In the rest of Somalia, where foreign aid propped up a corrupt central government without benefiting the populace at large, self-reliance meant banditry on the roads and piracy at sea. In foreign-aid-bereft Somaliland, such lawlessness would have killed the country’s best hope for survival — exports from the deep-sea port of Berbera that the British left behind, coupled with roads able to carry to port local goods as well as goods from neighbouring landlocked Ethiopia.
The local clan-based governments calculated they would earn less by plundering the few merchants willing to risk the trip to port than by ensuring safe passage along the road system and sharing in growing port revenues. It was an enlightened business decision. Livestock exports of goats, sheep, cattle and camels, which account for some 60% of Somaliland’s total exports and GDP, has soared, almost tripling in the last five years alone, while Ethiopia — the dominant economy in the region — increasingly ships through Somaliland. The once-underutilized port has already undergone a major upgrade and, to keep up with the needs of its burgeoning trade, Somaliland has announced it will privatize the port.
Because Somaliland is unrecognized, credit has been hard to come by, the country has largely needed to rely on cash transactions, and foreign investment has been all but non-existent. Until now.
Although most of the world’s governments, fearful of encouraging other secessionist movements, are in solidarity with the central government of Somalia against Somaliland, the world’s capitalists are taking a second look. Somaliland may not have the official imprimatur of the United Nations or the backing of a major central bank, some investors reason, but it looks a lot more secure than a Greece, an Egypt, or many other countries blessed by officialdom.
This week, Coca-Cola opened a US$15-million bottling plant in Somaliland, the country’s first major industrial investment since independence. Others, including Toyota and foreign airlines, have announced plans to invest. And oil companies, too, are expressing interest — prior to the civil war, several oil majors were exploring in Somaliland.
But the biggest breakthrough for Somaliland may come from a sympathetic Britain, its former colonial master and present home to the world’s largest Somali Diaspora community. In a 21st-century twist on its colonial trading corporations such as the Hudson’s Bay Co. and the East India Co., the British parliament this year established the Somaliland Development Corp. as an end-run around countries that deny Somaliland the recognition, and investment, it deserves.
“The point of the corporation is to facilitate international investment in Somaliland and economic interaction for the benefit of the Somaliland people,” explained British MP Alun Michael in the House of Parliament. “As an unrecognized state, it is isolated. Despite its extraordinary achievements in stability and democracy, international donors cannot deal directly with its government, and foreign investors face uncertainty about whether contracts — the basis of secure business — can be enforced. The point of the corporation is to establish an entity to circumvent that problem.”
The Somaliland Development Corp. will be, in effect, an outsourced Somaliland ministry that will allow foreign investors to help Somaliland develop under the laws of the U.K. Fittingly, the U.K. is helping to advance the development of its former colony into a viable democratic state. The rest of what is official Somalia — a region that was Italian Somaliland, including the autonomous Puntland region, has had no such luck, not least because it lacked the British tradition of democracy. But the Somalis in the former Italian Somaliland also have a path to peace, as we shall see next week.
By Lawrence Solomon/ Financial Post(Lawrence Solomon is executive director of Energy Probe and a founder of Probe International).