Somaliland - Economy

Economy

The Somaliland shilling, while stable, is not an internationally recognised currency and currently has no official exchange rate. It is regulated by the Bank of Somaliland, the central bank, which was established constitutionally in 1994.

Since Somaliland is unrecognised, international aid donors have found it difficult to provide aid. As a result, the government relies mainly upon tax receipts and remittances from the large Somali diaspora contribute immensely to Somaliland's economy. Remittances come to Somaliland through money transfer companies, the largest of which is Dahabshiil, one of the few Somali money transfer companies to conform to modern money-transfer regulations. The World Bank estimates that remittances worth approximately $US 1 billion reach Somalia annually from emigres working in the United States, Europe, and the Gulf states. Analysts say that Dahabshiil may handle around two-thirds of that figure, and that as much as half of it reaches Somaliland alone.

Since the late 1990s, service provision has significantly improved as a result of limited government provision and contributions from non-governmental organisations, religious groups, the international community (especially the Diaspora) and the growing private sector. Local and municipal governments have been developing the provision of key public services, such as water in Hargeisa and education, electricity and security in Berbera. In 2009, the Banque pour le Commerce et l'Industrie – Mer Rouge, based in Djibouti, opened a branch in Hargeisa, to become the first bank in the country since the collapse in 1990 of the Commercial and Savings Bank of Somalia.

Various telecommunications firms also have branches in Somaliland. Among these is Golis Telecom Somalia, one of the largest such operators in northern Somalia. Founded in 2002 with the objective of supplying the local market with GSM mobile services, fixed line and internet services, it has an extensive network that covers all of Somalia's major cities and more than 40 districts in both the Somaliland and Puntland regions. Golis also offers among the cheapest international calling rates, at $0.2 USD less than its nearest competitor. Other telecommunication firms serving the region include Telcom and NationLink.

Agriculture is generally considered to be a potentially successful industry, especially in the production of cereals and horticulture. Mining also has potential, though simple quarrying represents the extent of current operations despite the presence of hugely diverse quantities of mineral deposits.