Investment Priority Sectors

Based on the Somaliland’s Five Year Development Plan (National Development Plan 2012-2016) there are six sectors in the economy that are regarded as priority sectors, and the government is seeking to encourage foreign investment in those sectors:

Other Areas for Investment

In addition to these six sectors in the table above, that are prioritized for investment by the National Development Plan, the Ministry of Trade and Investment is prioritizing the following areas for investment.

Exports

One of the most important areas that the government is promoting and encouraging for investment is the export oriented enterprises with a view to increase exports while fulfilling domestic demand. Somaliland has traditional areas of economic activity for exporting which can be invested and developed further by making them more competitive (e.g. livestock fattening and export), but it is equally important to encourage the new entrepreneurial spirit and innovation (e.g. salt processing; new small scale industrial development, etc.). In order to achieve this, the government is seeking to encourage investors through incentives including tax exemptions and land leasing. These will be highlighted further in the legal and regulatory overview section of the Investment Guide. “It is expected that the more investors are given the right information about the challenges and opportunities in these sectors the more they could make an informed decision about investing in Somaliland.” 

Mining Another

sector that has huge potential for foreign investment and could transform the future economic prospects of the country and its small population is mining including hydrocarbon deposits (oil and gas) as well as coal, which can be easily explored. Based on seismic surveys and geological data gathering carried out during the past few years, there are encouraging indications including onshore oil seeps showing favorable conditions for hydrocarbons to have accumulated in numerous large tilted fault blocks and sub-basins. Some of these discoveries go back to the 1950s and 1980s but there are also new data based on recent seismic surveys which indicate potential oil and gas deposits in the country. There is no doubt that the increasing global demand for oil fuelled by the expanding Asian economies will make Somaliland’s oil drilling prospects more demand driven and urgent than before and the government has been seeking to develop the right institutions to pave the way for oil drilling and the distribution of any wealth from that oil to be properly channelled towards economic and social development.

Tourism

There is also a need to establish more thriving tourism industry ventures in the country, particularly eco-tourism, where visitors can be encouraged to explore ancient caves, beautiful beaches and mountains, and spectacular landscapes in the country. The tourism sector is therefore another area in the economy that has large potential for foreign and domestic investors. Another area for increased potential for encouraging tourism is to attract Diaspora Tourists. Many Somalilanders living abroad have never visited Somaliland and many more were born abroad. With good hotels and tourism infrastructure, the Diaspora yearning to visit Somaliland can be attracted. This in turn could benefit other sectors in the economy by making the Diaspora promote investments in them. A concerted effort is needed to promote tourism.

Civil Aviation

This sector is expected to provide important support to the future growth of the economy in Somaliland. According to the Ministry of Civil Aviation and Air Transport (MoCAAT), air passengers at the Hargeisa airport between 2010 and 2012 has increased by 18% compared to the previous two years and air cargo had increased by almost 29%. In addition there are a growing number of people from the Diaspora who are visiting their country every year. Both Foreign and Diaspora investment is therefore required for this sector which is likely to grow, between 10% and 15% annually for the next three years. There is already a positive sign that companies like Ethiopian Airlines are interested in investing this sector and targeting this growing market in Somaliland.

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