In 2020, the Republic of Somaliland and the Republic of China (Taiwan) formed diplomatic relations and established representative offices in the respective capitals. Since then, the two countries have started technical assistance projects in agriculture, information technology, and medical sectors, nevertheless, the economic cooperation has yet to get momentum. The relationship between Somaliland and Taiwan is conducive to greater economic integration because of the existing industry complementarity and commitment to do business with one another. Taiwan’s government and business community have eyes on Africa and are fully aware of business opportunities and market potentials in Africa, unfortunately, the country has a few allies in the continent including Eswatini and Somaliland. Therefore, Somaliland could become a hub for Taiwan to establish economic ties with the population of 400 million-plus in the East African region. With that in mind, Taiwan has begun its efforts to engage Africa through Somaliland and has organized trade fairs that brought together businesspeople and chambers of commerce from East African countries in Hargeisa, Somaliland. Taiwan’s presence in Somaliland provides an opportunity for the Taiwanese business community to take advantage of the free trade agreements of African countries such as the African Continental Free Trade Agreement (ACFTA) and to explore investment opportunities in Africa. But for bilateral relations to be mutually beneficial, Taiwan can contribute to the development of Somaliland’s domestic economy by sharing its miraculous economic experience from the 1960s to the 1990s. If Taiwan helps Somaliland build a debt-free economy through know-how exchange and capacity building, it may convince other African countries to set up diplomatic offices in Taiwan. Aside from the importance and benefits that Somaliland-Taiwan economic ties can bring to Taiwan; the question is whether Somaliland is a place worth investing in? or is it a place where economic growth can take place?
Somaliland’s Market Potentials
Unlike some of the neighboring countries, Somaliland is a peaceful, stable, and democratic nation with a free-market economy. Somaliland locates at a strategic location which makes it an integral part of the world economy since ancient times. Somaliland’s coastal towns of Zeila, Lasqoray, and Berbera were famous for vibrant trade activities where raw materials and primary products from inland Africa were exported to other territories, and the imports from the rest of the world were received. In addition, Somaliland has plenty of untapped reserves of natural resources such as minerals (iron ore, uranium, copper, tin, bauxite, gypsum, etc.), salt, and natural gas. These numerous natural resources are yet to be exploited because of the poor infrastructure and the decades of international isolation. On the other hand, Somaliland has a predominantly young and multilingual workforce that can play an important role in economic development. In terms of physical infrastructure, Somaliland and neighboring countries are building their infrastructure to promote trade flow and connectivity such as the Berbera Corridor which aims to connect Berber, Somaliland port city, and Addis-Ababa, the capital city of Ethiopia.
UAE also invests 500 million to increase Berbera port capacity and build Berbera airport. On the other hand, Somaliland is improving its trade and investment regulations to create legal frameworks that can attract foreign partners to invest in Somaliland. There are also plenty of profitable business opportunities in the sectors of livestock production, fishery development, outsourcing manufacturing, tourism, and services. The Somaliland National Development Plan Vision of 2030 gives the highest priority to economic development; hence the government of Somaliland is committed to establishing economic cooperation with partner countries. On the other hand, the people of Somaliland are creative and entrepreneurial people who prefer to get foreign direct investment instead of foreign aid. All these factors taken together can make Somaliland an attractive investment destination for Taiwanese businesses.
Current and Future Collaborations
Despite the Covid-19 restrictions and its subsequent difficulties in trade, travel, and investment flow, Somaliland and Taiwan have successfully collaborated in organizing trade fairs, matchmaking webinars, market opportunity seminars, and many more trade and investment promotion activities. Several MOU’s were signed by companies and institutions from Taiwan, Somaliland, and other East African partners. Moreover, there were some import-export activities of products from Taiwan and some raw materials from Somaliland, such as Frankincense. In terms of investment, China Petroleum Corporation (CPC) lead the way and pleaded to invest millions in Somaliland’s oil exploration and drilling activities. Most importantly, recent Somaliland’s delegation to Taiwan has met with the Minister of Economic Affairs of Taiwan and important trade and business associations in Taiwan to discuss future economic cooperation. To maintain these efforts, it is necessary to remove the basic barriers hindering economic cooperation and establish favorable trade and investment environment. One of the biggest challenges facing Somaliland in terms of international economic cooperation is the immature regulatory system, which is sometimes incomplete or doesn’t exist at all.
Therefore, Taiwan and Somaliland authorities should prioritize collaborating in reviewing Somaliland’s trade and investment laws to establish global standard regulations which can attract international investors and can facilitate economic diversification and growth. Data and statistics are also necessary to make business and financial decisions, hence, the two countries should conduct joint feasibility studies and work together in the areas of research, exploration, and data collection. Another key element of economic development is to have a strong human infrastructure that is healthy, well-educated, and well-trained society. Taiwan can assist in the development of basic industrial human resources through establishing vocational schools, providing scholarships, training, industry visits, and exchange of human capital. In addition to the human resource development cooperation and policy reviews, Taiwan can also contribute by investing the critical infrastructure for economic development such as roads, telecommunications, water, energy, food processing manufacturers, and other sectors which are necessary to boost the country’s productivity. Taiwan has lending and investment programs for partner countries, therefore funding Somaliland’s basic infrastructure can boost economic cooperation between the two countries.
As the president of Somaliland, H.E Musa Bihi has repeatedly said Somaliland’s people and government prefer to attract foreign investment and establish trade relations with friendly countries instead of receiving foreign aid. On the other hand, Taiwan understands the importance of Africa and is committed to coming back to the African continent for mutually beneficial economic cooperation. In conclusion, the existence of business and investment opportunities coupled with the recent bilateral efforts for economic cooperation and the willingness of authorities to work together can predict positive future economic collaboration.
ABOUT THE AUTHOR
Ph.D. Candidate in International Business Asia University, Taichung, Taiwan
Abdiqani Muse Hassan is currently a Ph.D. Candidate in International Business at Asia University in Taiwan. The author received his undergraduate degree from the University of Hargeisa in Somaliland. In 2019, the author graduated with an MBA degree from Asia University in Taiwan. The author is currently a research assistant at Asia university and a member of the Somaliland diplomatic mission in Taiwan.