It’s the only
African country that doesn’t rely on foreign aid from the world’s rich
governments. It’s a Muslim country in Africa that has had a functioning
democracy for two decades. It’s an oasis of relative peace in one of the most
vicious regions of the world, with a growing free-market economy, low inflation
and a currency that has been appreciating against the U.S. dollar.
This anomaly of a country, Somaliland, is unrecognized
by any other country in the world, even though the World Bank’s chief economist
for Africa touts it as a “success story” and the World Bank itself doesn’t
formally recognize it. Somaliland’s story is all the more astonishing given
that it is officially part of Somalia, a failed state best known for its piracy
at sea and al-Shabaab terrorists on land, and given that it declared
independence in 1991 after surviving a brutal repression by Somalia’s Marxist
dictator that dispersed much of its population to the U.K., Canada and other
safe havens.
While much of Somalia descended into an ungovernable anarchy over the past two decades, Somaliland miraculously found its feet. The miracle lay largely in the country’s good fortune to have been in British hands over most of the previous century, and in its good fortune to be deprived of foreign aid. Without foreign aid lavished on leaders in the central government and with a decentralized British colonial parliament, Somaliland’s local governments exercised meaningful rule, citizens were accustomed to local rule, and citizens had no choice but to be self-reliant.
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.
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