Ayadi Ibrahim and Kassim Wais, two young Somalilanders from Toronto, highlight challenges in national security, foreign policy, creating more robust economy and developing governmental institutions. This is well-constructed analysis offers insight how to approach challenges of our time.
Somaliland celebrates its 20th anniversary of independence this year. This is a momentous and joyous occasion for our people. This is an important milestone; we have been able to accomplish many goals with little or no assistance from the international community and this something that we must be proud of. However, it is important to note that while we have accomplished many goals we have also endured much heartache and encountered many challenges on our road to independence. The Somali National Movement with their exemplary efforts fought persistently and without hesitation for our freedom. From their base of operation in Ethiopia they launched a counter offensive operation against the Siyad Barre regime. After a lengthy war we were able to claim victory by liberating all the towns and villages across Somaliland. Many innocent men, women and children lost their lives on this road to freedom, but now twenty years on and we know that their sacrifices have not been in vain. We continue to honour their memory by focusing on laying the vital foundations necessary for our eventual path to international recognition and continued prosperity. As we reflect on the past twenty years it is important to look ahead and figure out what goals we must set for ourselves for the next twenty years. That is why we were compelled to write this article, we believe that Somaliland’s best years lay ahead and we believe that we must focus on developing strong institutions that will see us succeed in the decades ahead.
Crafting A Coherent National Security Policy
Somaliland is about to celebrate its 20th anniversary this coming May and although this fledgling Republic has achieved many remarkable things, the likes of which no state in Africa has done before, yet ironically it still has not managed to completely secure its eastern border. A state is defined by three characteristics, a recognized border, a stable and permanent population, and a government that exercises complete jurisdiction within its defined territory. It has become quite evident that our sovereign Republic has successfully fulfilled the first two requirements but it has failed to accomplish the third prerequisite to complete statehood. Today, there are six regions that compromise Somaliland, Maroodi Jeex, Toghdeer, Saxil, Awdal, Sool and Sanaag. Four of these regions are completely secure while the eastern regions of Sool and Sanaag minus the capital city of Las Anod, are still ruled by tribal fiefdoms.
Somaliland is a free and democratic state which has demonstrated that it has risen above the tribalism and anarchy that has engulfed Somalia for the last twenty years. However, it has become very apparent that the government has failed to address the security situation in the eastern regions particularly Buhoodle which is overrun by the Sool Sanaag and Cayn (SSC) militia. The SSC is a terrorist organization that uses fear and intimidation to recruit members into its ranks. The objective of this illegal organization, according to its mission statement is, to unite the northern tribes particularly the Harti Darood clans into a single unified entity which will then break free from the Isaaq dominated Somaliland and begin to unite the former Somalia from its base in the town Buhoodle. The state of Somaliland will not tolerate the unwarranted aggression of clan affiliated movements within its territory. This tribal oriented and malicious type of thinking is what brought the Republic of Somalia to its untimely demise. The SSC must realize that Somaliland’s existence is based on recognized colonial borders which the majority of African nations use today to define their respective territories. It must also acknowledge that Somaliland is a free and democratic state which exercises equality amongst the clans that inhabit its territory and that all are equal under the constitution and that no clan has superiority over another within the free republic. The irony is that, the so-called injustice that the SSC claims it is liberating its people from, is the same mechanism it is using to recruit the local populace, tribal affiliation.
Now the question is how will Somaliland secure its eastern frontier while at the same time ensuring that insurgencies like the SSC do not crop up again? We believe that there is a three step solution to securing our eastern border. First we must successfully manage the financial resources of the state over the next three years so that we can acquire a surplus in our national coffers. When that is complete, the second step requires that the state carry out a massive construction program to keep the eastern cities on par with the other cities of Somaliland. We will increase the loyalty of the citizens on the eastern frontier. What this means essentially is that, the money the state successfully saves over the next three years must be used to fund extensive construction projects in the eastern cities and villages that make up the provinces of Sool and Sanaag. This will create a more positive attitude towards the central government in Hargeisa. The third part, which is solidifying support, requires that the eastern cities feel protected and secure from external threats while these large scale construction projects are going on. This last step will require a massive investment be put into the armed forces of Somaliland. The army must be reorganized in a way that allows it to deter any force or if need be, invade any territory that threatens the existence of the state.
According to the Ministry of Finance, the Somaliland Army has received an increase of 100% to each soldier’s salary and it continues to receive the lion’s share of overall government spending. The position of the government is that our frontline soldiers deserve every investment they receive. However, with all these investments it’s important to note that our military is over-stretched and its approximate fighting power remains a national secret but there have been estimates ranging from 30,000 to 60,000 which means the best way for the government to reduce unemployment is to create new military academies that will arm and train our new and young recruits so that they can be incorporated into the national army. The officers that will supervise and maintain these new academies must come from the plethora of well-trained SNM veterans, who currently remain jobless in the largest cities of Somaliland. These new academies will allow the republic to create a fresh batch of soldiers to guard the eastern border while at the same time creating jobs for our veterans. We must give our young men and women the opportunity to secure their nation from those who wish to destroy it from within and abroad. This crucial three step formula, if adopted, will allow us to double the strength of our military within a short period of time so that the burden of guarding the eastern border will be lessened and distributed equally amongst the national army.
Overall, it will create an unwavering sense of loyalty from the eastern cities towards the government because after the years of neglect that they have felt will have finally come to an abrupt end and once the much needed construction programs commence, which will consist of wells, schools, road rehabilitation etc. The local populace will feel that they are finally part of Somaliland and its bright future, therefore the increase of military presence on our eastern frontier will not be seen as an invading Isaaq force but as a harbinger of peace and security. Therefore, any future organization that will wish to imitate the SSC or support its ideals will find itself lacking any real tools to recruit for its tribal based agenda. The local population in this region will begin to see the benefits of being part of Somaliland and the benefits it brings. We must instil values in the local population, values that will create more productive citizens amongst society. Being a responsible citizen includes, the reporting of any suspicious activities that they may view as counterproductive to their development, directly to the authorities. Violence begets only more violence; nothing gets accomplished through the barrel of a gun.
Organizations like the SSC have always been known to exploit the uneducated and oppressed people of a certain region in order to achieve its objective of destabilization. When a group of people feel that they have been ignored by the ruling class, the ruling authority of the time should take every possible measure so that the concerns of these people are taken into account. Somaliland is a nation of all tribes and this is an undeniable fact that can only be visible if the proper steps are taken to ensure that the eastern cities remain content and secure. Somaliland must continue to secure the eastern towns through peaceful dialogue but if the local population continues to resist all peaceful negotiations, the armed forces of Somaliland must be ready to secure all rebellious towns by any means necessary. The acquisition of all towns within Somaliland is an imperative national security goal which should be completed as soon as possible.
Somaliland’s Foreign Policy Goals
For the past twenty years Somaliland has painstakingly sought recognition from the outside world and for twenty years the world has denied it its god given right for self-determination. The people of Somaliland have been through countless hardships, from an attempted genocide to seeing its capital cities of Hargeisa and Burco razed to the ground by aerial bombardment. It seems that the people of Somaliland forgot that in their most desperate time of need, not a single nation lent a helping hand, in fact it was the contrary, many nations were supplying the Siad Barre regime in carrying out thesevicious attacks against them. Through the mercy of Allah and the bravery of our SNM soldiers, we were able to defeat one of the largest armies in Africa at the time, without any international assistance.
So the question remains, if we did not need the world then, why do we need the world now in order to become successful? Many say that without recognition we cannot develop as a nation, this is a mindset that is in nature pessimistic and downright offensive to the mercy giving lord, Almighty Allah. Recognition does not ensure economic success or increased development. Africa boasts many of the richest nations in terms of natural resources but none of these countries have managed to become economically successful or even peaceful but yet they are all recognized by the United Nations. Now we do not want anyone to misconstrue our point, we are arguing that recognition should not be the ultimate foreign policy goal, but what we are arguing is that, actively seeking recognition from states that have barely demonstrated any type of governing sense is not in our long-term interest. Somalilanders must realize that our recognition is not a matter of if but when. Somaliland’s international recognition is inevitable but it will only come when the world figures out it needs it. The people of Somaliland should realize that they are an intelligent and innovative people and that by using our limited fiscal resources we have become a financial success story. With the help of Allah, Somaliland can develop into a strong modern state without the assistance of the international community. At the end of the day, the greatest resource a nation has is its people.
Through hard work and due diligence and with proper fiscal prudency we believe we will be able to achieve many of the economic goals we have set for ourselves. The longer we continue to wait for recognition, the more complacent we will become as a nation. We must stop relying on the goodwill of nations and start realizing that the world revolves around self interest; no one offers a helping hand unless they have reason to do so. Somaliland should realize that Allah has recognized it and that there is no higher recognition available than the one given from the heavenly court. Somaliland’s foreign policy goals for the next twenty years should be focused on securing greater business partnerships and establishing as many economic trade links as possible, while at the same time adopting a mindset that propels our people towards self-sufficiency. No nation can be completely self-sufficient but Somaliland has demonstrated that without recognition, (which is the greatest economic sanction), a nation can not only survive but it can thrive and remain peaceful. Somaliland’s foreign policy goals should be based on self-interest, any deal that does not benefit the nation greatly should be considered of no interest to the development goals of the republic. Somaliland should demonstrate pride and confidence and should no longer allow itself to be known as a second rate nation. People only treat you according to how they perceive you, if Somaliland exhibits weakness and indecisiveness, nations will then begin to treat it with contempt and pity. If our political leaders show honour and virtue when dealing with global leaders, the world will begin to see a strong and innovative state emerge before its very eyes.
The Somaliland Economy an Overview
As Somaliland recovered from the ashes of civil war all our internal state institutions were left in shatters our faltering social and economic infrastructure and massive internal and external migration were evident. All the while our traditional spirit of entrepreneurship remained strong, and the private sector in Somaliland has been resilient and robust. Throughout the course of the past twenty years our private sector has managed to grow impressively, particularly in the areas of trade, commerce, transport, remittance services and telecommunications. The primary sectors of the Somaliland economy, notably in livestock, agriculture and fisheries, are also gaining new economic momentum. The backbone of Somaliland’s economy is livestock. It is estimated that roughly 60% of the population depends either directly or indirectly on livestock and livestock products for their daily livelihood. Agriculture provides subsistence for about 20% of the country’s population. Remittances from relatives and friends also play a major role in the economy of our country.
Aggregate trade data shows that Somaliland’s imports had almost doubled, reaching a historic US $200 million in 2004, exports almost tripled to about $266 million US during that same time. Somaliland’s economic activity and prosperity is being driven primarily by the vast Diaspora that resides primarily in North America and Europe. Based on these estimates there are currently one in eight Somalilanders who currently lives abroad. They represent roughly 80% of our country’s skilled manpower and remit close to $1 billion to their relatives annually. Without these remittances, our country’s private sector would be in a state of disarray and dysfunction. We already face significant challenges accessing credit and other financial services. These remittances also dwarf any international aid the country receives as overseas development assistance. It is estimated that nearly three-quarters of the population live on less than $2 a day. Remittances, at roughly four times that number, clearly show that the major inflow of aid comes from Somalilanders themselves. Most of the recipients of this form of assistance live in urban areas which constitute about 40 percent of the income of urban households. Less than 10 percent of these transactions are destined for rural villages. According to a recent UN study, individual transfers are primarily in small amounts averaging $132/month, sent regularly to cover basic family needs. In fact, household consumption, including expenditure on education and health, accounts for between half and two-thirds of remittance spending. However, studies in Somaliland show that remittances are increasingly being used to fund new organizations and development projects, and such transactions usually involve larger sums. Whether invested or consumed, remittances have important macroeconomic impact in generating positive multiplier effects, while stimulating the various sectors of our economy.
Strengthening our Fiscal and Monetary Institutions
The civil war also led to the collapse of our commercial banking sector, which had previously been plagued by corruption and mismanagement from Somalia. Presently in Somaliland there are few formal financial institutions operating. In addition, past circulation of counterfeit currency has led to inflation and hyperinflation and an increasingly dollarized system within Somaliland’s economy. Somaliland’s central banking authority is in its infant stages of development and is evolving at a very rapid pace. There are several branches across the country that offer some form of commercial banking services, such as deposit accounts and trade finance. While their primary function as a central bank remains acting as the treasurer of their respective regional governments, the fact that they also offer commercial banking services creates an undesirable conflict of interest with their primary role as a central bank. Our financial sector development is dependent on a sound legal and regulatory framework and the ability of central banks to provide the necessary support and supervisory functions. Without a clear legal framework enforced by a functioning regulator, there is little scope for attracting private sector investors to establish banks and other financial institutions across Somaliland. The international community can work with Somaliland authorities to establish the necessary legal framework and build the capacity of our central banking structures by focusing on a set of core priority functions. Investors have expressed an interest in establishing formal banking operations in Somaliland, but have been constrained by the absence of a sound legal and regulatory framework, a strong property rights culture, enforceable collateral contracts, accessible credit information systems and related financial infrastructure. In this context, the Somaliland financial sector largely remains underdeveloped, informal and unsupervised, with limited access to credit and savings, and no protection for consumers and financial institutions. Apart from the limited banking services offered by the Central Bank, the main actors in Somaliland are the remittances companies, which have extensive networks of agents that service all towns and villages in Somaliland, as well as major cities in countries populated by the Diaspora. The limited functioning capacity of the Central Bank also constrains private sector development as it constitutes a serious risk factor to the investment climate for ordinary Somalilanders’ and businesses operating within our society. A significant demand for financial services from both individuals and small-medium businesses remains unsatisfied, even at basic levels.
The Bank of Somaliland currently operates under the Constitutive Law which aims at maintaining price and exchange rate stability, promoting credit and trade conditions which supports balanced economic growth and to support the economic and financial policies of the government where possible. Currently, the Bank of Somaliland is not in a position to perform its key central bank functions as outlined under the Constitutive Law. It has not yet developed the typical instruments necessary to conduct monetary policy. The money issued by the Bank of Somaliland is not used in a uniform manner within our country. It is only used to a very limited extent by Somalilanders as a means of exchange and its day-to-day functions are fulfilled by the US Dollar. The Bank of Somaliland is also involved in elementary treasury and government payment functions and at the same time offers rudimentary commercial banking activities, mainly offering national remittance services through its network of branches and savings and current accounts to a limited number of clients, especially government bodies. No legal framework has been established for commercial banks or Islamic banks, and no banking supervision function and regulatory know how has yet been developed within the Bank of Somaliland. The principal pillar of the current financial system in Somaliland is the remittance industry, which offers money exchange, remittance services, checking accounts as well as overdraft facilities for a small number of trusted customers.
Dahabshill Financial Services is the largest remittance company in Somaliland and it is estimated to handle more than half of all remittance transactions as well as the money supply for most international organizations operating in Somaliland. Although no statistics are available it is clear that the remittances companies by far handle the largest part of the money flows within Somaliland. There have been attempts by the Somaliland Parliament to introduce a new banking law that would strengthen its regulatory functions in support of a functioning commercial banking system. This is something that the remittance companies have been lobbying hard for in recent years. If this proposed banking law is passed it would allow these remittance companies to evolve their financial services within Somaliland. Furthermore, our country has also been locked out of international capital markets. Somaliland does not have any relations with international creditors, such as the International Monetary Fund and the World Bank. We believe that the government must create an environment where financial institutions can flourish and to ensure that it is vital that we assure the stability of our infant system. A banking system that is constantly in crisis does not serve the public interest well. Our central bank must adopt a monetary policy that keeps domestic inflation at manageable rates. High levels of Inflation make it difficult for businesses to maximize output because it increases the risk to borrowers and lenders, and making prices unreliable signals. Establishing targeted rates of inflation provide the necessary foundations for achieving real economic growth in the long-term.
It has been argued in a recent article by Abdullahi Duhod that there are four key elements in establishing an effective and functioning central bank. A central bank must be independent of political pressures, accountable to the public, transparent in its policy actions, and finally there needs to be clear communication with financial markets and the public. There is also an agreement that it is prudent to have policy decisions made by committee rather than by a single individual. It is very important as much of the Somaliland economy is integrated into the world economy via livestock exports and remittances. If the central bank is allowed to let the Somaliland Shilling fluctuate too much against the dollar than a vast percentage of Somalilanders would greatly suffer as they would be unable to predict that a remittance will support them for a time or that if they sell livestock they can be supported for a time since the price of livestock is determined at a dollar rate and not the Shilling. In our mind at least there has been a realization that it is essential to keep the Shilling relatively stable against the dollar which will ensure our successful macroeconomic stability.
Somaliland has an 850 km long coastline that is rich in fish resources. These vast resources are currently not properly exploited. The government in concert with the private sector must provide targeted investments to help establish the necessary coastal infrastructure and an overall campaign to raise public awareness in the coastal communities about the wealth within their reach. It will be the responsibility of these actors to work together to pursue this very integral component of our development goals. Somaliland is blessed with large mineral deposits that could be exploited on a commercial basis. Gemstones, coal deposits, and copper and gypsum are the main deposits. Although not officially published in any government document on the Somaliland economy, there are several identified oil fields on-shore and off-shore along the north-west coast of Somaliland. There are several wells that have been excavated over the past few years, foreign oil companies and coal companies have not been able to benefit from this because of the fact that we are not international recognized.
It is necessary that the current government focus on providing a coherent economic program that focuses on making targeted investments in generating jobs, services, investment opportunities and revenues, the ?Berbera corridor could serve as a regional model for development through expanded private sector ?activities. The removal of trade barriers will create and enable an environment for development oriented by cross-?border trade with our regional neighbours and establishing a hospitable climate for business investment. This would greatly encourage and continue the growth that our private sector has experienced in recent years. The Berbera Corridor must be an important element of this creating fostering this climate.
Somaliland currently lacks the administrative capacity to collect taxes particularly inland taxes and there is not a well-established legal framework that governs tax collections such as income and corporate taxes. This is an area that has long been neglected by the previous government. The Silyano government faces a significant challenge in this regard and it is vital that they begin the task of creating a fair tax system which ensures that every citizen pays his/her fair share. The government must also establish the administrative capacity necessary to collect these taxes. Every dollar that is saved by trimming ministries and cutting expenses can be reinvested in the productive sector of our economy such as public services economic development and infrastructure. We want Somaliland to be a key player in the Horn of Africa and in order to do that we must start by attracting international investment for the our untapped natural resources and taking advantage of our significant and strategic geographic location. We must also commit to improving our living standards, while at the same time crafting an image that aims at transforming and restoring the image of the region by addressing the multidimensional poverty facing their people, tackling security concerns, and establishing regional trade links.
Developing Somaliland’s Governance Institutions
Somaliland has a decentralized governance model, in which districts are given the primary responsibility for service delivery. A recently published United Nations report on the Somaliland budget plan highlights that given the limited capacity for local revenue generation, a state transfer mechanism has been put in place to provide financing, but the fund transfers are still insufficient relative to the functional responsibilities at the district level, and the transfer system does not constitute a re?distribution mechanism that would support poorer districts. Local government provision of social services is also constrained by extremely limited capacity and the lack of direct control of service.
The phenomenon of weak institutional structures are not new in many African countries, but the need to put in place effective strategies to address the weaknesses in Somaliland’s governance structures is more critical than ever. Somaliland, however, faces a particularly thorny development challenge due to its overall weaknesses, particularly in the areas of governance and economic institutions. For development to succeed in any context Somaliland needs take that view and stay engaged for the long process of development in governance, social services, job creations and income generation. There are no quick fixes to strengthen governance or build a country’s ability to improve the lives of its citizens.
Development and good governance reforms must be the first pillars of the state. It must put in place strategies that improves the governance structures but also enables us to succeed in the essential reconstruction and long-term development goals of Somaliland. The strategies outlined here identifies key issues related to governance and development in Somaliland and how to more effectively respond to the overarching challenges posed by our weak governance structure and build solid political foundation in Somaliland for the 21st century. It must be guided by the overarching principle that Somaliland needs to engage carefully and selectively. It recognizes the fact that there are areas where the international assistance will be able to make a difference, and it directs the focus to those strategic areas with the greatest impact.
Somaliland has been a leader in Africa when it comes to promoting democracy and strengthening the rule of law, as well as respect for internationally recognized human rights and fundamental freedoms. We must continue to improve the quality of our democratic institutions and processes, and managing the changing roles of the state and civil society must be the top priority in Somaliland. Immediate interventions are required for the reform and building the capacities of the core social and political institutions in Somaliland reform process. Somaliland must continue to enhance its local governing institutions. We must strengthen the capacities of governance in central government institutions and we must strengthening democratic participation amongst civil society groups. Overall, our institutions have different roles and responsibilities in the democratic governance process. Good governance principles must underpin national efforts to reduce poverty, sustain the environment and promote economic development. These governance institutions will play a significant role in shaping the democratic governance and influence the development process.
By Ayadi Ibrahim and Kassim Wais
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