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Somaliland - Economy

The total value of remittances to Somaliland in the year 2000, originating mainly from migrant labour in the Gulf and more recently an exodus of refugees to the West, and greatly facilitated by the growth of telecommunications in Somaliland and of remittance agencies, is estimated at some US$500 million annually -- around four times the value of livestock exports. Contrary to the prevailing view that remittances are mainly used for consumption and unproductive investments such as housing and land, in Somaliland they have contributed to the rapid growth of a vibrant private sector. On the other hand, remittance flows have been associated with a number of negative side-effects such as the loss of the country's most educated and skilled labour, increased income inequality and booming sector effects, and their positive impact is limited by the present lack of credit schemes and facilities for saving.

USAIDs estimated FY2010 contribution to Somaliland is approximately $46.8 million, covering Humanitarian ($20.6 million) and Development ($26.2 million) Assistance. USAIDs Humanitarian Assistance efforts include an array of activities focused on economic recovery, market systems, agriculture, food security, protection, water and sanitation. The program provides food assistance for more than 18,650 countrywide. Development Assistance funds include activities aimed at improving security and strengthening good governance at the grass roots through education, conflict mitigation and other basic social services.

The 2012 Business Confidence Survey, released in December 2012, showed that investment in medium-sized enterprises more than doubled between 2011 and 2012. The Somaliland Ministry of Commerce and the Chamber of Commerce, Industry, and Agriculture conducted the survey with USAID support. This years survey shows that businesses and investors are becoming more confident in the economy, said Somaliland Minister of Commerce Honorable Abdirizak Ahmed Khalif. We expect that their confidence will continue to grow and that investment will continue to increase.

The survey found that investment in medium sized-enterprises of $100,000 -$500,000 had more than doubled in Hargeisa between 2011 and 2012 (from 7.5 percent of respondents to 17 percent). Nearly 300 local businesses from all regions of Somaliland responded to the annual survey including women entrepreneurs and youth-owned businesses as well as investors from the Somali diaspora. The survey queried respondents about the ease of starting a business, perceived availability of skilled labor, the quality of infrastructure, security, and laws and regulations for businesses and investors.

Previous surveys had shown that businesspeople and potential investors were particularly concerned about weak legislation. In response, in 2012 USAID also provided assistance to the Ministry of Commerce to review and amend laws governing commerce and investment. Support for these activities comes from USAIDs Partnership for Economic Growth program, a $13 million initiative that supports stabilization by investing in the local economy and strengthening the livestock, farming, and energy sectors.



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