Friday, November 22, 2013

New Countries, Old Hopes

Somaliland declared its independence from Somalia in 1991, calls itself a sovereign nation, and operates as such, but has not been recognized by any other country in the world. and has been largely forgotten. Somaliland has a working government -- something that's markedly lacking in Somalia. Somaliland, a region with a population of 4 million islocated in Somalia's northwest bordering Ethiopia, Djibouti and Puntland (another unrecognised autonomous region). Somaliland has its own government, constitution, currency and economic ambitions. Since it isn't formally recognized as an independent state, the territory can't receive direct aid from international donors. (Tens of millions of dollars do filter in annually to combat endemic poverty and food shortages, though the funds are administered by aid agencies and aren't recorded in government books.)

Led by President Ahmed Mahamoud Silanyo since 2010, Somaliland is promoting itself as a safer destination for investors than the nearly-lawless Somalia. ighly dependent on transport customs and domestic taxes, which many analysts argue has actually stabilized the region by keeping government authorities beholden to citizens and private businesses.  Meanwhile, remittances from abroad have grown indispensable to citizens, since there are no commercial banks in Somaliland.

It might find itself at the center of an international scramble for the next oil hotspot.  Given its geology, he says, the region could hold several oil fields with reserves in the billions of barrels. In 1991, with Somalia on the verge of civil war, a World Bank/UNDP study noted that the northern part of the country was likely to contain significant hydrocarbon prospects. But as the central government dissolved in a spiral of violence, prospects for exploration vanished.  Somalia’s government -- whose authority does not extend much beyond Mogadishu, 500 miles (800 km) away by air -- does not recognize the government of Somaliland, and has discouraged oil companies from doing any business with it.

Minister of Energy and Minerals Hussein Abdi Dualeh expects three or four international oil companies to begin 2D seismic evaluation exploration projects in Somaliland next year. He will also be developing a separate military force fully trained and equipped and tasked with protecting the oil industry which will have a separate command structure from the other armed forces of Somaliland. His sales pitch is that East Africa is currently the go-to region for oil exploration in Africa. It has the potential to become the new Middle East and unlike some of the inland places in Africa where oil is being found, the possible oil-fields here very close to the coast, where oil can be shipped easily to world markets.

Berbera, the country’s the port city,  hopes to tap into Ethiopia's relative wealth by turning Berbera into a similar hub as Djibouti. Some Ethiopian trade already flows through the city, and total revenues from the port generate up to 80 percent of Somaliland's annual budget, which is at an all-time high of $125 million this year. But the government is keen to rake in even more. The demand is there; maritime traffic often overwhelms the Djibouti port, as it does at nearby ports like Mombasa, Kenya and Dar es Salaam, Tanzania.

From here

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