A man tends to his herd of goats at an animal market, which was a former al-Shabaab stronghold in Somalia. The country offers interesting prospects to investors, but economic progress is impeded by an unstable currency and security uncertainty among other things. Photo by: Tobin Jones / United Nations / CC BY-NC-ND

EDITOR’S NOTE: Somalia has made significant strides in development progress, but much work still remains to be done. Alex Dick-Godfrey from the Council on Foreign Relations takes a look at different recommendations on how the country can improve on integrating economics and governance.

Somalia continues to improve after a nearly a quarter century of war, but integrating economics and governance remains difficult.

IRIN identifies five core challenges for Somalia’s economic reconstruction. Potentially, the country offers interesting prospects to investors, including vast herds of livestock, bountiful fisheries, oil and gas reserves, and a long coastline with natural deep water ports. However, IRIN highlights such brakes on investment as security uncertainty, inconsistent trade and financial policy, and an unstable currency. These problems are not insurmountable. As the report shows, by formalizing institutions, increasing transparency, and generating cooperation between federal, regional, and tribal administrations, progress can be made.

A second report, ”Decentralization Options for Somalia,” published by African Arguments, focuses on governance. It lays out various forms of decentralization as options for Somalia. Little enthusiasm exists for a return to a centralized government structure after the fall of the Siad Barre regime in 1991 and federalism is already endorsed by the Provisional Constitution of Somalia. The report also explains that distrust in and among the political elite, animosity between Mogadishu and the hinterlands, and the desire for widespread political participation have driven Somalia towards decentralization. Diffusing power to the regional states is the most stable way forward, and the most likely one.

Separately, these recommendations make sense. However, when considered together, they may prove difficult to integrate into a coherent political system and economic structure.

Many of the economic changes required to build an economy, like trade agreements with other countries or oil and gas revenue sharing, require agreement and consolidation on a national level. To achieve a robust federal system, there will need to be strong states that can effectively govern their territory and provide basic services to the population. However, as investment increases, often so does corruption and cronyism, which can have devastating effects on governance and confidence in government. As power diffuses amongst states, so does momentum in national endeavors like infrastructure development, national unity, and defeating al Shabaab.

Governance and economics together are essential to the stability and sustainable success of the country. The drivers for decentralization are already in place, and hostility or suspicion of centralized economic policy may be a brake on growth.

Edited for style and republished with permission from the Council on Foreign Relations. Read the original article.

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