‘Business unusual’ can still work

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I recently spent three days in Hargeisa, Somaliland. An eye-opening experience, as much as one that strengthens my conviction that World Bank Group is doing the right thing by engaging in this fragile country.

Somaliland is business unusual. Imagine among others, sitting in a mandatory security brief and specifying your blood type straight off the plane, going to meetings in armored cars, wearing the hijab  – a veil worn by Muslim women in the presence of adult males – scheduling meetings around prayers and the time of Iftar, the evening meal when Muslimsend their daily fast during Ramadan.

The business environment in Somaliland is characterized by a fragile state, poor public service delivery, a weak legal and regulatory regime, inefficient and costly trade logistics, and a fragmented private sector with limited structured engagement with the government. Although the private sector accounts for more than 90 percent of GDP (an anomaly in Africa), it has poor access to finance and lacks an organized voice.

Meeting with the President of the Republic of Somaliland.

During my mission, I met with key Ministers, entrepreneurs and development partners and discussed the challenges and opportunities linked to the ongoing economic development agenda, notably the development of infrastructure and the energy sector. The exchanges highlighted how the World Bank Group’s program in Somaliland is laying a foundation to create job opportunities and to accelerate the pace of economic development by fostering business reforms and SME engagement. In this light, the set-up of a high-level taskforce – reporting directly to the President – to implement Doing Business reforms compiled in a Doing Business memo, is a milestone and a strong sign of client buy-in. That is always crucial for the World Bank Group’s programs to reach their objectives.

Last, I participated in the presentation of the pilot Reform Champion Program, which aims to develop the capacity of government officials and some representatives of the private sector to implement key reforms that will address constraints to economic growth and development. The project is expected to help trained reform champions implement at least five reforms to improve government-to-business services by July 2016.

Hats off to our team in Somaliland: Catherine, Fred, Kalton, Laura, Patrick, Cemile, Svetlana, Michael, Dobromir, Jade, Suhail and Najeeb. They are writing the story of how the World Bank Group helps reduce poverty and promote shared prosperity – where it is most needed. And a very special word of thanks to Bella and Hugh, who support our work for the CMU. I witnessed first-hand the transformational nature of our work in fragile countries and the hard work of our teams.

There are signs of positive change in Somaliland, and World Bank Group programs are part of it.

Our portfolio in Somaliland includes:

The Somali Private Sector Development Re-Engagement Project Phase II (recently completed, except for a small port component) funded by DfID, DANIDA, and the World Bank’s State and Peacebuilding Fund. It includes financial sector development; an investment climate reform program that supports the One-Stop-Shop and the rewriting of the Companies Act; value chain support in fisheries and gums and resins; Public Private Partnerships for the Berbera Port and solid waste management; and a $13 million matching grant program.

The $30 million Somali Core Economic Institutions and Opportunities, which be launched later this year, is a hybrid Bank and recipient-executed program funded by the Somalia Multi Partner Fund and co-led by the Trade and Competitiveness and the Finance and Markets Global Practices. SCORE covers financial sector development; an investment climate reform program; technical assistance for the port sector; a catalytic fund; and an MSME service center. It will cover Somaliland, Puntland and South Central Somalia.

The Somali Investment Climate Reform Program (SICRP), primarily funded by DANIDA and IFC. The program works to implement critical investment climate reforms and to build a robust policy dialogue in order to contribute to increased investments and economic growth.  SICRP supports the establishment of a structured dialogue platform around the business environment and the priority areas identified by investors.

Our work in Somaliland truly offers the opportunity to fully integrate World Bank and IFC programs and to strengthen collaboration with other Global Practices – namely, Energy and Transport.

Engaging in a forum on capacity-building.

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(IN the following blog, similar to the one above, one may wonder on occasion if, in fact, the writers have ever been to a Somaliland that has no similarity to insecure Mogadishu. Both are a little unkind to to Somaliland but tell the story of Somaliland, however, in terms, perhaps, that are understood by compatriots – mysterious they may seem to Somalilanders.)

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Is Somaliland truly “Open for Business”? Moving past the conventional narrative of a fragile state (2014

Somalia has the reputation of being a mysterious and conflict-ridden land. Who hasn’t heard of the infamous “Black Hawk down” episode, the militant group al-Shabaab or the pirates off the Somali coast?

But in the northwest corridor of war-ravaged Somalia lies Somaliland, a self-declared independent state that claims to be open for business. Really?

It’s easy to dismiss the “open for business” claim by Somaliland’s Ministry of Planning as mere fantasy or wishful thinking. Flying from Nairobi on a painfully slow UN-chartered plane, being greeted at the hotel by Kalashnikov-armed guards, or traveling to your meeting in an armored car is enough to discourage even the most adventurous entrepreneur.

At first sight, Somaliland has all the characteristics of a fragile and conflict-affected situation(FCS). However, you never want to judge a book by its cover. In Somaliland, I’d argue that the conventional narrative of fragility needs to be revisited. The Republic of Somaliland has been an internationally recognized autonomous region but has not been recognized as an independent state since it broke away from Somalia in 1991 after the fall of Somali dictator Siad Barre. Somaliland’s GDP per capita is estimated at $347, one of the lowest in the world, according to the World Bank.

However, like many FCS economies in Sub-Saharan Africa, Somaliland has embarked on a path to reform its business environment (Figure 1). This has partly been possible thanks to the relative peace and stability that prevails and thanks to the existence of a functioning democratic government. The 2012-2016 National Development Plan sets out an ambitious capital investment proposal of $1.19 billion. But the regulatory framework will need to be improved to foster investments.

Figure 1. Reforms in Sub-Saharan FCS economies across Doing Business indicators

According to the Doing Business in Hargeisa 2012 report, many crucial reforms need to be considered in order to improve the investment climate. If one compares Hargeisa to the 183 economies measured by Doing Business 2012, it would rank 174th on ease of doing business – ahead of economies like Eritrea (180th) or Chad (183rd), but behind Djibouti (170th) (Figure 2).

Figure 2. Hargeisa’s performance in the Doing Business indicators compared with Sub-Saharan African economies and fragile and conflict-affected states

To complement the regulatory reform process, a team from the World Bank Group’s Trade & Competitiveness Global Practice is working with the government and private sector to lay the groundwork for the Somaliland Business Development Forum (SBDF), the state’s first public-private dialogue (PPD) platform. The World Bank Group held a workshop in November to raise awareness and discuss the Doing Business indicators. More than 85 representatives from the government and the private sector, including heavyweights like Dahabshiil and Telesom, participated and showed their support for PPD and a better business environment.

Leading this workshop was one of the toughest jobs I’ve ever had as facilitator – not due to any resistance from the participants, but rather due to the overwhelming passion and appetite for PPD and for the opportunities that it offers. Somaliland is a country of traders who use dialogue as a traditional way to deal with conflicts and find sustainable solutions. Public-private dialogue seems to be a natural fit. The private sector has had the upper hand for many years, substituting for the government in areas like public service provision, taxation, licensing, and law and order.

In Somaliland, and in Somalia in general, it’s crucial to redefine the fundamentals of development:  Instead of trying to reduce the role of the state in the economy, one has to bring the state on board. This has to be done by engaging the private sector and providing reassurance that the rehabilitation of the state will not come at the expense of business. Companies want to operate on a level playing field, and they require a more solid regulatory environment. The public and private sectors need to engage in a structured policy dialogue in order to identify the bottlenecks impeding the investment climate and, together, find solutions.

Joint commitment from the government, the Chamber of Commerce, and business entrepreneurs at large can help Somaliland move past the seemingly inalterable fragile-states narrative.

As I was about to board my UN plane to return to Nairobi, I realized that there was an Ethiopian Airlines jet on the tarmac. I learned, to my surprise, that it flies daily to Addis Ababa. It may just be a sign, but it seems as if Somaliland is indeed slowly opening up for business.

Source: blogs.Worldbank.org

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