LONDON Feb 24 (Reuters) - The breakaway enclave of Somaliland, which boasts
oil and gas potential, has set up a UK-linked corporation to act as an entry
point for investors concerned the Somali territory's lack of international
recognition would stop contracts being enforced.
On a visit to London to attend a conference on Somalia, President Ahmed
Mohamed Silanyo told Reuters that the purpose of the Somaliland Development
Corporation was to "to attract companies and institutions which want to
invest in our country."
"Since we are not a recognised country, insurance is always a difficult
problem in Somaliland so if this can help with that, it would be useful."
Somaliland declared independence from Somalia in 1991 and has enjoyed
relative stability compared to the rest of Somalia, including the holding of
a series of peaceful general elections, but remains unrecognised
Silanyo did not indicate what economic sectors he wished investors to
target. But energy and mining minister Hussein Abdi Dualeh said in November
the northern enclave had hydrocarbon potential with a geology similar to
basins containing 9 billion barrels across the Gulf of Aden.
A number of big oil companies with permits to operate there left what is now
Somaliland in the late 1980s and declared force majeure during Somalia's
escalating civil conflict.
Several foreign banks have expressed interest in operating in Somaliland
where they are keen to capitalise on its untapped market potential.
Somaliland has no formal banking sector and its people rely heavily on
remittances from diaspora communities in Europe, North America and the
United Arab Emirates, as there are no ATMs or loan facilities.
A briefing paper distributed to journalists on the sidelines of the London
conference said that despite Somaliland's "achievements in stability and
democracy, international donors cannot deal directly with its government,
and foreign investors face uncertainty about whether contracts - the basis
of secure business - can be enforced".
The SDC circumvented the problem of non-recognition by providing "a
transparent, accountable and enforceable means by which investors can
participate in Somaliland ventures".
A not-for-profit company had been set up in Britain to act as the founding
vehicle, with Somaliland's Minister of State Mohamed-Rashid Hassan and
Britons Myles Wickstead, a former diplomat, and Jeremy Carver, a retired
international lawyer, as founding directors.
The SDC is owned by an incorporated trust, the Somaliland Development
Corporation Trust, the paper said.
Oil discoveries would be a cash boon to Somaliland though hydrocarbons have
often proven to be a curse to African nations as the opaque nature of the
industry can breed corruption.
Colonised by Britain while the rest of Somalia was under Italian
administration, Somaliland declared independence in 1991 as the rest of the
country disintegrated into anarchy.
But the African Union and foreign powers have not recognised Somaliland.
Many in the breakaway republic suspect the African Union fears its formal
recognition would trigger a flurry of secession bids across the continent.
(Reporting by William Maclean; editing by Ron Askew)
C Thomson Reuters 2012 All rights reserved
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Received on Fri Feb 24 2012 - 18:01:17 EST