Investment Priority Sectors
Based on the Somaliland’s Five-Year Development Plan (National Development Plan 2018-2021) and Somaliland Vision 2030 there are six sectors in the economy that are regarded as priority sectors for investment, and the Government is profoundly encouraging both foreign and domestic investments to have open and transparent access.
However, all sectors and activities are open for investment unless specifically prohibited or restricted for reasons of national security and public safety.
In Somaliland, agriculture contributes 15% of GDP which is the second large production after the livestock. Notably, crop agriculture is underdeveloped and offers considerable potential both in cereal and horticultural production. The agriculture sector also provides employment and income to people involved in the produce marketing chain at both whole sale and retail levels. The sector is dominated by smallholder farmers who tend to small farms ranging from 2 to 30 hectares in area with the size of the average farm just about 4 hectares. But, there are great investments opportunities to commercialize the crop farming sector for food companies. Hence, the Government is keen to promote commercial farming and seeks potential investors to develop agriculture sector which will have mutual benefit for investors and people of Somaliland.
Livestock is the backbone of Somaliland economy as livestock is the single most export to international markets in large part due to the dominance of the port of Berbera as one of the leading livestock export ports in the world from the early to mid-1970s to now. Based on FAO reports Somaliland has about 1.69 million camels, 0.40 million head of cattle, 8.4 million goats and 8.75 million sheep in 2011. The Sool, Sanaag and Togdheer regions account for about 75% of all livestock. Somaliland’s major livestock exports are sheep and goats, accounting for 91% of all animal exports. But Camel is also major export to Saudi Arabia.
In 2010 a total of 2.352 million shoats were exported through the Berbera port (including from Ethiopian sources). Of this total, 1.612 million (69%) were exported between September and November for the Hajj festivities. Assuming an average export price of US$70, the estimated total value would be over US$160 million.
As the livestock exports are heavily concentrated during it sales can be improved with external investment embodied with sustainable markets outside the Gulf. The NIP seeks to encourage investors that will add value to livestock exports particularly to those who are pioneering new global markets, improve marketing and markets, establish research centers, explore new markets, and most importantly the Government of Somaliland is welcoming potential investors that will improve veterinary services. Priority shall be given to the investment in those areas where it: -
- Puts to productive use Somaliland’s human and natural resources.
- Introduces innovative technology suited to the country’s conditions.
- Generates new earnings or savings of foreign exchange, through exports, resource-based import substitution or service activities.
- Contributes to regionally balanced socio-economic development.
The fishing sector is a resource with potential for increased domestic and export revenue, but it needs both domestic and foreign investors. Though an estimated 3,000 tons of fish are caught locally per year, an estimated potential catch of 190,000–210,000 tons of fish, 60 times the current levels of harvesting is underexploited.
There are untapped fishery opportunities along the Somaliland coast line which could boast the exported product potential to second only to livestock. Expansion of fishing requires modern value chain infrastructure efficient processing with market identification and promotion.
Although, exports of fish are currently limited to a few truckloads of frozen fish per month to neighboring Ethiopia consumption is growing and Ethiopia has very populated market. NIP requires that the investors will establish fish stock in territorial waters, explore regional and international fish markets.
Promote industrialization and manufacturing in particular by increasing the agro-business industry which is currently at its growth stage; but more importantly rebuilding former production factories and establishing new facilities including Berbera Cement Factory, Tuna fish factory, salt production factory, and animal skill processing factory. There is vast untapped potentiality in this sector and the Government of Somaliland is seeking to attract investors in to this sector as it is crucial for job creation and economic development. Somaliland industry will benefit the Ethiopian market following the establishment of the Berbera-Wajale Corridor.
Somaliland is rich with sun produced solar power and air grid electricity. The investment in the renewable energy will have excellent return on investment.
The mining sector has huge potential for foreign investment and could transform the future economic prospects of Somaliland. Seismic surveys and geological data gathering carried out during the past few years have discovered that there are various minerals that are highly demanded in mining markets present. Thus, Somaliland is partnering the international mining industry to commercialize this resource.
There is no doubt that the increasing global demand for oil and gas by the emerging economies has required the exploration of new sources of oil and gas.
The presence of oil and gas in Somaliland has attracted oil drilling prospects where European, Turkish and Arab companies has already registered for the interest of oil exploration.
As such Somaliland government has been developing the right partners to pave the way for oil drilling and the distribution. The NIP promotes that oil to be properly channeled towards economic and social development.
6.8 Gums and Resins
Somaliland has long been a producer and exporter of gums and resins, harvested from wild trees indigenous to eastern Somaliland, mainly in the Sanaag region and parts of the Sool region with the total value of annual output estimated at US$2.94 million. The value of exports of gums and resins reached US$2.1 million in last couple of years, with additional amounts probably exported unofficially to Ethiopia and Djibouti. Most of the gums and resins are used as thickeners, in fragrances, in chewing gum, and for aromatics and these products are competitive in the international markets but currently its collection and trade is engaged by local firms. The Government encourages foreign investors that have capacity to collect and process efficiently.