Natural Resource Governance in Unrecognized Settings: What Are Emerging Political, Legal and Fiscal Issues Affecting “Somaliland”?

Abstract

Somaliland declared independence after the fall of the Central Government of Somalia in 1991. Early peace settlements and state-building efforts led to transitional government and early democratic contestations including presidential elections in a hybrid state framework. This emerging democracy in a conflict-torn region is challenged by weak accountability and power imbalances between the three government branches. Over the past few years, the current ruling party started to engage with foreign companies to carry out exploration activities in onshore blocks utilizing existing information on the distribution of natural resources of oil, and gas and to lesser extent mining. Following an informal auction of selling licenses for resource exploration among various companies, Genel Energy amongst others; Somaliland has no competent institutions in managing revenues for long-term development due to two distinctive factors: 1) absence of strong legal and political frameworks specific to governance of extractive industry ; 2) weak fiscal regimes across spectrum of extractive companies, the state and investors.