Overcoming Challenges in Unrecognized Economy: Experience from Somaliland

By: Muktar Adan A. (Koshin) A Researcher

Despite Somaliland being the fourth poorest country in the world, Somaliland operates one of the lowest budgets of unrecognized states; it is unfortunate that 70% of its budget goes to the security sector while only 30% goes to the development programs (World Bank economic update of Somalia 2015).

According to Collier and Hoeffler (2005), most unrecognized states are low income countries, and the costs of non-recognition grow over time as their economies further decay, this is because the resources of unrecognized states are primarily focused on security which is generally characterized by a lack of public investment in critical sector which is the main vein of development like infrastructure and education.

Since its self-declaration of independence, Somaliland has had 15 finance ministers, with as many as four ministers were appointed within one year. Most of these ministers happen to have no financial management background, meaning that placement is not based on sectoral competence and knowledge. Which means there is a highly need of technocrats, it is only in the developing world and in particular Somaliland, where you will see a veterinary doctor who is nominated to serve as a finance minister and hence very little development and progress is achieved since the right people are not designated to the right position

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