Somaliland: peace, profit and patronage

Politics in Somaliland has long been uneasily balanced between clans, parties and shifting coalitions. Its economy, however, tells a different story entirely. Here, the status quo is monopolisation to an almost suffocating degree. The fate of entire sectors, and by extension, the daily lives of millions, is shaped by a handful of conglomerates whose influence knows no bounds.

On August 8th, the country’s three main telecom providers, Telesom, Somtel, and Soltelco, announced they would double the daily cost of unlimited internet from $0.50 to $1. While this may seem modest in nominal terms, in an economy where youth unemployment is endemic and purchasing power is in a state of almost perpetual erosion, the increase represented an intolerable assault on livelihoods.

The announcement triggered a wave of public anger that spread across social media, with calls for protests in major cities across the country. Small outbursts soon broke out in a southwestern neighbourhood of the capital, Hargeisa, injuring three civilians and ten police officers. Scheduled national protests were subsequently declared ‘unlawful’ by the Ministry of Interior. Yet, as public pressure refused to subside, within forty-eight hours President Abdirahman Irro announced that the price hike would be reversed.

This episode was not isolated. The culture of price fixing extends into even the most mundane corners of commerce. In December 2021, a video emerged of bakery owners (Roodhilayaal) swearing on the Quran to enforce fixed prices among themselves. Public outrage forced the authorities to arrest the men, but the incident revealed that such practices are not aberrations, they are deeply embedded, reaching even the most basic of commodities.

The events of early August reignited national debate, driven in large part by lawyer and activist Guleid Ahmed Jama, who framed the issue not just as one of affordability but as a clear symptom of regulatory capture. “Price fixing should not be dealt with by a committee; it must be addressed through legal measures, such as fines,” he said, criticizing the government’s initial response and its failure to tackle the underlying problem.

Unlike the generations leading them today, peace for Somaliland’s youth is no longer defined by clans, guns and militias, but by resisting the monopolistic practices embedded in their daily lives.

Early calls to maintain “peace” by ministries, MPs, and police have only fuelled widely held public sentiment that state institutions are beholden to the interests of big business. The excessive emphasis on maintaining public order by the government has contributed to what Guleid refers to as a “negative peace” in which stability is maintained by discouraging dissent rather than addressing the grievances around declining living standards.

But unlike the generations leading them today, peace for Somaliland’s youth is no longer defined by clans, guns and militias, but by resisting the monopolistic practices embedded in their daily lives.

The recent viral testimony of an ambitious young entrepreneur Muhiyadin Abdirahman illustrates this. After two years of delays, derision, and even threats, he finally secured a Central Bank licence to operate as an independent mobile currency exchanger (sarifle). The process had cost him around $15,000, yet within two months of operation his account was abruptly shut down, with rival traders accusing him of misconduct without any evidence.

With no formal avenue of appeal, Muhiyadin sent his uncle to plead his case, only to be told he required political backing from a minister or MP. Months of struggle brought no results until an independent journalist covered his story, capturing him emotionally distraught as he called on the President and Central Bank Governor to hear his case.

Muhiyadin’s story is one of many in Somaliland where entrenched monopolies have created obstacles for those with ambitions to establish capital-intensive businesses. This systematic exclusion often manifests as limited access to credit with high borrowing costs intentionally designed to guarantee failure.

This exclusion constitutes a form of structural violence: though it may not rely on overt physical coercion, it inflicts measurable harm by depriving people of essential income and blocking avenues for social mobility. What is often celebrated as entrepreneurial dynamism is, in practice, an institutional order that rewards rent seeking and prohibits opportunities for an educated youth, who are increasingly frustrated by their limited prospects.

The lack of intellectual property rights further exacerbates this disadvantage, enabling predatory businessmen to exploit the remains of failed ventures and ideas without repercussions. And in an environment like this, even fundamental consumer and data protection rights become tenuous.

Amid public outrage over the internet price hike, Poet Hassan Daahir ‘Weedhsame’ recounted his attempts to close his ZAAD (Mobile money service) account with Telesom in 2013. Only when he threatened court action did they relent, and for a decade, the poet said he avoided mobile money payments altogether until the speed of digitalisation in the economy left him no choice but to return.

“What forced me, what compelled me? The short answer is that our state has become like feeding an already fattened ram — pouring effort into what’s already bloated.” says the poet expressing how his withdrawal was not a right but a concession.

When I wrote The End of Somaliland’s Exceptionalism in September of last year, the aim was not to puncture political rhetoric for its own sake, but to show how the myth of a uniquely democratic and consensual polity obscures the reality of elite capture.

The state, lacking capacity and legitimacy, outsourced public functions to private actors. Those actors then ensured no state capacity would emerge to threaten their autonomy.

This myth of exceptionalism has, to a certain extent, flourished in the economic sphere as Somaliland’s private sector was celebrated as a model of entrepreneurial self-reliance in the absence of international aid. Various policy reports, academic journals, and op-eds all returned to this refrain as empirical proof of Somali ingenuity, held up in contrast to the failures of donor-dependent state-building in Mogadishu.

Yet, what was hailed as a miracle of free enterprise was, from the beginning, an arrangement of mutual convenience. The state, lacking capacity and legitimacy, outsourced public functions to private actors. Those actors then ensured no state capacity would emerge to threaten their autonomy. This capture is often celebrated, perversely, by unemployed youth who see businessmen as saviours of their sub-clans. Cabinet seats are routinely filled by former Dahabshiil and Telesom executives, whose opaque donations finance campaigns and cultural events alike.

The boundary between public and private in Somaliland is effectively non-existent, and with it the notion of the state as an impartial regulator.

The consequences of this collusion are most evident in essential services. Burao, for instance, is home to a single electricity supplier, HECO (a group of six local providers), which has long charged exorbitant tariffs hovering around $0.79/kWh, subject to frequent outages and minimal reinvestment.

A 2019 feasibility study showed that a hybrid renewable microgrid could deliver power at $0.25/kWh while cutting annual emissions by more than seventy per cent. However, donor-backed interventions for more affordable and clean energy, including the UK-funded ESRES programme, have been routed through partnerships with HECO under political arrangements, effectively subsidising the incumbent while producing no tangible benefit to residents.

When Al-Nuur, a rival provider, attempted entry, it faced harassment and licensing hurdles. The dispute culminated in a government resolution forcing it's incorporation into HECO and mandating a reduction to $0.59/kWh. Officials justified the move as improving coordination and safety, but the decision aligned with decades of policies that stifled Burao’s economic growth.

Similar patterns exist elsewhere: SomPower, owned largely by Dahabshiil Group, consolidated dominance in Hargeisa by acquiring 39 municipal generators between 2013 and 2017. Today, it is Somaliland’s largest utility provider, with stakes across telecoms and banking.

Such regulatory capture extends far beyond consumer grievances to the management of major state assets.

This month, the government announced a seventy-million-dollar investment by the little-known International Maharat Investment Company to modernise Egal International Airport, the country’s main aviation hub. Currently hosting between 240,000 – 270,000 passengers annually, the agreement promises new terminals, a refurbished runway, and upgraded navigation systems. The details surrounding the agreement remain controversial at best, with brief investigations on social media already raising serious questions about the investment’s legitimacy.

The lack of credibility is particularly concerning given the high stakes of the proposed development, with airports considered among the most reliable levers of regional economic growth. A study of small-to-medium-sized Chinese airports demonstrates their ability to promote urban economic growth by 3.4%, while other research indicates a 10% increase in passenger traffic correlates with a 1% rise in metropolitan service employment.

But such gains depend on transparency and credible contracts. The new deal marks the largest investment since 2012, where $10 million was awarded by the Kuwait Fund for Arab Economic Development (KFAED) for the upgrade of the airport’s facilities, overseen by Mohamud Hashi Abdi, chairman of KAAH party and minister of aviation at the time, who has been accused of several corruption allegations surrounding the misuse of the funds and contracts on the airport’s management.

The regulatory distortions produced by domestic monopolies threaten to undermine Somaliland’s capacity to negotiate credibly with foreign partners.

Thus, while opportunities for the airport remain ripe, the institutional conditions needed to capitalise on Somaliland's strategic position are still far from being met.

The Ministry of Aviation’s announcement comes alongside other headline projects by the new government, which has signalled its intentions to take a more active role than its predecessor. In July, costs in the port city of Berbera successfully went down to $0.20/kWh, having previously featured some of the highest tariffs in the country.

Although a positive development, it is worth noting that this is still double the amount promised back in 2021 following the construction of an Emirati-funded solar power project. both the Berbera case and the Egal upgrade reflect a troubling continuity: the appearance of state-led development without the institutional oversight needed for transformation.

These regulatory distortions produced by domestic monopolies threaten to undermine Somaliland’s capacity to negotiate credibly with foreign partners.

Elected under a slogan of change in November 2024, President Irro has leaned on publicised state interventions, often tied to foreign investment. His first year in office included tours to Gulf financiers such as the Abu Dhabi Fund for Development and the Qatari Fund for Development. Yet even as the UAE recalibrates its regional strategy, concerns remain. DP World has reportedly flagged Somaliland’s lack of legal and logistical frameworks, while weak economic ties with Ethiopia have delayed the next phase of Berbera port expansion.

On the legal obstacles to foreign competition and investment, Guleid Ahmed Jama notes that laws are few and far between, and even those that do exist are rarely implemented. Law No. 80/2018 for example, permits the operations of foreign companies, though in practice, it is often the Ministry of Business and Trade that demands that local citizens hold a majority stake, a protection granted at the behest of the government’s domestic creditors.

competition laws should be enforced by an independent authority with the power to fine and adjudicate through administrative courts, rather than primarily being left to the executive and parliament committees.

Some progress has been made in Somaliland towards interoperability in mobile money services. However, the barriers for new entrants in telecoms and utilities remain, while transparency in tenders for key sectors like fuel and logistics are yet to be ensured.

To this end, competition laws should be enforced by an independent authority with the power to fine and adjudicate through administrative courts, rather than primarily being left to the executive and parliament committees. The government must also demand that the telecom and power sectors adopt functional separation to prevent the use of cross-sector leverage to block competition

Kenya offers a reasonable model in this regard as the 1997 Electric Power Act has ensured that Kenya Power’s grid remains neutral, allowing multiple IPPs to compete under Power Purchase Agreements. Furthermore, the Communications Authority of Kenya enforces network-sharing rules enabling smaller mobile and internet providers to access telecom infrastructure on fair and competitive terms.

Finally, mobile-money interoperability must be enforced in full by the currently dormant Central Bank of Somaliland, taking note from the mandates by Kenya’s Central Bank (CBK) which require dominant platforms like Safaricom’s M-Pesa to open connections to smaller providers while protecting consumer data.

Ultimately, whether Irro’s reformist mandate delivers structural change will depend less on courting Gulf financiers and announcing projects than on dismantling the monopolistic protections that continue to block competition at home.