Sunday, March 15, 2009

Riches of Somaliland remain untapped

Medeshi March 15, 2009
Riches of Somaliland remain untapped
By James Melik
Business reporter, BBC World Service
Until Somaliland gets official international recognition it cannot exploit its rich reserves of natural resources.
Although agriculture is the most successful industry, surveys show that Somaliland has large offshore and onshore oil and natural gas reserves.
Several wells have been excavated during recent years but because of the country's unrecognised status, foreign energy companies cannot benefit from it.
Somaliland is in north east Africa but, as far as the outside world is concerned, it is simply a region of war-torn Somalia which has not been a nation since Britain gave it independence in 1960.
Yet the area the size of England declared independence 18 years ago and, while the rest of Somalia remains in a chaotic state, Somaliland has established a stable government, peace and relative prosperity.
Self reliance
The country's progress is limited however, because aid donors and trade partners do not officially recognise its existence.
After declaring independence in 1991, Somaliland formed its own hybrid system of governance consisting of a lower house of elected representatives, and an upper house which incorporated the elders of tribal clans.
Somaliland made its final transition to multi-party democracy with elections in 2003.
“ We have to rely solely on our meagre revenues and the investments of our own people ” Foreign Minister Abdillahi Duale
The country has its own flag, national anthem, vehicle number plates and currency - although the Somaliland shilling is not a recognised currency and has no official exchange rate.
It is regulated by the Bank of Somaliland which was established constitutionally in 1994.
Foreign minister Abdillahi Duale says the recession affecting the rest of the world is causing him particular concern.
"As a country which is not yet recognised this global phenomenon is affecting us very seriously," he laments.
"We do not have access to international trade or international financial institutions," he says. "So we have to rely solely on our meagre revenues and the investments of our own people."
'De facto' state
Mr Duale insists that his people have a great entrepreneurial spirit and are business-oriented.
“ We need butter, we are not asking for guns ” Foreign Minister Abdillahi Duale
Most trade is carried out with the Gulf States, Indonesia and India.
"Trade doesn't require recognition," he says.
The main export is livestock, with sheep and camels being shipped from Berbera, the country's largest port.
In order to export livestock, a veterinary license has to be issued.
To facilitate that, a veterinary school has been built in Sheikh and it attracts students from the Horn of Africa and as far afield as Uganda and Kenya.
Mr Duale is unperturbed that such licences will not have the force that a United Nations-sponsored veterinary licence would have.
"We are not members of the UN but nevertheless, the international community trades with us because we are a de facto state," he says.
He admits however, that one of the major problems the lack of official recognition creates is the inability to access international financial institutions.
"We cannot talk to the International Monetary Fund or the World Bank because they only talk to recognised states," he says.
"We rely on ourselves and our Diaspora, which accounts for almost $600m of revenue a year.
"People get by but it is very difficult without infrastructure," he says, "We need butter, we are not asking for guns."
Growth industry
Apart from livestock, other exports include hides, skins, myrrh and frankincense.
Mining has the potential to be a successful industry although simple quarrying is the extent of current operations - despite the presence of diverse mineral deposits including uranium.
One industry which has seen growth however, is tourism.
The historic town of Sheikh is home to old British colonial buildings which have been untouched for 40 years, whilst Zeila was once part of the Ottoman Empire.
Due to the fertility of some regions, many people travel to see the wildlife, while the offshore islands and coral reefs provide another major attraction.
Whoever is brave, or reckless enough, to break ranks with the world community and gives Somaliland the recognition is craves, must surely be well placed to take advantage of the riches the country has to offer.
Story from BBC NEWS:


Jim said...

The essence of the problems that Somaliland faces is that because it is not recognized by the international community as a sovereign state, (1) Somali and foreign businesses cannot secure insurance to do business there, (2) countries that buy the plentiful meat for their own consumption from the Somalilander herders (Saudis, particularly) can extort and manipulate the meat markets, diverting the product through Bosasso and Djibouti, and (3)foreign investors (petroleum and mining companies) cannot depend on international courts to enforce contracts made with the Somaliland government.

There are some small errors in the report, but not so important to take away the thrust of the argument. First, the buildings in Sheikh are totally destroyed, not "still standing (untouched) for the last 40 years." I lived in one of those buildings (the Lt. Governor's house) in the 1960's and recently returned to take photos of the destruction. The schools that the British left in Sheikh Town are vacant, collapsed and unusable. The road through Megaalo Sheikh from Burao to Berbera is much improved from the old days, and the livestock market could be developed from the Haud through the port of Berbera if the Saudis would lift their artificial ban on Somalilander livestock. Recognition would do good things for the level of business in Somaliland. It might also give the mindless warring factions in the South something to think about. Forget the "donors." Prosperity comes with Peace. The donors will continue to live nicely in Nairobi's Gigiri neighborhoods in any event. They need conflict in Somali territories to "sustain" their careers. Nabaday.

Medeshi said...

I, too, lived in Sheikh from 1964-65 and later 1971 -75 when I was at Sheikh secondary school.

I agree with Jim regarding the colonial building in Sheikh. These building have totally been destroyed or their steel roofs looted for commercial purposes.
Peace is the key to Somaliland's current de facto status and the people of Somaliland have had enough of civil wars and will always pursue peaceful means in settling their differences.

Arabs are the main obstacle to Somaliland recognition because they want greater Somalia which should include Dijibouti, NFD, Ogadenia and Somalia. This has been the dream that has lead Somalia into two wars with its neighbours and eventually brought down the dictatorship of Siyad Barre.
People of Somaliland will never re-unite with southern Somalia.