare Party, Somaliland is hopeful that an expansion of the energy sector will dramatically expand the country’s budget, which was only $125 million in 2013. With new energy sources also being discovered in Tanzania, Mozambique, Kenya, and Ethiopia, East Africa is poised for a surge in revenue that could drastically alter the standard of living for the better. Hopefully, as the region develops, they will avoid the type of waste and mismanagement that is rampant in oil-rich Nigeria.

Financing and investment still missing

Somaliland still faces significant hurdles for foreign investment. Lack of recognition has restricted the development of Somaliland’s banking and finance infrastructure, but that has not stopped transnational corporate interest. Sino-Somaliland relations are taking off with the signing of a mining deal with China’s Guangzhou Dongsong Energy Group Co Ltd. China has also shown interest in investing in Somaliland’s fisheries.

Nevertheless, Somaliland is still in the early stages of developing its banking and financial infrastructure. There is a lack of ATMs and the use credit cards is widely rejected. Dahabshiil, a financial transfer service company, allows Somalilanders access to US currency. Customers are notified in advance by text message when their funds are available.

But there is a trend of new business innovation in Somaliland. An idea to develop Africa’s first livestock insurance in agreement with Sharia offers a huge potential market. Estimates show that the Horn of Africa region has over 70 million herders in rural areas without bank accounts. The insurance plan already has some 4,000 policy holders in Somaliland, Kenya and Ethiopia, and enrollment is steadily increasing.

In conjunction with the EU’s “New Deal” for Somalia, a portion of the 1.8 billion euros allocated has been spent by Kings College Hospital in London training health care professionals and investing in expanding primary education enrollment and assistance with the aim that Somaliland’s Veterinary Code will help protect a largely pastoral society.

South African Gavin Dehning, a manager of a new Coca-Cola factory, while acknowledging the difficulties of transportation and infrastructure in Somaliland, told NPR, “It’s an open market for any potential investor who in the next five to 10 years will be able to come in, set up their business and really gain a tremendous market share.”

Telecommunications to connect large parts of the region

A new underwater fiber optic cable project created as a cooperation between Canadian telecommunications company Optelian and Somaliland’s Somcable will be ready by the end of 2014. Additionally, transmission hubs are in various stages of development with the goal to branch out to other countries such as Ethiopia, Rwanda, Uganda, and South Sudan.

“We have set a target to provide one million subscribers with access to high-speed broadband by 2015, to help move Somaliland into the knowledge-based economy,” said Michael Cothill, the CEO of Somcable. He explained that the absence of high-capacity wireless networks in East Africa will provide lucrative opportunities for new business.

Health services

Somaliland also offers superior health care services compared to the rest of the region. Patients come from nearby Ethiopia and as far as Mogadishu to the Edna Adan University Hospital. A nonprofit founded by Somaliland’s former Foreign Minister and the former first lady of Somalia, Edna Adan, the facility offers a clean environment, modern equipment and crucial training services for nurses and midwives. Compared to the extremely high infant and maternal mortality rate in the rest of the region, Somaliland has managed to reduce child mortality by 50 percent.

Edna told the Christian Science Monitor how the training was spreading throughout Somaliland, saying: “What is most inspiring is when I see those young women who could barely look you in the face when you ask their name, who would be so timid, who get trained and go back to their village and start practicing midwifery.”

Somaliland offers hope for the Horn of Africa, but not without significant challenges. Wedged between a regional military power, Ethiopia, and Somalia, which is still struggling to recover from civil war, Somaliland has treaded carefully so far. If there is ever an expansion of the East African Community, Somaliland could be a strong contender.

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Categories: Economics, Sub-Saharan Africa

Author:Christopher Solomon

Christopher completed his internship with the Middle East Institute in Washington, DC and has supported several US government-funded international development programs in the Middle East and Africa throughout his professional career. He primarily writes about the Middle East, Africa, and South Asia. His focus areas include local economics and party politics, at-risk populations, and international security. He is an avid follower of global affairs and is currently a regular contributing writer with Global Risk Insights. Christopher holds a Masters degree in Public and International Affairs from the Graduate School of Public and International Affairs (GSPIA) at the University of Pittsburgh. He studied abroad in Lebanon and worked on a volunteer project in Bolivia. Follow him on Twitter: @Solomon_Chris

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10 Comments on “Is Somaliland a model for regional development?”

  1. Kevin Amirehsani
    April 16, 2014 at 6:01 pm #

    Great stuff. I’ve always been fascinated at how such stability and relative calm could persist just north of the chaos in Somalia proper. And Somaliland’s transition to democracy seems to have happened without a hitch. What do you think the prospects are for Puntland?

  2. Christopher Solomon
    April 17, 2014 at 12:36 am #

    Thank you for reading, Kevin! I believe that with sustained international effort, Somalia could be back on the right track within a decade. Puntland is an interesting case study. Last October, Puntland just allowed Golis Telecom Somalia to resume services after a political message was sent out from the government of Somalia. Also, more recently, Puntland and Somaliland’s standoff over the Sool and Sanag regions is escalating.

  3. Kevin Amirehsani
    April 17, 2014 at 7:25 am #

    Interesting, especially with the allegations surrounding Somaliland’s support for al Shabaab in order to destabilize Puntland, as well as the probable influence of neighboring states…

  4. endashaw
    April 17, 2014 at 9:05 am #

    I appreciate the real effort of Somaliland for their peace and development in the horn of Africa.She passes several peaceful elections.Somaliland is relatively a stable part of the region.Keep it up!Peace is a key for development.Really,Somaliland is a model regional development.

  5. April 17, 2014 at 10:26 am #

    Somaliland deserves to be recognized the western countries say they uphold democratic principles and credentials but with a record of Somaliland achievements since 2001 a referendum vote ,and constitutional referendum in 2003 Somaliland Presidential elections in 2005 parliamentary elections in 2010 presidential elections in 2012 local elections and in 2015 presidential and parliamentary election expected , So why does the world not recognize Somaliland when it has colonial borders it has the right to determine their own future when it has its distinct history when it united with Somalia in 1960 and wishes to be independent now the world fail to recognize it the world rushed to recognize south sudan but not Somaliland its very strange its like they are rewarding Somalia which has recognition and is 23 years in civil war the world tells the people of Somaliland to talk to Somalia , but they are willing to listen so why are the people of Somaliland future connected with Somalia. when Somaliland declared their independence

  6. Yusuf Dahir
    April 18, 2014 at 3:24 am #

    Bravo Somaliland, Somaliland and it’s people started ground zero after the war with Somalia’s dictator Sida Bare which thousands of Somalilanders lost there love ones, most of the major city’s have been destroyed by the Bare regime, Somaliland gained it’s independence from the British protectorate in 1960 and was a independent country before uniting with Somalia, the union that Somaliland was hoping back then was not only Somalia but, all Somali speaking regions in the horn of Africa, Region five of Ethiopia, Djibouti, NFL of Kenya and Somalia, Somaliland realized that such dream was impossible when they first merged with Somalia. After 1991 Somaliland decided to set the record straight once again and started from ground zero with out the help of international community, for Somalilanders foreign aid is considered a curse. Somalia including Puntland should realize that Somaliland will never make the same mistake again and that Somaliland is serious about it’s sovereignty.

  7. Ahmed
    April 18, 2014 at 4:32 pm #

    Thank you Christopher Solomon. Great article showing how Somaliland is moving from strength to strength against all odds. If Somaliland moved on after gaining independence on the 26th of June 1960 from GBritain, the Horn would have been a different place more prosperous and different all together.

  8. Suleiman
    April 18, 2014 at 6:57 pm #

    Thank you Mr Solomon!!! Somali land Will never tired to show the world reality.

  9. Mohamed
    April 19, 2014 at 1:10 pm #

    Thank you so much Christopher Solomon for this great article. I think Somaliland is an African success story, but ever since remained unnoticed. Now, Somaliland is considered as a strategic partner in the Horn of Africa, by the same countries who used to push Somaliland to be part of Somalia.

  10. Mustafa
    April 19, 2014 at 7:18 pm #

    @Kevin That is true Somaliland’s support for al Shabaab in order to destabilize Puntland, Puntland is a very rich state have untaped resource the state continued progress and stability the Somaliland ambition is to destroy the peace and stability of Puntland

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