Somaliland Is A Lesson In How To Build A Nation Without Aid

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Over the years, the West has spent many millions to help stabilise the Horn of Africa, and alleviate the grinding poverty of many of its residents. In 2011-13, the EU pledged 260 million euros in development aid for South Sudan, and the US has also invested substantial amounts of money to stabilize the country. In Somalia, meanwhile, the international community is still trying – as it has for decades – to build a functioning government.

Yet despite massive amounts in aid, these two countries still top the list of the world’s most fragile states. And there is little hope of either building resilient and inclusive state institutions.

What a stark contrast there is with neighbouring Somaliland. Even as other countries suffer coup after coup, Somaliland has enjoyed a relatively smooth transition of power for more than two decades. In April 2003, for example, Dahir Kayin won by just 80 votes out of 675,000. The defeated candidate, Amhed Silanyo, gracefully conceded defeat – and was re-elected by the voters at the next election.

Somaliland is, admittedly, desperately poor – the World Bank put its GDP at just $347 per person in 2012, the fourth lowest in the world, and the majority of the population are unemployed. But it is, in a volatile region, a beacon of security and stability.

Somaliland’s unique situation derives from the fact that, while it has all the trappings of a state, it is not actually recognised as one.

Somaliland gained its independence from Britain in June 1960, but united with Italian Somalia a few days later. It only reclaimed its independence from Somalia in May 1991, amid the chaos of the civil war there. But international bodies, and the African Union, have refused to recognise it, fearing it will set a precedent for other nations.

The result has been that, without international aid and support, Somaliland has had to fall back on its own resources. In contrast to other African nations, state-building programmes and public services have been entirely financed by domestic income, rather than being supported by international donors.

Whereas countries that are dependent on aid can afford to neglect tax collection, countries without it are forced to use taxation appropriately. In 1990-2000, the Somaliland ministry of finance reported that “95 per cent of the resource that finance the activities are locally mobilised, mostly through taxation”.

Not only are taxes collected in a non-coercive manner, but the government enhances its legitimacy by allowing a degree of public participation in the policy-making process. For example, in early 2000s the government attempted to increase taxes on the private sector and proposed a VAT rate of 30 per cent, but the business sector lobbied against it and the policy was reversed.

This reflects a wider commitment to careful bargaining between interest groups. In Somaliland, power is equally dispersed among the military, business and the public. In particular, the civilian council of elders, known as the Guurti, exerts enormous influence over policy-making. It played a particularly important role in persuading Somaliland’s first leader, Abdurrahman Tuur to hand over power to Mohamed Ibrahim Egal, setting a precedent for peaceful transition.

Of course, Somaliland has severe problems. It is currently ravaged by severe drought, which has seen the latest presidential election postponed by six months. There are arguments and protests over rising inflation, and the involvement of Chinese companies in exploiting its resources. The freedom of the press, while constitutionally guaranteed, is increasingly under threat. And being cut off from international markets means that the economy is heavily, perhaps overwhelmingly, dependent on remittances from those who have been driven abroad.

But Somaliland also has much to be proud of. For example, the successful knowledge-based Institution University of Hargeisa (UoH) was built entirely without external support. Fewazia Adam, its founder, approached a number of international philanthropic organisations to discuss support for the project, including the EU, World Bank and international NGOs, but all in vain

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