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Puntland - Economy

Puntland is situated in the north east of Somalia, centered on the administrative capital of Garowe. Other major towns include Bossaso, Galkayo and Gardho. In 1998, political leaders declared it an autonomous region which in future they hoped will be part of a federal united Somalia. Puntland is a disaster prone area affected by drought and some conflict, mainly in the State borders with Somaliland and South Central. Also cyclones affect the country.

Puntland operates as a member state of Somalia with a high degree of decentralisation of powers, that has translated into a quite vibrant dynamic and a proliferation of new ventures, such as universities, new businesses, as well as presence of local and International NGOs, etc.

Despite the political will to move into a development phase, Puntland still has a significant number of its population requiring humanitarian assistance. Nevertheless as in other parts of Somalia, the humanitarian setting and its complex machinery together with the lack of trust among international and local actors, makes delivery of humanitarian aid very slow. As the director of HADMA said, sometimes the rain comes before the humanitarian aid arrives.

In the past, conflict, drought and migration of people (especially prior to the civil war in the early 1990s) paralyzed most of the region's infrastructures and economic resources. The last major conflict took place in 2002 when two rival factions fought for authority and power in the region. While a prevailing stability provides respite from warfare and hope for a better future, the situation in Puntland remains critical - financial resources are limited, food security remains a concern despite some livelihood recovery, and the vulnerable population was growing.

Rule of law remains weak; vulnerable groups particularly IDPs, the urban destitute and poor, suffer regular infringements of their human rights. However, progress is being made and in November 2005 the Puntland authorities embarked on their first ever Disarmament, Demobilization and Reintegration Programme (DDR) with UNDP Somalia to strengthen the rule of law and security in the region. The first case load of DDR clients entered the preparatory phase in August 2006 and will go through six months reintegration process.

In 2005, the Puntland government had a budget of So. Sh. 281 billion (or US$18.8 million). Salaries and allowances constituted the major expenditure item in the budget (61 percent of budget). The military and police force constitute 45 percent of budgetary expenditure. Only 11 percent is spent on development, which is low, but there is a slight improvement over the previous year. In 2006, the government of Puntland reports a budget of So. Sh. 299.8 billion (or US$20.0 million). Of this amount, 63.2 percent was allocated for salary and allowances, owing to the enlargement of the civil service to about 11,000 as a result of absorption of demobilized militia.

USAIDs estimated FY2010 contribution to Puntland is $16.4 million for programs similar to those in Somaliland. USAIDs food assistance program provided an estimated 5,000 metric tons in 2010. USAID planned on expanding Development Assistance programs in 2011.

On 27 September 2012, the Somali Youth Leaders Initiative (SYLI) with the Puntland Ministry of Education launched a five-year program to build and rehabilitate secondary schools in Puntland. The objective of the initiative, funded by USAID, is to boost enrollment and retention of secondary school students, particularly girls. The SYLI education project is being implemented through a consortium involving Mercy Corps, Save the Children, and CARE International, in partnership with the Puntland Ministry of Education. The project is currently assisting 10 secondary schools--with a target of 20--across all regions of Puntland. It is increasing the number of classrooms, laboratories, and other learning facilities. In addition, to ensure that more girls in particular attend secondary school, the project will construct separate sanitation facilities for girls and boys, train more women teachers, run local campaigns on the importance of girls education, and involve the communities in school management.

The secular law pertaining to land considers all land to be government land which can be leased by individuals for specific uses over a defined period of time. According to Islamic law, land cannot be the basis of a commercial transaction, only the investments made on it. Land and property rights issues constitute a majority of Puntland court cases. Land is managed by the local governments, and can potentially represent a significant source of income. However, since land is such an important resource for both livestock/pastoralism and agriculture, it can become a source of conflict or corruption, especially as cadastral records do not exist and the financial procedures of local public finance are not clear. There is no consistent and comprehensive legal framework for land and property management, but a mix of dispositions and practices stemming from the three sources of law. Xeer in particular is well adapted to regulate and manage common property such as pasture, grazing land, forests and water. Suluh, sharia, xeer and relevant state laws can be combined to arrive at an outcome that is acceptable to all parties.

The main sources of livelihoods and income are livestock, agriculture, fishing and remittances. Livestock exports contribute around 80 percent of foreign exchange earnings, 40 percent of the GDP and 60 percent of employment opportunities. In other words, Puntland relies heavily on the livestock sector, which is fragile even at the best of times due to the semi-arid to arid climate, recurring droughts and epizootic livestock diseases. Meanwhile, the fishing sector has huge potential for expansion; the Puntland coastline is around 1,640 km long, and has extremely rich grounds for fish and lobster. Diversification of the economy through expansion of the fishing industry would have a major benefit in making it less susceptible to the recurring disasters that Puntland has been subject to.

While it is hard to establish the exact amounts of these private transactions for Puntland, it is estimated that Somalis in South-Central, Puntland and Somaliland together receive around one billion US$ annually in remittances. These remittances also provide substantial community funding, for small businesses and basic service provision, especially in and around towns.

Currently the only Somali currency in use is the 1000 Shilling note first issued in 1990 and as a second issue in 1996.The Somalia Shilling has been the official currency of Somalia since 1962. The currency symbol is Sh.So. The currency has been listed as one of the worlds worst currencies, with an incredibly high exchange rate against the US Dollar. Puntland President Gaas illegally printed counterfeit Somali shillings without due process and sold them in the open market.

The principal form of currency in Somalia has been metallic coins, usually silver, and by the first half of the 19th century the main unit of currency was the Maria Theresa Thaler which was known in Somalia Sharuq. It was a coin containing four parts silver and one part copper, and has been issued by the Austrian Empire, in honor of the Empress Maria Theresa, who ruled Austria, Hungary and Bohemia from 1740 to 1780. It had gained acceptance in the Arabia Peninsula and in the Horn of Africa, Somalia, Ethiopia and Eritrea, as its high silver content satisfied the peoples desire for coins.

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