Somaliland Info: The economy

As mentioned in other articles, Somaliland is not yet recognized by most countries in the world or the UN, while it has developed state-like political structures and an independent economy. It has its own police force, army and currency, and has held regular elections for parliament and a president. It enjoys relative peace and stability, unlike Somalia, where African troops are helping the government fight Al Shabaab and Islamic State militants.

Nevertheless – and this goes without saying – Somaliland is struggeling with low economy numbers and growth rates: How should you be able to negotiate trade deals with other countries and benefit from exports if no one recognizes your existstence?

Somaliland has the world’s fourth-lowest GDP per capita and a high income gap between rich and poor, according to data from the World Bank. Yet the country has been resilient with little foreign aid. With a GDP of $400 per head, Somaliland is wealthier than countries like Burundi, the Democratic Republic of Congo and Malawi, according to a survey by the World Bank.

Since unilaterally declaring independence in 1991, Somaliland’s efforts to boost development are limited by low inflows of donor aid. The government’s main source of revenue for its $400 million budget has been the port of Berbera, which is being rebuilt by DP World from the UAE, at a cost of $442 million.

There is also hope of mineral discoveries. UAE-based RAK Gas and UK-based Anglo-Turkish oil company Genel Energy have been engaged in exploration over the past four years in hopes of striking oil.

“Ours is a resilient economy. We know we are not getting any aid from the major financial institutions, so we have to make do with what we have,” Somaliland Finance Minister Saad Ali Shire recently said in an interview.

But without recognition, Somaliland’s economy is largely dependent on diaspora remittances: Somalilanders who have migrated to Europe, America or other parts of the world send money back to their loved ones in their home country. For now, this helps many families to survive and keeps the general economy stable. But in the long run, international recognition is essential for weath and prosperity in Somaliland. (Text: Christian Klosz)

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