Overcoming Challenges in an Unrecognized Economy: Experience from Somaliland
Muktar Adan A. (Koshin)

The crumble of the great Somali Democratic Republic does not designate to Somalis that they lost their precious nation. The formidable pride of the Somali nomad, his extraordinary sense of superiority as an individual, and his firm conviction that he is the sole master of his actions and subject to no authority except that of God. But it’s a loss of all the national institutions and the hierarchy of governance, a loss of the brilliant Somali culture, academics, professional personnel, the proudness and patriotism the dignity and all sorts of humanity This study analyses the economic meltdowns that hampered Somaliland. In 1991 all state institutions that provided and regulated financial services, including the central bank and the entire banking system collapsed, the collapse of the commercial banks in the 1990s and the loss of depositor’s money, eroded public confidence in government and banks. The former British Somaliland protectorate (now the Republic of Somaliland) got its independence on 26th June 1960 and after four days united with southern Somalis’ which was colonized by Italy and that was the beginning of three good decades of anarchy, chaos and mayhem which was confronted by the northern Somali’s who had united with their southern brothers. This dishonesty led the northern Somali’s to withdraw from the unionon May 1991, which led to the rebirth of the Republic of Somaliland. All the national institutions were molded from zero, whether it is national armies, security forces, effective government institutions, its own currency, a police force as well as a national flag and a national anthem, Subsequently, Somaliland has conducted frequent elections despite no recognition of its independence by the international community: most continue to treat Somaliland as a region of Somalia, albeit an autonomous one. The conclusion suggests that Somaliland needs drastic economic reforms, particularly passing central bank act reforms, and the formation of monetary and fiscal policy committees. These will set guidelines that will enable the central bank and the Ministry of Finance to act as a watchdog of the market volatility.

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