Somaliland: a fragile economy
- Visits: 228
Hargeisa- "Shortage of domestic demand is an obstacle to the economic growth of Somaliland,” says Abdirisak Abdilahi Adam, the dean of Faculty of Economics and deputy president of Gollis University of Berbera.
Somaliland is a small unrecognized country in the Horn of Africa. Despite absence of international recognition, Somaliland government maintains security and peace.
"The devastating war of 1980s destroyed the economy. Somaliland had to start from the scratch in 1991. The infrastructure was poorly invested. For instance there was only one port and one main road. The government struggled to generate income to start administration and pay the salaries,” he adds.
The lack of recognition means Somaliland cannot connect to the international trade and cannot receive loans.
”There are no commercial banks in Somaliland. It is very hard for the businesses to find investment. There is a shortage of follow of money in the country,” says Mowlid Farah Mouse, a commercial lawyer and lecturer at University of Hargeisa. He argues that the lack of recognition bars Somaliland from ratifying bilateral and multilateral treaties that are vital for the trade.
"The environment is harsh. It is a semi-desert land with a minimum rain fall. To adopt such environment, the people opted livestock husbandry. Farming is not practiced. Therefore, the essential goods are imported. Somaliland is dependent on imported food which creates food insecurity,” explains Abdirisak.
Abdirisak says the money remittance sent by the Diaspora communities positively contribute to the purchasing powers of the people. But, the majority of the people live in the rural areas, and the main market is the domestic one. With small population of 3.5 million with weak purchasing power, he argues, the business cannot thrive.
The private sector is developing. The livestock exports contribute 60% of GDP in Somaliland.
"Unfortunately, Somaliland livestock is dependent on only one single market, Saudi Arabia. The government is unable to find other markets to its chief export,” says Adam Ahmed Adam, economist based in Erigavo.
Adam contends that the government should diversify the economy.
"Although it is very important, there are no macro-economy policy discussions in Somaliland,” Abdirisak said. Even the political parties do not include in their political programs, he claimed.
Somaliland is one of the poorest countries in the world. According to the World BankSomaliland’s GPD for 2012 $ 1.4 billion with GDP per capita of $ 347.
About the author
Jama Ahmed Jama is the Editor-in-Chief of Somaliland Daily.