Business beyond profit: the private sector’s role in Somaliland’s social services

In the 1990s, when Somaliland was little more than an idea on paper, its fledgling state had no army, no currency, and virtually none of the institutions expected of a government. What it did have, however, was a private sector that refused to let the country collapse.

Local tycoons stepped in, lending President Mohamed Haji Ibrahim Egal’s administration more than $7 million, money that kept the lights on and the wheels turning. Their intervention meant that state-building didn’t stall at birth.

Three decades on, that legacy continues. The private sector today drives more than 90 percent of Somaliland’s GDP. And as a modest but growing middle class demands higher-quality services, opportunities abound, not only for profit but for transformational investment in universities, hospitals, and other social infrastructure.

When disaster strikes in Somaliland, it is often businesses, not the government, that act first.

During the 2022 fire that tore through Hargeisa’s Waaheen Market, business leaders gathered at the presidential palace and raised $8 million in a single night. When drought gripped Awdal in July this year, with the national budget stretched thin, Dahabshiil Group contributed $200,000 in relief. And at the height of the COVID-19 pandemic, Dahabshiil and Telesom pledged $800,000 and $840,000 respectively to the national response.

This pattern is not new. As I explored in my paper In-between Profits and Benevolence, Somaliland’s private sector regularly straddles two roles: profit-maker and first responder. Philanthropy, relief, and even state-building have become part of their business model.

Nowhere is the private sector’s presence more visible than in the provision of everyday services. In most cities, electricity comes from private suppliers. Health care is almost entirely privatized. Water is delivered through a patchwork of public, private, and hybrid systems. In Hargeisa, most children attend private schools.

Somaliland’s business leaders are no strangers to ambitious projects. Just last month, Hargeisa welcomed its first five-star hotel, the kind of investment that signals confidence in the country’s future.

This has ensured access where the state has fallen short. But it has also sparked debate. The Academy for Peace and Development warns that the private sector has “outgrown the state,” raising concerns about monopolies and accountability. For now, though, unless government capacity expands dramatically, private businesses will continue to dominate.

Somaliland’s business leaders are no strangers to ambitious projects. Just last month, Hargeisa welcomed its first five-star hotel, the kind of investment that signals confidence in the country’s future. Yet if Somaliland can build luxury hotels, why not top-tier hospitals and universities?

The demand is clear. Every year, Somalilanders spend vast sums seeking medical treatment abroad, in Ethiopia, Turkey, and India, because local facilities cannot meet their needs. Likewise, students often graduate from local universities without the skills required for a fast-changing economy. Investing in high-quality health and education would not only keep money in the country but also transform Somaliland’s development trajectory.

The model already exists. When I studied for a master’s degree at North South University in Dhaka, Bangladesh, I saw firsthand what private investment in education can achieve. Founded by business leaders, educators, and civil servants, the university boasts a state-of-the-art campus, a multistory library, and a faculty drawn largely from Western doctoral programs. Nearby, Apollo Hospital, also privately run, set the standard for world-class medical care.

Bangladesh shows that when governments cannot deliver, the private sector can step in, and thrive while doing so. The World Bank notes that in countries with growing urban middle classes, demand for high-quality private services is only rising. Somaliland’s trajectory is no different.

The lesson is clear: collective action delivers lasting impact. A consortium of Somaliland’s leading businesses could pool resources to finance large-scale hospitals or universities, managed professionally and overseen by independent boards. Such collaboration would spread costs, minimize risks, and maximize credibility.

The alternative is a continued exodus of patients and students abroad, taking both money and talent with them.

Somaliland’s private sector once saved the state from collapse. Today, it has the chance to build the foundations of a stronger, more self-reliant nation, one hospital, one university, one investment at a time. For forward-looking business leaders, this isn’t just a moral imperative, it’s smart economics. The future of Somaliland may once again lie in their hands.