Somaliland is fascinating experiment in minimalist state building
Down the street, the porter walked, wheelbarrow piled high with thick wads of Somaliland shillings held together with elastic bands. Along the pavements, tea-sipping money traders sat behind similar stacks of wealth, trading shillings for dollars, pounds, euros and even slivers of gold.
The shilling is the official currency of the self-proclaimed sovereign Republic of Somaliland; but the currency, much like the republic, is yet to be recognised by any country in the world. The 3.5 million residents of this breakaway territory, along the Gulf of Aden, carry a veritable currency basket in their pockets — personal savings are in dollars, but shopping is in shillings.
The money traded on the streets, residents say, is a testament to the safety and security of their town.
On May 18 1991, the northern province of Somaliland broke away from Somalia. Somalia was torn apart by two decades of internecine violence, but in Somaliland, clan elders set about assembling their own nation state with an elected government at the capital in Hargeisa, a judiciary, a nominally independent central bank with a national currency, and relative security.
Twenty-two years on, international isolation has resulted in a stilted economy without a formal banking or energy sector, but a robust money transfer industry, high cell phone penetration, and reasonably fast internet.
Hargeisa is a dusty town of about a million residents, its streets peaceful, bazaars raucously decorated in the red, green and white colours of the flag, and supermarkets stocked with milk from Saudi Arabia, chicken from Brazil, and iPhones from Dubai.
While Somalia has been ravaged by clan conflict, Somaliland is controlled by an uneasy alliance of the majority Isaaq clan and several smaller groups. A clique of business families have created a minimalist state confined to providing security and stability for a fast growing private sector that has created significant wealth for some, even as more than half the urban population and a quarter of the rural population rely on foreign remittances to make ends meet.
“When our first president came he didn’t have a pencil on his desk, nor a paper,” said Abdulkader Hashi, a former petroleum engineer who returned from the Kuwait oilfields to set up The Mansoor, Hargeisa’s biggest hotel.
Mr. Hashi mobilised the Somaliland diaspora, telling his friends, “Give money to the government, bring your goods and we’ll waive customs duty. We bought the stationery, knocked on the door of the President and said, let your people go to work. We opened offices, police stations, we paid them. We called judges, put them in office, paid them.”