Benefits of Investing in Somaliland- P1

For a long time now, the idea of writing a basic but objective article about the benefits of investing in Somaliland has been on my mind….

The other thing on my mind has been the thoughts of potential investors if the country in question technically doesn’t exist?!?

Perhaps if one were to toy with the idea of the Top 5 benefits of investing in Somaliland, they may overcome their potential fears? I for one, like to keep things simple and I never shy away from challenges. Therefore, kindly find below 5 very basic reasons on why you should consider taking this challenge like me…. 

#1 Investments from well-known brands like Coca Cola, DHL and DP WORLD

I often hear "if I would have known better, I would’ve invested in China, Dubai or India long before their economies grew"... In that case, let me start off by saying, you can do that right now!

If you study the evolution of China, India or Dubai, you will quickly note that several incidents occurred prior to their economic growth….By studying this, you can go out there and literally hunt your next China, India or Dubai. If you are successful, you will be placing yourself ahead of the pack, and providing you have a good "barrier to entry", you might just become the next Warren Buffet.

But for those who do not have the money for a comprehensive research or time, one of the biggest tell-tale signs are large corporations investing and a pro-foreign investment government…

This is Somaliland right now!

#2 People of Somaliland

With 60% of young Somalians unemployed, Somaliland has a young, educated and hungry work force available for work. Furthermore, the cost of living in Somaliland is amongst one of the very lowest in the world, therefore from an investors perspective, this means you can keep expenses low without affecting output quality.

Another important thing to note, the labour laws in Somaliland are not restrictive which in turn makes outsourcing or investing in Somaliland an amazing opportunity.

Furthermore, Somaliland can serve as a brilliant alternative for countries like China who are facing double-digit increases in labour costs, an ageing workforce and a record slowdown in economic growth.

If you are searching for alternative manufacturing destinations, then maybe Somaliland is the place for you. 

#3 Strategic location

The interest by many in Somaliland is largely explained by its location.

Somaliland is sitting conveniently at the apex of trade routes in the Red Sea, the Gulf of Aden and East Africa. 

This is one of the reasons DP World of Dubai have recently invested over $400M and committed to transform the country's Berbera Port on the Gulf of Aden, with the ambition of creating a regional trade hub. 

The company and the Somaliland government plans to develop an ambitious new shipyard, quay, free trade zone on the site and roads leading to and from Berbera for its African neighbours to benefit and boost international trade.

The location also offers opportunities to landlocked Ethiopia, which is heavily reliant on neighbouring Djibouti, with 90% of trade passing through the tiny state. 

Ethiopia currently imports limited quantities of food through Berbera, but the imminent development will allow it to vastly scale up traffic through the port. 

#4 – Consistently Growing Economy 

When you are investing your money in a new market, you are investing in that country’s economy as well. One of the most important things to consider before you expand or set up your business in a new country, is to review the economic growth of that region, and if the graph of economic growth has gone up in recent years.

One of the biggest benefits of this "state in waiting" is that it has zero debt and the economy is growing at a good pace. This is despite the region’s main source of income being the export of livestock, mainly camels, goats, and sheep to Saudi Arabia and the Gulf States through the port of Berbera. Just, imagine what would happen if other goods and services were traded?

Somaliland is still a relatively poor country, but it is rich in natural resources. It is believed to have commercially-exploitable deposits of oil, gas as well as coal, iron ore and semi-precious stones.

Despite the lack of official recognition internationally, entrepreneurs from Somaliland have made a name for themselves as Africa’s most skilled traders. As keen businessmen working within constrained parameters, Somalians are a driving force in Africa’s informal market.

Their ‘doer mentality’ has created a massive boom in the private sector which in turn has impacted on the country’s GDP positively. Wherever you go, you will spot a new construction being developed, a new mall being built, street traders trying to make a living, new shops, hotels, coffee shops and other trade.

The governments ‘open arms’ approach to entrepreneurs and investment will continue to grow this economy.

#5 SOMALILAND FOREIGN INVESTMENT LAW

One of the most positive aspects of investing in Somaliland is the governments ‘pro-foreign investment’ stance. The government is committed to ensuring ‘free enterprise’, freedom to trade and the right to own a property or a business. They go as far as ‘securing’ all foreign investment in the country. Find below some extracts from the Somaliland constitution:

The Somaliland Constitution and Foreign Investment:

• Guarantees: Article 11(3) of the Somaliland Constitution states that: “The state shall ensure the security of foreign investment in the country. Such investment shall be regulated by law.” 
• Importance of Foreign Investment: Article 11(1) of the Constitution confirms that the state shall lay down the national economic policy “based on the principles of free enterprise and the joint working of private property, public property, the national wealth and foreign investment” so as to realise the growth and advancement of the economy.
• The right to own property: Article 31 states that every person shall have the right to own private property that is acquired lawfully and that such property “shall not be expropriated except for reasons of public interest and provided that proper compensation is paid”. As a further guarantee of legality, Article 31(3) adds that “the law shall determine matters which are within the public interest” that may bring about expropriation of private property. 
• The guarantee of private property rights and the protection of the free market is one of the guiding principles of the Constitution as set out in the Preamble of the Constitution. These principles, which also include the entrenchment of fundamental rights and freedoms, are relevant in guiding state action and also in the interpretation of the constitution and the laws of the land.

So, there you have it…. TOP 5 benefits of investing in the "state-in waiting".

If you are still unsure or not fully sold on the idea, think about this, in 2016 the average hedge fund went down by 3.85% according to Hedge Fund Research. Many suffered double-digit losses. It follows a terrible 2015 when the average fund fell 3.64%. Furthermore, the forecasted "annualised returns" this year in most investment strategies are looking VERY SCARY..

So, the question you should ask yourself is, why should you pay more and earn less?!? That is of course if you are lucky earning anything.

Do you need any more convincing about the benefits of investing in Somaliland? I am here to help and make the process hassle free.

Keep in mind that I can be reached anytime at m.madar@myshaqo.org or if you would prefer to speak on the phone, call me at +25263-3358027.

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