Financing Somaliland’s Sovereignty: Revenue, Accountability and U.S. Partnership
Recognition could widen Somaliland’s opportunities. Stronger public finances would give it greater freedom to act on them.
Somaliland’s campaign for closer American relations raises a question that extends beyond diplomatic recognition: how can the government finance its responsibilities without weakening the businesses and households that sustain its economy?
President Abdirahman Mohamed Abdullahi Irro’s Washington diplomacy offers an opportunity to seek investment and institutional cooperation. Its domestic value will depend partly on whether those relationships strengthen Somaliland’s own revenue base. A government with dependable finances can negotiate partnerships with greater confidence and withstand changes in foreign support.
Start with the accounts
A credible revenue strategy begins with a clear account of what the government actually collects and spends. Budget announcements describe intentions. Executed accounts show whether those intentions were financed and delivered.
Somaliland would strengthen its investment case by regularly publishing accessible figures for revenue collection, expenditure, arrears and major contractual obligations. Independent scrutiny would help establish whether reported improvements reflect stronger collection, temporary receipts or changes in accounting.
The same discipline should apply to future partnership income. Any port-access payment or other strategic revenue should have a defined place in public accounts, with clear responsibility for its use.
The political benefit is substantial: citizens can judge whether new agreements improve public services, while potential partners can assess obligations with greater confidence.
Collect fairly before demanding more
Higher tax rates are only one possible route to additional revenue—and can impose costs on compliant businesses without addressing unequal treatment.
The more defensible starting point is to examine collection gaps, discretionary exemptions and inconsistent enforcement. Clear rules and a practical appeals process would make it harder for revenue collection to become selective pressure on businesses.
Reform should also consider household consequences. Businesses may pass additional costs to customers, while smaller firms have less room to absorb administrative burdens.
A stronger revenue system should widen participation by making compliance understandable and predictable. Its success should be measured alongside business activity and household welfare, rather than through collections alone.
Berbera’s return must extend beyond the gate
Berbera provides an opportunity to expand the economic activity from which public revenue can grow. DP World’s development program combines port infrastructure with an economic zone and connections to the Ethiopian corridor.
The policy implication is to encourage the businesses that make trade possible: transport, storage, maintenance and other services. Their growth could broaden employment and the tax base.
That requires attention to operating conditions. Unpredictable charges or cumbersome procedures could weaken the corridor’s competitiveness. Somaliland should assess the overall return from trade expansion before treating every transaction as an opportunity for an additional fee.
Infrastructure earns a lasting fiscal return when businesses repeatedly choose to use it.
Recognition would create opportunities, not a balanced budget
Closer diplomatic relations could facilitate new partnerships, but Somaliland should avoid building spending commitments around anticipated recognition or unsigned agreements.
Long-term obligations require dependable financing. Temporary receipts are better treated cautiously, particularly when their continuation depends on another government’s priorities.
Irro’s strongest economic offer in Washington would therefore include a domestic commitment: transparent management of partnership income, credible financial reporting and reforms that improve the environment for investment.
Those measures would also serve Somaliland if recognition takes longer than its supporters hope.
WARYATV Assessment
Somaliland’s financial strength will depend on its ability to turn economic activity into fairly collected revenue—and revenue into services that citizens can see.
The most valuable external partnerships would reinforce that process. Irro’s diplomacy can widen Somaliland’s options; accountable public finances would give the country greater control over which options it chooses.
