Somaliland’s ambiguous status denies it certain economic and political opportunities that come with recognized statehood. But it has also been spared some of the problems that independent statehood can present to developing countries. It receives little bilateral aid, forcing the government to spend over 50 percent of its budget on security alone. Yet that absence of foreign help means that the government is not dependent on outsiders’ generosity or strategic interests, as is the case in even the most prosperous countries in sub-Saharan Africa. Somaliland cannot get loans from international financial institutions, but it has also accumulated little official debt. Somaliland’s statelessness precludes any major foreign commercial investment, since it’s nearly impossible to insure projects in an unrecognized territory; but as a consequence, the economy is not captive to a single big industry or employer, which can sometimes distort the economic development of poor countries. The government is weak, but it’s debatable as to whether Dahabshiil would have been allowed to grow into a continent-wide behemoth if it were operating within a more typical political and regulatory context. One Western expert raised the possibility that the international community feels that “dangling recognition keeps Somaliland on its best behavior.”

posted 3453 days ago