Page last updated at 13:46 GMT, Sunday, 15 March 2009

Riches of Somaliland remain untapped

By James Melik
Business reporter, BBC World Service

Camels in Somaliland
Camels and sheep are the country's biggest foreign currency earners

Until Somaliland gets official international recognition it cannot exploit its rich reserves of natural resources.

Although agriculture is the most successful industry, surveys show that Somaliland has large offshore and onshore oil and natural gas reserves.

Several wells have been excavated during recent years but because of the country's unrecognised status, foreign energy companies cannot benefit from it.

Somaliland is in north east Africa but, as far as the outside world is concerned, it is simply a region of war-torn Somalia which has not been a nation since Britain gave it independence in 1960.

Yet the area the size of England declared independence 18 years ago and, while the rest of Somalia remains in a chaotic state, Somaliland has established a stable government, peace and relative prosperity.

Self reliance

The country's progress is limited however, because aid donors and trade partners do not officially recognise its existence.

After declaring independence in 1991, Somaliland formed its own hybrid system of governance consisting of a lower house of elected representatives, and an upper house which incorporated the elders of tribal clans.

Somaliland made its final transition to multi-party democracy with elections in 2003.

We have to rely solely on our meagre revenues and the investments of our own people
Foreign Minister Abdillahi Duale

The country has its own flag, national anthem, vehicle number plates and currency - although the Somaliland shilling is not a recognised currency and has no official exchange rate.

It is regulated by the Bank of Somaliland which was established constitutionally in 1994.

Foreign minister Abdillahi Duale says the recession affecting the rest of the world is causing him particular concern.

"As a country which is not yet recognised this global phenomenon is affecting us very seriously," he laments.

"We do not have access to international trade or international financial institutions," he says. "So we have to rely solely on our meagre revenues and the investments of our own people."

'De facto' state

Mr Duale insists that his people have a great entrepreneurial spirit and are business-oriented.

We need butter, we are not asking for guns
Foreign Minister Abdillahi Duale

Most trade is carried out with the Gulf States, Indonesia and India.

"Trade doesn't require recognition," he says.

The main export is livestock, with sheep and camels being shipped from Berbera, the country's largest port.

In order to export livestock, a veterinary license has to be issued.

To facilitate that, a veterinary school has been built in Sheikh and it attracts students from the Horn of Africa and as far afield as Uganda and Kenya.

Mr Duale is unperturbed that such licences will not have the force that a United Nations-sponsored veterinary licence would have.

"We are not members of the UN but nevertheless, the international community trades with us because we are a de facto state," he says.

woman kneeling on beach
Somaliland has 740 kilometrees of coastline bordering the Red Sea

He admits however, that one of the major problems the lack of official recognition creates is the inability to access international financial institutions.

"We cannot talk to the International Monetary Fund or the World Bank because they only talk to recognised states," he says.

"We rely on ourselves and our Diaspora, which accounts for almost $600m of revenue a year.

"People get by but it is very difficult without infrastructure," he says, "We need butter, we are not asking for guns."

Growth industry

Apart from livestock, other exports include hides, skins, myrrh and frankincense.

Mining has the potential to be a successful industry although simple quarrying is the extent of current operations - despite the presence of diverse mineral deposits including uranium.

One industry which has seen growth however, is tourism.

group of people and goats
The majority of the 3.5 million population is nomadic

The historic town of Sheikh is home to old British colonial buildings which have been untouched for 40 years, whilst Zeila was once part of the Ottoman Empire.

Due to the fertility of some regions, many people travel to see the wildlife, while the offshore islands and coral reefs provide another major attraction.

Whoever is brave, or reckless enough, to break ranks with the world community and gives Somaliland the recognition is craves, must surely be well placed to take advantage of the riches the country has to offer.

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