Somaliland: beyond the quest for recognition

Saad Ali Shire (PhD) is the Minister of Foreign Affairs and International Cooperation for Somaliland. Shire came to this post very recently by replacing his predecessor, Mohammed B. Yonis. Formerly, Shire, who is an agricultural economist by training, came to the foreign ministry from the ministry of economic planning. Last week Shire was in town on the occasion of the 26th African Union (AU) Heads of State Assembly where he met diplomats and ministers of various African countries. From his tight schedule Shire took time to drop in the office of The Reporter for a an interview with Asrat Seyoum. Excerpts:       

The Reporter: What was the purpose of your visit to Addis Ababa on the eve of the 26th African Union Heads of State Summit?

Sadd Ali Shire (PhD): Basically, we came to meet some of the delegates who are in Addis Ababa to take part in the AU summit. We hope of meeting heads of state, foreign ministries and heads of the delegates of African states. We want to meet some of the Somaliland community who live here in Ethiopia. We also come to meet officials from the Ethiopian government side since we have a lot of issues to discuss with our Ethiopian counterparts. We hope to meet some from the Ethiopian foreign ministry. As you may know, Ethiopia is a very important country to Somaliland both in terms of security, economic and the overall regional issues. There is the Berbera corridor, the project to extend electricity from Ethiopia to Somaliland and there is also trade and transit agreement which has been going on for some time now. There is also collaboration in the cultural arena including education and training and many other issues.

With regard to your planned meeting with other African delegates to the summit, I understand that the main agenda on the table will be the recognition of Somaliland as an independent sovereign state. So, who are you going to meet and what is the plan here? Are you planning on lobbying African delegates?

We have asked a meeting with foreign ministers of different African countries while they are here for the summit. We have already met the foreign minister of Swaziland, and we are scheduled to met foreign ministers of Kenya, Djibouti, Ghana; we are also hopeful to meet foreign ministers from Benin, Togo and other African nations. Our purpose is clear really. Most people do not recognize Somaliland; they tend to confuse us with Somalia. So, the first purpose is really to introduce Somaliland to the rest of Africa and the world. Apart from that, we really believe that Somaliland-Somalia issue is an African issue in all aspects. So, we believe that the AU should really be a partner in finding the solution to this problem. We also like to inform people about the progress we have made in security, politics and democracy, health, education and development so that people are fully aware about the recent condition of Somaliland. And also we try to educate people on the history of Somaliland and that it is not just a region in Somalia but that it is trying to secede but has been separate prior to its unification to Somalia. We want to tell the world that Somaliland has its own pre-colonial and colonial history, its own pre-union history and has been on its own for the past 25 years. We have fulfilled all the requirements of a sovereign state: we have well-defined boundaries as a result of the protocols signed between the British and Italians, the British and the Ethiopians and the British and the French. We also have an elected government and a democracy with an elected parliament, elected president and elected councils. We also provide the services of a functional government: health, education, security and physical infrastructure. So, we want to tell the world that Somaliland is a state that fulfills all the requirements of a sovereign state as it is defined in the Montevideo Convention of 1933. So, we want to explain where we are coming from when we seek self-determination.

 

We understand that you want the option of gaining a negotiated separation from Somalia by directly engaging in talks with Somalia. However, since there was no stable Somalia government for a long time, this plan had been a dead-end for many years. Now, with the revival of the Somalia state, where are you on the talks with Somalia?

 

Yes, we started talks with Somalia in February 2012 and since then we had nine around of talks before it failed. Unfortunately, the Somalia government has not been very serious about these talks and that it has not been strong enough to take a serious decision on the matter. So, we are struggling with that still. I think there was a lot of hope among the international community when the current president was elected and that he would be in control and that situations would change including the talks with Somaliland. Unfortunately, this has not happened yet. We are still keen and hopeful that talks would continue but for us it is quite important to have strong partner on the other side and to continue with talks.

 

Why have these talks failed with Somalia?

 

You see, the talks were supposed to be between Somaliland and Somalia; but the president of Somalia sent a delegation consisting of Somalilanders who are residing in Somalia. That I think defeats the whole purpose since it was supposed to be talks between Somalia and Somaliland. And that was largely a signal that the Somali government was not really serious about the talks. But, we were there for serious talks and that is why it has failed.

 

There are claims that Somalilanders could be part of the recent efforts of establishing a federation in Somalia. Are you part of this process and do you have any interest in this process?

 

Well the federal process was started several years ago and Somaliland has never been part of that federal structure. And it is not part of the current federal arrangement either. We are not part of the 2016 elections in Somalia. We are not part of the consultation process; we have nothing to do with that. We have our election coming up in 2017. So, the two are parallel systems; the one has nothing to do with the other. The purpose of our engagement is to deal with the government in Somalia on a state-to-state basis.

 

But, there are reports of groups involved with talks in the Somalia federation process. Who are these? Are they the opposition?

 

Somaliland has a democratic system where three parties contest political power via democratic elections which consist of one governing and two opposition parties. So, both the party which is in office and the two opposition parties have nothing to with the federation process that you speak of in Somalia. However, there are people of Somaliland origin in Somalia as there are many Somalilanders here in Ethiopia, Kenya or other nations. These might be groups who have shown interest to take part in federation process but not the state of Somaliland.

 

Now that you are contemplating to pursue legal means to exercise your rights to self-determination, does it mean that you have abandoned the talks with Somalia and the negotiated separation with same?

 

Independent of the talks with Somalia we do think that we have fairly good legal case to claim our rights to self-determine action. But, we continue to talk to Somalia on a range of other issue. We think we have plenty of other issues to talk about, not just politics; we need to talk about economic, security and other positive issues. Every country needs to talk to its neighbors; so the talks are still there on the table. Of course, we will talk about the final status of Somalia but at the same time we explore other avenues as well and we think the legal avenue is one of those.

 

Talking of domestic politics of Somaliland, we understand that the election commission of Somaliland has decided to postpone a scheduled election to 2017. Can you tell us what happened there and if the election would be conducted as per the new schedule?

 

The election was supposed to be conducted in 2015, five years since the current government took offices. As we approached that scheduled date, the government and  members of the opposition parties in the parliament made an assessment regarding the level of preparation for the election. So, when they examine the situation and see where we were with the preparation required to conduct the election, they established that we need more time. This decision was agreed up on by both governing and opposition parties in parliament whereby it was decided to extend the date of the election from June 2015 to March 2017. That is when we will be holding the next election. So, it was really about the level of preparation to hold elections. Starting from voter registration we have been preparing for the 2017 election and so far everything is going well. We just started the voter registration process. And on a totally unrelated note, we are also conducting a civilian registration where we require everybody above the age of 16 needs to be registered in the national civil registration program. So far, we have estimated 50 to 60 percent of population has been registered. And also, those who are eligible to vote should also be registered as voters. We expect to complete voter registration in the specified period of time but we are hoping to make the civil registration process an ongoing undertaking.

 

With regard to your security affairs, Somaliland still faces pressing security concerns from groups like Al Shebab from Somalia, sea piracy and extreme elements from within. How are you managing your security affairs so far?

       

It’s not only Somaliland but the whole region that is facing security threats from all directions, particularly from peoples having extreme ideas and inclinations. Somaliland takes these security challenges very seriously. That is why we spend almost half of our budget on security matters: on the army, police and our judicial systems. And that is also why we have succeeded in protecting our people and live in generally peaceful and secured environment. The last time we had an incident was in 2008; so we have a continued peace and security in the country for at least the past seven or eight years. But, our effort to secure Somaliland also benefits the whole region including Ethiopia, Djibouti and beyond. Ethiopia is a friend of Somaliland and, of course, one of the areas that we collaborate on is security since security is of extreme importance to both of us. That is one area that we share. So we collaborate, share information and generally work very closely on security matters.

 

But, what do you see is going to be the biggest security challenge for Somaliland in the coming years? Where do you think this challenge is going to come from?

            

I think the biggest challenge that Somaliland faces in terms of security in the coming years would be the same threat that every country in the region faces: that is people of extreme ideas and inclinations. Of course, we have other challenges we share with the region as well such as climate change, economic challenges and human trafficking challenges. But, the most prominent security challenge to the region would be again extremism.

 

Traditionally, the government of Somaliland has been dependent on the port of Berbera in terms of covering its budgetary expenses. But, in recent years, there are efforts to diversify. How successful are you in this regard?

 

Like most governments, the bulk of the revenue of the government comes from taxation. So it happens to be in Somaliland. The bulk of the revenue is generated at border points and entry ports in the form of customs duties on imports and exports. Berbera, of course, is the main port of the country and that is where the main revenue is generated. But, I think we have agreed upon the need to diversify this source of revenue since it is very risky to rely only on one source. As a result, now, we are trying to boost the contribution of Inland Revenue that is revenue from inland taxation to the government coffers. So, we are trying to move away from reliance on customs and taxation and into income and corporate taxation; I think inland taxation is where we are headed. Currently, we are undergoing a reform process in our public finance system and one of the main components of this reform is to establish a separate inland taxation agency. The agency would be tasked with levying and collecting income tax, VAT and corporate tax in the country. Well, the skeleton is already in there; it is a matter of the magnitude and scaling up these taxation types. As I have said, we are going under a reform process and they are now in the process of putting in the IT system which is required to administer these taxes. The main challenge in this is, of course, our economy is dominated by the informal economic activities. Not everybody in the business sectors registers what they are doing and fully account for the revenue and expenditure. So, where there are not many records one has to rely on estimates to make the taxation work; and surely this would be a challenge. Hence, together with reform, we also have a lot of public education to do so that business would peak on the habit of getting their accounts in order. 

 

Another challenge for Somaliland is the dollarization of the legal tender which is the Somaliland Shilling. What is your government doing to change these facts and what is the status of the Somaliland central bank in averting this trend?

 

We have a central bank which is responsible for monetary policies and stabilization of the currency. Of course, it has its own limitations in terms of resources that are available to it. For instance, when the local currency is weak and the bank needs to purchase the local currency in exchange for U.S. dollars, it faces severe currency shortages. The bank also needs capacity building in terms of human resources to be able to function properly as a central bank. But, the problem with the dollarization of the Somaliland currency is not only with the central banks. For instance, for central bank to function properly we need banks. We do have a couple of domestic banks although we don’t have foreign bank in the country yet. Even the local banks don’t have that wider reach outside of the capital Hargessa.  So, we do show deficit in that regard. But, the dollarization is not about the central bank alone. The condition on the ground shows that transactions down to a restaurant level are conducted with dollars. As a result, the Somaliland Shilling has weakened because the demand for dollars has increased against the Shilling. Now, we have two currencies working in parallel. The government has set up a committee to look into this matter and restore the Somaliland currency to its rightful place that is de facto and de jure legal currency of Somaliland. By the way, the Somaliland Shilling has shown appreciation in recent months from 8000 to 6000 against a dollar. I think it is because of the measures that are taken by the government to help the currency regain its value. Apart from enforcing the law, this requires efforts to encourage business to accept only Somaliland Shilling while conducting their business transactions. We need also a significant improvement in our foreign trade balance sheet which is showing great deficit at present time. This gap is financed by the remittance that is sent from Somalilanders who live abroad but we need to do something about rebalancing our trade. First and foremost, we need to increase our export earnings to finance our expenses in foreign currency and substitute some of our critical import items and reduce our reliance on imports.

 

Other important players in dollarization of the Shilling are the foreign money transfer companies in Somaliland. In fact, the money transfer industry looks to be a dominant entity in the country’s financial sector. Do you have a regulatory framework for these money transfer companies? And what is your strategy to develop the local banking sector?

 

People believe that one of the contributing factors to the dollarization of the Somaliland Shilling is boom in use of the mobile banking services called Zaad. It is a system where you can settle all your payments using your mobile. But, the problem is that most of the tractions that are concluded via Zaad are conducted using U.S. dollars. So, what the government is trying to do now is institute the Somaliland Shilling to be the only currency that is used when conducting mobile-based money transfers. Instead of having dollars in customers’ mobiles the government is thinking of using the Shilling to conduct all the tractions. As far as the banking sectors is concerned, we have already concluded laying down the legal framework by passing the central bank law, the Islamic banks act and the conventional banking act is already in parliament. So, at this moment we are trying to encourage the Islamic international banks to come to the country and we would like to see conventional international banks in the country once the conventional banking act is passed by parliament. Of course, the central bank is responsible for the regulation of the banking and the money transfer sectors and the overall financial system.                            

 

What are the potential export commodities for Somaliland in the future?

 

At present, the three main export commodities for Somaliland are livestock, hides and skins and frankincense. When it comes to livestock we have a potential to add value to the exports since we still export it in the half. There is possibility to added value by exports the meat rather than exporting just the livestock. This way, we can really diversify our export markets to Asian, European and Middle Easter markets. Even we have the potential to diversify by processing the raw hide and skins into leather and also leather articles. This is somewhat what you are trying to do here in Ethiopia. This would not only help us in diversifying our export products but also diversify our export markets as well. This could also be true for frankincense; we have a great potential in diversifying in this product. However, we also have a big potential in increasing exports in fish mostly for the Middle East and Asian market notwithstanding the market in Ethiopia as well. Also we do have prospect in mining to generate foreign currency and also tourism. So, the strategy is boosting our foreign currency earning capacity both by diversifying into other export commodities and also by trying to add value to our existing export products.

 

One of the recent pushes by the Somaliland government was to sell the Berbera Port as a recreational center and big tourist destination in the region. How far has this plan progressed?

 

Yes we do have the potential for tourism on the port but this plan is still in its early stages. We have a beautiful beach and we like to see many Ethiopians to come and enjoy this. But, the sector still needs a lot of development in terms of hotels and the hospitality industry in general; and in the transportation facilities. We do believe the sector has a lot of potential but it still is in its early stages of development.

 

We also understand that some years back as part of its plan to develop the port of Berbera as sea port, the Somaliland government went shopping for companies to do the job. What is the progress there? Have you selected a company yet?

 

This is a process that has been going on for a number of years now and at present we have some four companies shortlisted for this job. The list includes Bollare, DP World through P&O and Mediterranean Shipping Company S.A. (MSC). We are now in the process of assessing these proposals with the help of the World Bank and also with help of consultants. Hopefully, we will be coming to a conclusion on this matter by the middle of the year. The project of rehabilitation of the Berbera Port consists of two parts: the renovation of existing facilities at the port and construction of a new container terminal. As you know, in the past most of the cargo was in the form of general or bulk cargo but now it is becoming more and more containerized. So, the government wants to equip this port to handle such a cargo. At the present time, the port caters for something like 40,000 to 50,000 containers a year; but the government wants to reequip it to increase this capacity. We are hoping that it is going to be a vendor financing arrangement with companies fetching the financing required to renovate the port facilities. The Ethiopia government is a stakeholder in this; not directly in the rehabilitation of the port but in terms of building the Berbera corridor: a road that is leading from Berbera to Togochale. This is one of the areas that we would like to discuss with my Ethiopian counterparts while I am in Addis Ababa.             

                    

                          

         

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