Somaliland: Open for Business
The Somaliland people have witnessed a great deal of progress over the last 20 years of self-governance. Peace has been restored through our own efforts, democratic systems have been established and have continued to evolve after five successful elections at the presidential, parliamentary and local government levels; and professionalized security forces protect the population from terrorism, and organized crime. Now that the foundations have been put in place, it is time to build on these achievements by using foreign direct investment and local capacities to promote economic growth and job creation.
Somaliland has deepened its economic engagement with foreign governments, both within the region and beyond. With Ethiopia, Somaliland is engaging in negotiations to finalize their first official bilateral strategic cooperation agreement. Djibouti has invested heavily in Somaliland’s economy, including investing roughly $15 million in a Coca Cola factory last year. Somaliland has used diplomacy to help facilitate FDI from Turkey, the UAE, Egypt and China into Somaliland’s key sectors such as livestock and fishery.
Thanks to stringent public financial management, increased tax revenue and more safeguards against corruption, Somaliland’s 2013 budget is the largest and most balanced in its history. Moreover the government has no debt. Our children receive free primary education; we are expanding medical services and water distribution in urban and rural areas; and our mobile banking and money transfer industries have allowed for commerce to flourish.
Livestock exports account for around 60% of Somaliland’s national income, chiefly to the Gulf States, but great potential exists for Somaliland to capture further global market shares and stages of the value chain. We have a fishery sector whose potential annual sustainable production is estimated at 40,000 tons. Somaliland’s deposits of oil, gas and coal are attracting the attention of international investors, and agreements have been reached with Genel, DNO, Ophir and others over exploration and production rights. These contracts show investor confidence in our country’s stability. There is also huge potential for renewable energy. Pilot projects in wind and solar energy are underway, and the legal environment is being reformed to better regulate the sector and protect investors. Somaliland also has large proven deposits of minerals including gypsum, gold, iron, lead, and quartz; and gemstones such as emeralds, rubies, garnets, sapphires, aquamarines and opals.
The services sector will be enhanced by the new fiber optic cables which are being laid between Somaliland’s major cities and towns, which also provide connectivity with the outside world. This new infrastructure will revolutionize the way in which business is done in our country, and provide new opportunities, including in financial services.
Somaliland is reforming its once cumbersome regulatory framework to better promote investment. An Investment Climate Unit has been established within the Ministry of Trade and Investment (formally known as the Ministry of Commerce) to streamline business registration. Important legislation—such as the Foreign Investment Law, Islamic Banking Law, Central Banking Law, Electrical Energy Act, and Commercial Banking Act—have either been passed or are making their way through Parliament.
Diaspora are returning in large numbers and are setting up businesses, investing in projects and real estate, and sharing their knowledge and experience with the private and public sectors. Business development services – including local legal, marketing, IT, telecommunications, advertising, printing, business planning and consulting, and accounting firms – have proliferated to support the growing small and medium-size enterprise sector.
Somaliland has made many impressive gains in creating a favorable investment climate, but more investment support is needed. The main obstacle to major foreign direct investment has been ignorance of Somaliland’s well-established peace and stability as well as its economic potential on the part of international investors. Somaliland is at a much more advanced stage of development and investors must acknowledge this reality. The start of new investment into Somaliland has shown that these attitudes are beginning to change, and my Government welcomes investors to come and see for themselves the unexplored and untapped opportunities that our country has to offer.
Dr. Mohamed A Omar
Minister of Trade and Investment
Republic of Somaliland