28 June 2011

Somaliland: Growth Without Aid

This small article on Somaliland in The Economist caught my eye:
Somaliland announced its secession from Somalia in 1991 and has operated as a more or less independent country ever since. It has its own president, parliament and constitution. It even boasts a central bank that prints its own currency, the Somaliland shilling. The peaceful existence of its three million mostly Muslim, but secular, residents contrasts sharply with the disorder and instability of Somalia. The world, however, has refused to recognise Somaliland. Reluctant to encourage other separatist movements, the West remains committed to supporting the embattled Transitional Federal Government in Somalia which opposes its separation.

In his paper, Nicholas Eubank, a researcher at Stanford University, claims that some of Somaliland's success is down to a dearth of aid. Donors cannot give aid directly to the government since it is not recognised as such. It has been dependant on raising local tax revenue, which the paper says citizens have used as leverage to make the government more inclusive, representative and accountable. For those looking to bash the multi-billion dollar aid industry, it is an appealing thesis...

Somaliland's experiences cannot be applied directly elsewhere. But it offers some lessons. The resource constraints which led to a more inclusive government gave each clan a stake in maintaining stability. It is impossible to judge whether this outweighs the benefits that aid might have brought, but it should give donors pause for thought when they start splashing cash around. Somaliland's chances of becoming a fully-fledged country have risen with the precedent of South Sudan's independence. But the Somaliland government should consider its options before accepting the aid that would pour in if and when it is recognised. Its stability has in part been a result of a weak central government that does not threaten traditional regional leaders. An influx of money could upset this delicate balance.
I am not too sure what lessons to draw from this because I do not know much about Somaliland. The final paragraph provides necessary caution and reason for further understanding of the potential nation. Just as aid cheerleaders should take pause, skeptics should not hold this up as if it proves that aid is entirely bad.