Somalia, a State Again
Somalia, a State Again

In January 2013, the United States formally recognized the first Somali national government since 1991 when the Siad Barre dictatorship was overthrown and the country fell into a period of statelessness (Hogg, 2008). After a three-year battle with AMISOM, the African Union Mission in Somalia, Somalia’s fate made a turn for the better when Al Shahab, the militant Islamic group that controlled the capital city and much of the country, pulled out of Mogadishu on August 6, 2011. Soon thereafter, AMISON captured the last of Al Shahab’s urban strongholds (Fergusson, 2013). Al Shahab is still present though in remote villages in southern Somalia (Somalia: Amisom Declares ‘Security Progress’ in Somalia, 2013).

In September 2012, Somalia held its first presidential elections on Somali soil in twenty years. Somalia’s Parliament appointed Hassan Sheikh Mohamud, a little-known university president and moderate Islamist who used to work as a consultant for the United Nations (Fergusson, 2013). Despite the lack of a popular vote, this election paved the way for diplomatic recognition and reintegration into the world community. The United Kingdom, China, and Italy are planning on opening embassies in Somalia (Somalia: More Foreign Embassies to Open in Mogadishu).

With one of the largest populations in exile, Somalis are returning home to rebuild their country. Foreign governments are investing in development projects and are helping tackle piracy. The state needs to be built from the ground up and the rule of law needs to be put in place. The global community is energized and the process of nation-building and state-building has begun. This news analysis will examine the challenges and opportunities facing Somalia as it enters the 21st century.

Governance Challenges

The absence of the rule of law makes rebuilding the Somali economy difficult.  As noted in the Development Issue in Depth, land rights can serve as a cornerstone to economic development. People use land as collateral for loans. They also sell it and rent it to others to build businesses and factories. In Somalia, most of the land does not have registered owners (Ali, 2013). Ownership cannot be proven because millions of people fled the country since 1991. This makes it difficult for people and corporations to buy land. Those who do are taking a big risk. Fraud is common as the land is sold to multiple tenants (Ali, 2013).

Another governance challenge is absence of financial laws. There are no laws governing loans and credit. Central Bank books from the Siad Barre dictatorship exist, but few records that date after 1991 are available. Somalia has been a cash-based society, so those Somalis who never left the country during the unrest are not familiar with modern banking. For the most part, Somalis rely on moneylenders (hawalas) to obtain remittances from family members living and working abroad. While remittances kept the economy from fully imploding, Somalia needs modern-day banking laws to facilitate economic development.

The lack of financial laws resulted in black market traders running Mogadishu’s unregulated Bakara Market, which fixes exchange rates. Inflation is rampant as the only domestic currency in circulation is the one thousand shilling note. (Making money in Somalia, 2012). Despite these challenges, Somali entrepreneurs recently opened the First Somali Bank and are now offering bank accounts to Somalis. Loans and credit are not yet available due to the lack of financial regulations (Ali, 2013).

The absence of the rule of law is connected to pervasive corruption and the lack of accountability. Widows and teenage orphan girls are often raped by Somali soldiers and the police. The government does not hold the soldiers or police accountable for their actions. Many of the victims live in displaced persons camp and have no protection from their clan members, who traditionally protect their own (Peace Comes At A Price, 2013) Authorities do not take rape claims seriously and few are willing to stand up and report the crimes. The first rape crisis center opened in 2010 and is trying to reduce the stigma of rape as well as provide services to those in need (SOMALIA: Rape flourishes in Mogadishu’s IDP camps, 2013)

Another governance challenge facing Somalia is the issue of Somaliland (located in north Somalia). In 1960, Somalia and Somaliland joined together. In 1991, Somaliland declared its independence from Somalia. It was then embattled in a bloody civil war until the warring clans signed a peace treaty. In 2002, Somaliland held democratic elections and declared its independence again from Somalia. Somaliland has not been recognized by the United Nations or by any other country as a sovereign nation though it has a functioning government, civil society and economy. Despite the lack of formal recognition, foreign investors are opening factories, investing in local industry and working with the de facto government.

Security Challenges

While the rule of law must be established, Somalia needs to address the integration of Islamist groups, particularly Al-Shabab (Baloch, 2013). One of the reasons for Al Shahab’s rise in the first place was the bleak economic conditions for large numbers of Somali youth (Fergusson, 2013). Despite the recent political gains in Somalia, the underlying economic and social problems are still there and amplified after years of statelessness. Many are living in grave poverty. According to Catholic Charities, more than one million people are living in refugee camps within Somalia (1 million displaced inside Somalia, charitable agency reports).

Currently, the median age in Somalia is only 17.8 years old and these youth wants jobs, incomes and security. Most of the Somali population do not support Al-Shahab, but may change their minds if the new government does not provide basic services, such as health care and education. (Llana, 2012).  While Al-Shahab retreated from most of the major city centers, security is still a major problem. Most of the rank and file fighters deserted, though the leaders are still active and are regrouping in the north of the country.

Furthermore, Somali faces a huge homelessness problem. The Somali Children Care Organisation counted 11,000 street children in 2011. While estimates are not available for 2012, many of the youth are still homeless. Some of these children are former child soldiers of Al Shahab. While the government recently banned the use of recruitment of child soldiers, it has not yet set forth a plan to rehabilitate the children and reintegrate them into the community. Hunger and inadequate drug rehabilitation services may lead some of these former child soldiers to crime. There are no government-run shelters for street children and NGOs are trying to provide these services, but the NGOs cannot provide basic care for all of the street children (Mohamed, 2013).

Energy Opportunities and Challenges

While Somalia faces daunting security, demographic, and economic challenges, the availability of untapped energy resources are an opportunity. In the 1980s, major international energy companies started to explore Somalia’s onshore and offshore potentials, but left the country during the political upheaval. The new government wants to honor previous contracts and is working on a new Petroleum Law to make the country attractive to foreign investors. Somalia plans to establish the Somali Petroleum Authority to regulate all petroleum operations and to restructure the Somali Petroleum Corporation (Abiikar, 2012).

There is a new scramble for oil and natural gas in the Indian Ocean and with a shoreline on the Indian Ocean, Somalia is poised to enter the race and provide much needed oil and gas for energy-hungry Asian countries (Abiikar, 2012).  The future Somali government will need to manage energy resources equitably to avoid resource conflict amongst the clans.


The Somali government needs revenue to re-build the country. The greatest chance it has to increase its coffers is revenues from oil and gas. Though it should definitely diversify and take advantage of the finances coming in from donor countries to restart various industries, such as the fishing industry. Reinvigorating the fishing industry could give jobs to the youth, revenue to the government, a domestic food source and a deterrent from piracy (SOMALIA: Potential goldmine for fishermen as piracy declines).

Beyond re-building the economy, President Mohamud needs to make sure that his Cabinet is corruption-free and that clan structures do not dominate Somalia’s institutional life. Because of the prolonged civil war, clans used violence to obtain and maintain control of urban and agricultural real estate.  Competition amongst the clans will arise as the central government tries to address the needs and interests of multiple stakeholders (Baloch, 2013). Mohamud needs to appoint a diverse set of leaders to set the right to tone (Olopade, 2012).  These steps with help Somalia start off on the right political course and give confidence to locals as well as a foreign donors and investors.

Works Cited

1 million displaced inside Somalia, charitable agency reports. Retrieved from:

Abiikar, A. (2012, December 27). A frontier country that will be open for oil and gas exploration in 2013! Retrieved from:

Ali, L. (2013, January 11). ‘Mogadishu is like Manhattan’: Somalis return home to accelerate progress. The Guardian. Retrieved from:

Baloch, S. (2013, January 9). Somalia: peace prospects. The News. Retrieved from:

Fergusson, J. (2013, January 13). Somalia: A failed state is back from the dead. The Independent. Retrieved from:

Hogg, A.L. (2008). Timeline: Somalia, 1991-2008. The Atlantic. Retrieved from:

Llana, S.M. (2012, December 27). In 2013, possibilities for stability from Somalia to South China Sea. Christian Science Monitor. Retrieved from:

Making money in Somalia (2012, August 9). Global Post. Retrieved from:

Mohamed, H (2013, January 16). Somali NGOs call for help to ease burden of Mogadishu street children. The Guardian. Retrieved from:

Olopade, D. (2012, September 18). Somalia’s New Man. Retrieved from:

Peace Comes At A Price (2013, January 8). Retrieved from:

Somalia: Amisom Declares ‘Security Progress’ in Somalia (2013, January 11). Garowe Online. Retrieved from:

Somalia: More Foreign Embassies to Open in Mogadishu (2013, January 10). Shabelle Media Network. Retrieved from:

SOMALIA: Potential goldmine for fishermen as piracy declines (2012, December 14). Retrieved from:

SOMALIA: Rape flourishes in Mogadishu’s IDP camps (2013, January 10). Retrieved from:

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