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Tbf-Somaliland-Paper-2019-08 DISCUSSION PAPER 08/2019 SOMALILAND New ways of doing things in a tough neighbourhood Greg Mills, Ray Hartley and Marie-Noelle Nwokolo Strengthening Africa’s economic performance SOMALILAND New ways of doing things in a tough neighbourhood Contents Executive Summary .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 3 Introduction: From peace to recognition.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 4 Livestock: From nomadic pastoralism to modern farming .. .. .. .. .. .. .. .. .. .. .. .. 6 Agriculture: From rain-fed to irrigated .. .. .. .. .. .. .. .. .. .. 7 Fisheries: From small boats to commercial vessels .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 8 Oil: From exploration to production .. .. .. .. .. .. .. .. .. .. .. 9 Minerals: From artisanal to commercial production .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 10 Light Manufacturing: From small scale to processing .. .. .. .. .. .. .. .. .. .. .. .. .. .. 10 Financial Services: Must be more than monopolies .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 12 The Berbera Corridor: Integrating logistics .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 12 Energy: From diesel to solar .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 13 Conclusion: The cycle of governance, productivity and recognition .. .. .. .. 13 Endnotes .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 15 About the Authors Dr Greg Mills heads the Johannesburg-based Brenthurst Foundation, Published in September 2019 by established in 2005 by the Oppenheimer family to strengthen African economic The Brenthurst Foundation performance. He holds degrees from the Universities of Cape Town and The Brenthurst Foundation Lancaster, and was the National Director of the SA Institute of International (Pty) Limited Affairs from 1996 to 2005. He has engaged in numerous reform projects in PO Box 61631, Johannesburg more than a dozen African governments (including in 2017/19 for example 2000, South Africa with the governments of Ghana, Lagos State, the five states of SE Nigeria, Lesotho, Somaliland, Buffalo City and Theewaterskloof Municipalities in South Tel +27-(0)11 274-2096 Africa, Ethiopia and Mozambique), sat on the Danish Africa Commission and Fax +27-(0)11 274-2097 on the African Development Bank’s high-level panel on fragile states, and has www.thebrenthurstfoundation.org served four deployments to Afghanistan with NATO. A member of the advisory All rights reserved. The material board of the Royal United Services Institute, he is the author, inter alia, of the in this publication may not best-selling books Why Africa is Poor, Africa’s Third Liberation (with Dr Jeffrey be reproduced, stored, or Herbst), Making Africa Work (with President Olusegun Obasanjo, Dr Herbst and transmitted without the prior Major-General Dickie Davis), and most recently Democracy Works (with President permission of the publisher. Obasanjo, Dr Herbst and Tendai Biti). Ray Hartley is the Research Director Short extracts may be quoted, of the Brenthurst Foundation. He holds a post-graduate degree from Rhodes provided the source is fully University where he studied African Politics and Journalism. He was the editor acknowledged. of the Rand Daily Mail, BusinessLIVE and South Africa’s largest newspaper, the Sunday Times. He was a member of the anti-apartheid United Democratic Front Layout and design by and worked as an administrator in constitutional negotiations to end apartheid. Sheaf Publishing, Benoni. Marie-Noelle Nwokolo is the Machel-Mandela Fellow at the Brenthurst Cover photo by Ray Hartley: Somaliland President Muse Bihi Abdi Foundation. She is a recent MSc Development Management graduate of the points to a map of Somaliland while London School of Economics and Political Science (LSE) and an alumni of the The Brenthurst Foundation director, Programme for African Leadership (PfAL) at LSE. Prior to that, Marie-Noelle Greg Mills, looks on during the presentation of an economic worked at organisations such as The Advisory Board Company in Washington diversification plan in Hargeisa DC, WaterAid UK, Diamond6 Leadership & Strategy and PrimeStrategy Ghana. SOMALILAND: NEW WAYS OF DOING THINGS IN A TOUGH NEIGHBOURHOOD Executive Summary Somaliland has been self-governing for more than two decades and has held successive democratic elections. It has its own army, currency, passports and flag and functions completely autonomously from Somalia, which it broke away from in 1991. But Somalia and the world are yet to recognise Somaliland, holding back foreign investment. Despite this obstacle, Somaliland is attempting to forge ahead by modernising its economy by establishing an ambitious new trade corridor with Ethiopia following a large investment in road and port development by the UAE and seeking investment in new industries that will soak up large numbers of unemployed youth. It is a country that must make a series of transitions – from nomadic livestock rearing to modern farming, from rain-fed cultivation to irrigation, from exploring oil to producing it and from an inefficient and expensive diesel-based energy supply to renewable energy amongst others. This battle to do new things in a tough neighbourhood will define Somaliland and the Horn of Africa over the next decade. BRENTHURST DISCUSSION PAPER 08/2019 3 SOMALILAND: NEW WAYS OF DOING THINGS IN A TOUGH NEIGHBOURHOOD Introduction: From peace Ogaden region of Ethiopia, and a piece of northern to recognition Kenya. That never happened. Instead, following a bitter civil war that saw ‘You see,’ says President Muse Bihi Abdi, pointing to the forces of Somali President Mohamed Siad an area to the east on the giant map of Somaliland Barre employ Rhodesian mercenaries (among covering the one wall of the presidential briefing others) to bomb and strip the capital of Hargeisa, room in Hargeisa, ‘in this area, clan members think the Somali National Movement booted out the “I have a gun, I am the government”’ explaining occupiers, and set about creating the conditions why the area is spotted with Al-Shabaab fighters for stability which have endured since. and his government continues to battle to estab- A domestic peace process was constructed lish governance. around five major internal meetings, starting with This statement has echoes in the observation the Grand Conference of the Northern Peoples in of the 19th century traveler Richard Burton of the Burao, held over six weeks and concluding with Somali that: ‘every man his own sultan’. the declaration of Somaliland’s independence The restive east notwithstanding, a great deal from Somalia on 18 May 1991. has been achieved by the hitherto unrecognised Somalilanders concentrated on achieving Republic of Somaliland since its re-proclamation peace, not on acquiring comforts and financial of independence in 1991. rents for delegates from the process. This fea- ture has continually blighted Somalia’s attempts to the south, where ‘conflict entrepreneurs’ have fed off both the fighting and the talking in a top- down process financed by donors, and which have largely taken place outside the country. This bottom-up process by Somalilanders was consoli- dated through the development of a democracy, again slowly but steadily. In 2002, Somaliland made the transition from a clan-based system to multi-party democracy after a 2001 referendum, retaining an Upper House of Elders (guurti), which secures the support of tra- ditional clan-based power structures. Regular elections and a regular turnover in power between the main political parties have characterised the local politics. It’s hyper competitive too. The 2003 presiden- tial election was won by Dahir Riyale Kahin by just 80 votes in nearly half a million from Ahmed M. Mahamoud Silanyo. The tables were turned A Mig fighter on a plinth in downtown Hargeisa serves as a reminder between the two in 2010. President Bihi was of the bloody civil war. But these days it is the place where the growing army of unemployed youth hang out to drink Somali tea. elected in 2017, receiving 55 per cent of the vote. Photo: Ray Hartley He had served in the Somali Airforce, flying Soviet Ilyushin Il-28 twin-engine bombers in the 1977 Three decades before, in June 1960, Somaliland war, which attempted unsuccessfully to wrest gained its independence from its colonial mas- the Somali-dominated Ogaden from Ethiopia ter Britain before making an ill-fated decision to before changing his allegiance to the rebel Somali join former Italian Somaliland five days later. This National Movement. union was then envisaged to incorporate French As the euphoria of self-government fades, Somalia (now Djibouti), the Somali-dominated his is an increasingly difficult job. The economy BRENTHURST DISCUSSION PAPER 08/2019 4 SOMALILAND: NEW WAYS OF DOING THINGS IN A TOUGH NEIGHBOURHOOD is straining. Infrastructure is poor. The unemploy- dominance of monopolies, which also define the ment rate among those under 30, who comprise banking and telecoms sectors. 70 per cent of the population, is 75 per cent.1 Productivity is poor, and growth opportunities The chewing of khat is a widespread social blight are few and far between. Outside of remittances, among more than half the adult population, which provide 55 per cent of the GDP of US$2 billion, an effective tax on productivity and foreign Somaliland depends on its sale of sheep, camels exchange, soaking up as much as US$700 million and goats, though this has suffered with
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