Somaliland: How Impactful is the DP World Contract to the Country?



Somaliland and DP world sign contract to manage Berbera port

BY Fatheya Gelleh  

Somaliland sun- For the people of Somaliland all roads leads to recognition, since 18th of May 1991 the people built, invested and fought to establish a democracy system based on freedom to choose their destiny.  

Somaliland strategically situated on the Horn of Africa along the Gulf of Aden bordered by Djibouti to the West, Ethiopia to the South and Puntland region of Somalia to the East has untapped natural wealth and assets comprised of commercially viable unexplored hydrocarbon resources, minerals, vast under developed fishing industry with 740km coastline that could socially and  economically transform the country from unrecognised under developed nation to one that could potentially become new trading hub and gateway to Africa. A recent study by the Danish institute for international studies ‘Concession and Conflicts: mapping oil exploration in Somalia and Ethiopia’ 2016 extrapolate on what could be the outcomes of instant wealth for Somali territories, would developed countries ever presence in the region with their naval ships and army bases (camp Lemonier in Djibouti) like France, US and Britain further encourage balkanisation of Somalia using Kenya and Ethiopia as proxy to take advantage? Should Somaliland leaders be concerned about international interest and are they prepared or aware of how their decisions could either steer the country into conflict internally or ignite war with other regions? Once Somaliland is recognised will it have a major advantage geopolitically, use its untapped resources to deliver prosperity and wealth for all its citizens? The facts are that since 2007 US department of defence formulated a plan to deflect Chinese influence in Africa, by launching AFRICOM a combatant command for Africa supposedly created to assist in global war on terror. France has been in Djibouti since 2006 and there is an unofficial CIA base in Mogadishu, with the spectacular demise of Gaddafi in 2011 there seem to be a rush by all the major powers to establish bases all over Africa the last bastion rich in raw materials and oil. A lesson for Somaliland policy makers would be to reflect on unfair tactics of monetary enslavement of former African French colonies are subjected to until today according to Vishunu Padayachee fascinating book on(The Political Economy of Africa) 2010 due to exploitative measures since colonisation African countries are still unable today to fully access or control their owneconomies. Just prior to independence for example 14 African nations under French colonial rule were forced to agree to place 65% of their foreign currency reserves into French treasury, plus 20% for financial liabilities. This meant 14 independent African states had access to only 15% of their wealth and if they require more money they would’ve had to borrow their own money from the French at commercial rate. In light of this glaring realities serious mechanism must be placed by Somaliland government to safeguard the rights of workers in Berbera Port, there must be training programmes initiated and implemented to prepare port employees for the changes ahead of the Berbera Port deal.            

DPW Berbera logoSomaliland for the past 25 years risen from the ashes of civil conflict to form successive democratically elected governments based on free and fair elections. Unlike the rest of Somalia which plunged into anarchy and lawlessness it enjoys peace and security because it opted for power sharing, reconciliation and inclusiveness.  Somaliland clans organised themselves without international community supporters or post conflict mediation advisers,  to form and participate in national conferences such as (Burco 1991, Boroma 1994 and Hargeisa 1996) to discuss a way forward from all the hostilities the military regime instigated and to find a way for lasting peace, needless to say it was an enormous success. Civil strife deterred Somaliland politicians and elders in 1991 from repeating the same mistakes instead they adopted initially a clan system of governance based on tradition (guurti), subsequently formed their own constitution that combined western democratic structures  and  retained traditional attributes. Somaliland progressive leaders were  aware that any attempt to centralise power would fail as illustrated with the collapse of Somali State, political dominance based on tribal sentiments and military dictatorship both failed, it did not work and lead invariably to conflict because most Somali’s are pastoral nomads unaccustomed to hierarchal rule, fiercely independent as Gerard Prunier described it ‘ultra-democratic’ something international community representatives failed to grasp with their many well intentioned interventions to form a state. Somaliland political mode of governance has been metamorphosing into divisive entity centred on selfish inclinations, since 2010 Kulmiye government party weakened Somaliland international status by hindering democratic process. Allegation of systemic corruption, violation of human rights of journalists/media outlets and lack of transparency regarding fiscal expenditure, bribery and intimidation of parliamentary representatives soured relations within even the party itself as indicated by the rise of popularity for opposition party Waddani. The recent successful negotiation securing a $442 million investment agreement with DP World to develop and manage the Port Of Berbera for the next 30 years was even shrouded in secrecy until public demand for information, this historic deal will illicit further investment opportunities and definitely pave the way for recognition but it has implications on a national and international level in terms of how it would alter Somaliland economic status from a fiscal point of view and who is benefiting most from this deal, these are some issues explored in this article.   

From a national perspective Somaliland according to World bank study ‘Somaliland’s Private Sectorat a Crossroads ‘2016 government input into the economy account to only 10% of GDP this limited influence reflects on why high youth unemployment rate, poor health services, ineffective drought management system, inadequate fiscal and taxation system, inadequate affordable housing and poor sanitation, expensive energy cost, poor road and transport systems inter linking regions exist. Unlike other governments around the world job creation, economic growth and development has been propelled by the private sector initiatives and significant support from large Somaliland Diaspora communities, consequently most policies implemented by political leaders would have to take into consideration the business elite interest first limiting its sphere of influence. It is indisputable that without private sector role in enhancing telecommunication, finance, health and education the pressure on the government bodies to maintain basic services after the civil war would have stalled but a robust regulatory system with effective institutional policy orientated framework can transform Somaliland economy exponentially. Trust in government is essential component to good governance, the challenges facing current political parties (Kulmiye, Waddani and UCID) in the upcoming election March 2017 is to deliver concrete solutions to obstacles facing Somaliland, for example promoting greater women participation in politics by legislating laws prohibiting gender discrimination. Women owned businesses in Somaliland have higher proportion of female workers in comparison to male owned enterprises (43% vs 7%); women collaborate in partnership by sharing risk, cost and pooling resources together as they tend to be excluded from mainstream financial male dominated sector. According to the data even though women are less educated and more constrained by family responsibility some may not even have an ID for (Zaad account mobile banking) businesses  enterprise led by women are cost effective in terms of finance and labour with higher marginal return. A modern innovative move for the next government would be to facilitate greater participation of women politically and economically. Furthermore with DP world deal a major overhaul of financial sector by the government is essential to attract investors, take for example The Bank Of Somaliland inability to construct National Payment System (NPS) these obligatory systems are important policies set by international regulatory bodies to be used as guidelines for governments to comply with regulation regarding Anti money laundering (AML) and combatting the financing of Terrorism (CFT) etc. These legal binding requirements create financial security, ensures investors rights and penalises wrong doers.

Citizens welcome DP world officials to Berbera It is by far DP World and government of Ethiopia who will benefit more from Brbera Port deal, recent reports from the government of Somaliland aviation ministry confirm a request by UAE to establish military bases in Berbera, while landlocked Ethiopia was in the process of buying ships worth $300 million as far back as 2011 apparently to enhance its shipping industry thus signing a bilateral accord with the government of Somaliland March 2016 to boost its use of the Berbera port prior to official announcement of DP world venture is intriguing and worrisome. As a recognised state Somaliland would have been able to obtain IMF and World Bank loans to build its weak infrastructure, it would’ve had legitimate external negotiating power on par with other states unfortunately it has not been granted autonomy for 25 years. Despite isolationism it succeeded in building key state services with its meagre revenue, by seeking to expand trade with Ethiopia (Berbera Corridor expansion project) and DP World Dubai it seems that it finally found a route to gaining recognition through economic independence.  Yet Somaliland government and parliamentarians must act for the national interest of the public, to safe guard its resources, leaders need to be cautious and not allow foreign powers to meddle in its internal politics, it is a fact that Saudi Arabia and Arab league countries along with Ethiopia, Kenya and Italy supported Siad Barre regime until the end. While statelessness, anarchy, drought and civil war engulfed Somali people no one came to alleviate their suffering.  In fact Somalia became a dumping ground for toxic waste by European companies (see UNEP report 2005), illegal and unregulated fishing which in retaliation instigated piracy crimes. 

There is a second ‘Scramble for Africa’ comparable to the 18thcentury rush to secure valuable resources and minerals, the proliferation of military bases sporadically littered across the continent is a cause for concern especially for weak or  failed state attempting to gain their sovereignty from conflict. Somaliland and Somalia are rich territories on the brink of recovery, fragile states are easily exploited but there is hope for the indomitable spirit of its people who survived colonialism, dictatorship and civil war.