Somaliland offers investors chance to make history

An Independence Day parade in Hargeisa on May 18 2016. © AFP

Prosperity will support the republic’s bid for international recognition

by: Saad Ali Shire


A farmer offloading goats at the morning livestock market to prospective customers; a teenager buying an ice-cold Diet Coke from a rural roadside stall; an entrepreneur paying for an espresso at a buzzing, urban start-up hub. All three have at least two things in common. They all opt to make cashless, digital payments for daily purchases with their mobile phones; and they are all in Somaliland, a little-known, former British protectorate with a fast developing economy, situated on the tip of the Horn of Africa.

Somaliland’s story is unfamiliar to many in the global investment community. We are often confused with our war-torn neighbour to the south, Somalia, from whom we separated and asserted our independence 26 years ago, in 1991, following years of violence orchestrated from Mogadishu by the repressive Siad Barre regime.

By contrast, Somaliland is highly stable and democratic. We have our own fully functioning government with a presidential system; regular, free and fair elections; our own currency, the Somaliland shilling; our own, independent judicial system; and a constitution that guarantees the rule of law.

Somaliland has a dynamic and youthful population; 70 per cent of the people are under 30 years old and well educated: there are more than 30 colleges and universities, public and private, which produce thousands of highly employable graduates every year.

Somaliland hit the international business pages recently thanks to a $442m landmark investment from DP World — the largest in our history — which will see the Port of Berbera (set in a bustling coastal town, north east of Hargeisa, Somaliland’s capital) redeveloped and expanded to provide an alternative shipping and trading hub in the Horn.

The port will have access to the maritime highways that connect Europe, Asia, the Middle East and Africa and will firmly establish Somaliland as a gateway to east Africa and the continent beyond.

DP World joins an increasing number of multinational companies viewing Somaliland as a secure and stable location through which to access the east African market, including Coca-Cola, which has partnered with a local business to open a $17m bottling plant outside Hargeisa, employing 100 local people. There are two flights every day between Addis Ababa and Hargeisa, bringing business people from across the world to Somaliland.

The lounges of Hargeisa’s hotels are fast becoming a melting pot for investors, eyeing opportunities in emerging sectors with potential for growth, such as logistics, fisheries, agriculture and infrastructure, particularly renewable energy, roads, railways, airports and hospitals. Resources companies are conducting exploratory work across Somaliland, testing for evidence of the oil, gas and abundance of minerals that are believed to exist below the surface of our land and beyond our coastline.

However, in spite of this great potential, and the clear benefits that inward investment would bring to the wider stability and prosperity of the Horn of Africa, there remains a stubborn hurdle that prevents Somaliland from achieving its potential.

That is the question of the international community’s formal recognition of Somaliland’s independence and sovereignty.

Regardless of our stability, heritage and the faith that international trading partners and investors have put in our economy, in the eyes of the international community, Somaliland does not exist. This causes innumerable problems, not least economic.

Despite the valuable lessons we are able to impart to developing economies in Africa and beyond, we do not have a seat at the table at the United Nations or the African Union. Crucially, due to our limbo-like status, we are unable to access aid or soft loans from multilateral organisations such as the World Bank and the IMF, which has a massive impact on our ability to respond with any real effect to environmental or economic shocks. Somaliland’s central bank is not underpinned by international banking systems, making inward investment difficult, and meaning that a mature commercial and retail banking system has been unable to effectively develop.

We have experienced the effects of non-recognition most viscerally in the context of the extreme and devastating drought currently ravaging east Africa, which has significantly impacted our livestock-centred economy. As we are ineligible for significant support from international donors, the infrastructure needed to ensure an effective response to the drought has been chronically lacking, and when it has been provided, has arrived slowly after being mediated through Mogadishu.

Somaliland’s difficulties in managing the drought have had a knock-on effect on our political institutions, with this year’s Presidential elections regrettably postponed from March to November. The desire to postpone the election came from opposition political parties and Somalilanders themselves, particularly in the east where communities have been most affected by the drought. If the drought has been exacerbated by our international status, it follows that lack of recognition therefore impacts the very core of Somaliland’s political infrastructure.

Yet Somalilanders pride themselves on their stoicism and resourcefulness; and in spite of the myriad issues that lack of formal recognition brings, the business community remains optimistic.

The faith shown by international investors and the trade partners with whom we have signed binding and enforceable agreements — such as Ethiopia and the UAE — is an important signal and vote of confidence in our potential. Those with a record of investing in east Africa recognise that our stability, governance systems and independent regulatory frameworks bring welcome certainty to a region that has traditionally been fraught with risk.

It is clear that investors will play a critical part in the next chapter in Somaliland’s story — helping this dynamic economy to thrive and prosper, bolstering our bid for recognition.

Those with the foresight to look beyond the question of recognition, and towards the that Somaliland offers, will be rewarded — and will help to make history.

Dr Saad Ali Shire is Minister of Foreign Affairs and International Co-operation of the Republic of Somaliland.



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