Somaliland: Is Politics Working Against Investment?


Somaliland, a de facto country that has been seeking international recognition and praised for its democratization process, free market-based economy, seems to have taken a regressive path that will prevent it from likely investment opportunities. This is according to legal, political pundits who believe that a recent amendment to the Telecommunications Act can damage reputation of the country.

Political, economic experts believe that result of this move seems to have come clearly noticeable following a recent report by Ethiopian newspaper, Capital, indicating that Ethiopia has suspended its shares in the tripartite agreement on the development of Berber port it had signed with Somaliland and DP World.

This small country has no access to international financial institutions let alone attracts foreign investments. However, some regional and international private companies took the risk to invest in this unrecognized country and as a result Somaliland appeared on the international media as a strategic country ready for business.

Somaliland had signed a concession agreement with Some-Cable Company to invest in Fiber Optic and creation of suitable infrastructure for its citizens to access affordable internet.

This agreement was considered a major investment opportunity and in order to assure to the investor company that it was ready for business and to protect investor assets the government of the day had the parliament ratify that agreement, to which it had agreed.

Women march on the streets to celebrate Somaliland independence.PHOTO/Courtesy AP

This agreement gave Somaliland the boost it needed to engage with international companies, entice them to invest its country. Dubai Ports World, and Emirati consortium which runs a large number of ports around the world, agreed to invest over hundred million dollars in Berbera port in Somaliland.

In an unexpected move, Somaliland government has proposed an amendment to the Telecommunications Act. On 7th March, the parliament adopted the amendment which creates legal loophole for the government to rescind any prior agreement it had with investors in this sector.

A day after, the upper house passed the same amendment, a move political analysts in the country say is a move by senior most officials of the government to make money by creating opportunities for companies willing to offer shares as kickbacks.

The dilemma, long term loss this move causes Somaliland is clear but the government of the day seems to be turning a blind eye. According to reliable sources, DP World has halted execution of the main projects in its investment since the government has proved to have no regard for the laws of the country and commitments for investors. This move will cost Somaliland its reputation and the trust it has been building with international community for many years.

What is more, is the fact that some members of the parliament openly threatened to review all investment laws in order to facilitate for government to take equal measures against all companies that have exclusive agreements with Somaliland, which observers believe was implicit threat against DP World.

Source: Citizen Kenya


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