Somalilandsun- The Somaliland private sector is dominated by Micro, Small and Medium Enterprises, many of which are informal (MSMEs), accounting for about 77% of the total employment in the capital Hargeisa.
This was revealed during presentation to the government of findings of the Somaliland Informal Trade and Economy Study held at the ministry of Commerce, Industry and Tourism in Hargeisa on the 5th November 2018.
At the study report presentation undertaken jointly by lead researcher Prof Alison Brown and Expert Eid Ali Ahmed was representatives from various ministries, DANIDA, SONSAF, Central Bank and the chamber of commerce among others.
According to Prof Eid Ali, the Research was undertaken in 2016 with support from Ukaid, Cardiff University, Golis University, Somaliland Ministry of planning and the Somaliland Non State Actors Forum-SONSAF.
Being a component of similar studies undertaken in several cities worldwide more so those recovering from conflict, the study took place in the capital thence examined the role of the informal economy in recovery from civil war in Hargeisa and current development challenges.
Prof Alison Brown who led the research said that findings, though pertains to Hargeisa city can and should be applied to other urban centers in Somaliland, thus ease national implementation.
Read: Researchers Set to Release Somaliland Informal Trade and Economy Study Report
In summation Prof Brown informed that
“This study was part of research led by Cardiff University on Economic Recovery in Post-Conflict cities: the role of the urban informal economy, funded by DFIC-ESRC (Project ES-M008789-1). The research explores the role of the urban informal economy in poverty-reduction, peace-building and development in post-conflict cities, and its scope to provide livelihoods for the extreme poor and a platform for economic recovery.
Hargeisa was selected for the research because of its extraordinary transformation as a modern city emerged from civil war. After a 10-year struggle, when thousands were killed, Somaliland finally declared independence from Somalia in 1991. Of particular interest is the clan-led peace and reconciliation process, and its success in establishing a functioning government”
Research in Hargeisa was carried out in August 2016, undertaken by a partnership between the Cardiff team, GollisUniversity,expertEidAliAhmedandSONAF. The core focus of research was the trajectory of the informal economy since the civil war of 1988-91, and its current economic and livelihoods contribution today. Within this framework, the study addressed three key questions:
i. How does the informal economy operate in Hargeisa today and what are its current challenges and problems?
ii. How can support for the informal economy contribute to core development initiatives of poverty reduction and economic growth?
iii. How did the informal economy respond during and after the conflict, and what were its contributions to to improved development outcomes?
Key Findings– Full details are in the main report.
Current challenges and problems: The informal economy thrives in Hargeisa – the World Bank suggests it employs at least 77% of the city’s workforce – with high levels of mutual trust, and much lower levels of harassment than elsewhere in Africa.
Yet, informal economy workers in Hargeisa face five key challenges:
1. Lack of literacy and business skills:
2. Difficulties with infrastructure and operating spaces:
3. Decrease in business
4. Lack of inclusion in government policy: and
5. Business challenges: Competition, exchange rates, etc. and lack of access to finance pose challenges
Five broad recommendations are adopted, with detailed proposals for implementation under each one. Full details are in the main report.
I. INCREASE NATIONAL LEGITIMACY & RECOGNITION of IE
II. STRENGTHEN VOICE AND PARTICIPATION
III. PLAN LOCALLY FOR THE INFORMAL ECONOMY
IV. SUPPORT VULNERABLE WORKERS and
V. LESSONS FOR INTERNATIONAL/HUMANITARIAN AID
5.1 Recognising positive contributions: Hargeisa demonstrates he transformative role of the informal economy after civil war, providing livelihoods, services, and a foundation for future growth.
5.2 Anticipating disruptive effects: Disruptive impacts must be recognized and addressed quickly.
5.3 Focussing multi-lateral aid to take account of the informal economy, e.g. through Somaliland’s JPLG.,
5.4 Improving humanitarian assistance to recognize how self-help and survivalist livelihoods that emerge after conflict can be the basis for economic recovery.
Deputy interior minister Mohamed Muse Abees Committee his ministry’s full support towards implementation of the adopted report, ow that mg to the fact that his ministry is in charge of local governance, that generate over 79% of revenue from the Informal Economy.
At present time the informal economy is the main driver of economic recovery and job creation in Somaliland. It is encouraging to see the government of Somaliland taking initiatives to work towards creating an enabling environment that can reduce vulnerabilities and support the move towards a formalisation of this sector. Dialogue and continuous consultation with relevant actors from both formal and informal economy is vital for this process and the launch of this coordination forum is an important first step.”
This was stated by the Danish International Development Agency-DANIDA, Somaliland program coordinator Annie Elisabeth Kobaek while pledging support towards realization of recommendations.
Upon thanking the researchers and all those present at the presentation the minister of commerce Mohamed Hasan said that government of Somaliland has endorsed the Informal Trade and Economy Study Report In it’s entirety.
“All recommendations shall be acted upon and not only in the capital Hargeisa where the research was undertaken by in all major urban centers of the country as well” said the commerce and industry minister.
The minister also revealed that plans are afoot to put in place polices geared towards facilitating Informal Economy operators relevant legal status more so with a view to opening avenues for accessing micro-financing.
Having been adopted, researchers are holding a one day workshop for members of the public in Hargeisa on the 6th November with a view to eliciting response.
Read Somaliland Informal Economy and Trade Full Report