chapter 5: What is Somaliland strategic importance economic?

What is Somaliland's strategic importance?

Somaliland is positioned along the Gulf of Aden near the entrance to the Bab al-Mandeb, a major sea-lane through which almost one-third of the world's shipping passes. Its location has helped the government attract new trade and development deals. For instance, in late 2016, a Dubai firm announced that it would invest nearly $450 million to manage and upgrade the port of Berbera [PDF] and develop a corridor running from there to the Ethiopian border. Ethiopia is reportedly negotiating a share in the deal.

The Horn of Africa has also attracted security-related investments in recent years. Djibouti has become a hub for foreign military bases; China, France, Italy, Japan, and the United States all have facilities in the country. Somaliland has followed suit, signing an agreement with the United Arab Emirates in early 2017 to build a military base at Berbera.

A weak economy and limited opportunities for foreign trade and investment have stifled the government's capacity to provide services to its approximately four million residents. Somaliland has a gross domestic product (GDP) of about $2 billion, most of which it receives in remittances from Somalilanders working abroad. Its main export is livestock, which it ships to neighboring Djibouti and Ethiopia, as well as to Gulf states, such as Saudi Arabia and Oman. Its GDP per capita, in the hundreds of dollars, is one of the lowest in the world.