By Abdiqani Haji Abdi
The Lasanod war, concluded a year ago as part of the broader SSC conflict, marked a defining moment for Somaliland, both politically and economically. One of its most devastating outcomes was the loss of the critical trade corridor through Lasanod, a lifeline that historically supported up to 75% of Somaliland’s bulk cargo trade and connected the region to Puntland, and Galmudug federal member states and Somali Regional State – Ethiopia.
The corridor’s closure plunged Somaliland into an economic crisis, isolating it from external markets and leaving the region teetering on the brink of collapse.
Trade Routes: The Lifeblood of the Economy
The Lasanod corridor was more than just a road—it was an economic artery facilitating regional trade. Its closure severed Somaliland’s connections with its primary trading partner, Puntland, other federal member states like Galmudug and Somali Regional State – Ethiopia.
Before the conflict, Berbera Port functioned as a strategic hub for trade, not just for Somaliland but for neighboring regions. It enabled the export of goods and livestock across the Horn of Africa. Now, the port’s decline, marked by a 75% reduction in trade volume, has triggered a domino effect:
1. Revenue Loss: The diminished activity at Berbera has slashed tax revenues and reduced employment opportunities.
2. Reduced Regional Relevance: Once a competitor to Djibouti, Berbera Port now struggles to maintain its significance in regional trade.
3. Ripple Effects: Industries reliant on trade, such as logistics and wholesale markets, have suffered significant setbacks.
Economic Collapse Along the Corridor
The towns and villages that once flourished along the Lasanod-Berbera trade route have undergone a dramatic transformation. What were once vibrant centers of commerce are now ghost towns, deprived of the bustling trade and activity that sustained them. These areas, which relied heavily on the flow of goods, people, and services through the corridor, have experienced severe economic decline in the wake of its closure. Local businesses, especially those tied to trade and transportation, have been forced to shutter, resulting in widespread unemployment and widespread poverty.
For many communities, the loss of the trade route is akin to the loss of their lifeblood. The bustling markets, once full of traders from across the region, have emptied out. The shops that sold goods ranging from food staples to electronics now stand barren, with no products to offer and no customers to serve. The communities that depended on the income from these businesses have seen their economic prospects vanish, leaving many struggling to survive. Small-scale vendors, truck drivers, and transport companies that once made a living from moving goods along the trade route now face economic ruin, as their livelihoods are directly tied to the corridor’s operational success.
The economic fallout from the closure is not confined to the smaller towns. Even larger urban hubs like Hargeisa and Buroa, which served as commercial and administrative centers for Somaliland, are feeling the brunt of the crisis. The collapse of regional trade has significantly impacted their economies, leading to observable shifts in key sectors:
a) Retail Sector Decline: The retail markets in both Hargeisa and Buroa once thrived due to the steady influx of goods from across the Horn of Africa and beyond. Goods that were previously readily available, from food products to textiles, are now in short supply. As a result, businesses face dwindling inventory, leading to higher prices and reduced sales. The declining availability of goods has also caused a drop in customer traffic, as residents find it increasingly difficult to afford basic necessities. With the uncertainty surrounding the future of the region’s trade routes, consumer confidence has also plummeted, further stifling economic recovery.
b) Housing Sector Stagnation: The once-buoyant real estate market in Somaliland’s urban centers has also seen a sharp decline. Before the closure of the Lasanod corridor, Hargeisa and Buroa were witnessing growing demand for housing, driven by both local and foreign investment. However, with the region’s economic isolation and the shrinking of trade, potential investors are increasingly hesitant to inject capital into the housing market. The uncertainty surrounding the region’s future economic prospects has made investors wary of making long-term investments in property, leading to a stagnation in real estate development. This slowdown in the housing sector not only affects investors but also prevents families from purchasing homes or accessing affordable housing options.
Hospitality and Services in Freefall
The hospitality sector, once a thriving cornerstone of Somaliland’s economy, has been hit hard by the ongoing economic crisis. Hotels in key cities like Hargeisa, Berbera, and Buroa, which were once filled with both regional and international visitors, now struggle to maintain occupancy. Business travelers, tourists, and even people attending conferences or events have significantly decreased, leading to empty rooms, reduced bookings, and growing uncertainty for hotel owners. This dramatic downturn in the hospitality industry has had cascading effects on the local economy, extending far beyond just the hotel businesses themselves.
a. Transportation: The hospitality sector’s decline has also deeply affected the transportation industry. Taxi drivers, who once benefited from the constant stream of tourists and business travelers, are facing reduced demand for their services. With fewer visitors needing rides to and from airports, hotels, and other destinations, many drivers have seen their incomes shrink significantly. Likewise, logistics providers—who often relied on the movement of goods for both local businesses and tourists—are also grappling with reduced activity, leading to a decrease in deliveries and services.
b. Local Vendors: Small-scale vendors who relied heavily on the influx of hotel guests are also suffering. These local businesses, such as restaurants, cafes, souvenir shops, and street vendors, often depended on the consistent flow of visitors staying in nearby hotels. With fewer tourists and business travelers coming to these urban centers, their sales have plummeted, and many have been forced to either cut back on their operations or close altogether. The trickle-down effects are felt across the community, as these small businesses represent a significant portion of local employment.
c. Tourism and Events: Somaliland’s once-vibrant tourism industry, which brought in revenue through visitors and special events, has been all but halted. Conferences, cultural exchanges, and other large gatherings that used to inject money into the economy have become unfeasible due to the uncertain economic situation, lack of resources, and limited international engagement. As a result, the broader tourism infrastructure, including event planning, conference halls, and travel services, has been severely impacted. The collapse of this sector has compounded the economic challenges faced by the region.
Broader Economic Challenges
The combined effects of the disruptions in hospitality and services, along with the closure of key trade routes, have sent Somaliland into a cycle of prolonged economic turmoil. The cascading impacts are evident across various sectors of the economy, creating a situation where recovery seems elusive.
1. Unemployment: As businesses in sectors such as hospitality, retail, and logistics have been forced to close or scale back operations, the resulting loss of jobs has been devastating. Thousands of workers in hotels, transportation, and small businesses now find themselves unemployed. Without a steady income or alternative employment opportunities, many families are struggling to make ends meet. The rise in unemployment has also led to greater social instability, as frustrated citizens search for ways to survive in an increasingly difficult environment.
2. Revenue Shortfalls: As businesses shutter and fewer people pay taxes or contribute to the economy, government revenues have sharply declined. This has created significant financial strain for Somaliland’s government, which is now struggling to provide basic services like healthcare, education, and infrastructure maintenance. Without sufficient revenue, development projects and essential public services are facing delays or cancellation. The government’s inability to address pressing needs only deepens the public’s dissatisfaction, creating a cycle of political and economic instability.
3. Inflation and Scarcity: The disruptions in supply chains caused by the loss of key trade routes and the broader economic slowdown have driven up the prices of essential goods. Items such as food, fuel, and basic household products have become more expensive, making it even harder for ordinary citizens to afford their daily necessities. Inflation has been exacerbated by shortages, leading to even greater scarcity of goods. This combination of rising prices and dwindling availability has compounded the hardships faced by families, making it harder for them to maintain their standard of living.
New Leadership Tested by the Erigabo Conflict
When President Abdirahman Irro was elected, many saw his leadership as a potential turning point for Somaliland. Known for his pragmatic approach and previous experience in governance, Irro was expected to bring much-needed stability to the region, especially following the economic and political turmoil caused by the closure of critical trade routes. His leadership was hoped to prioritize the restoration of these trade routes and the rebuilding of diplomatic relations with SSC and Puntland, which had become strained during the conflict.
However, the recent eruption of the Erigabo conflict has thrown these aspirations into jeopardy. The conflict, which broke out just last week, has underscored the challenges Irro faces in managing Somaliland’s internal divisions and restoring its economy. The fighting, which pitted Somaliland forces against SSC loyalists, led to the closure of the last remaining functioning trade corridor in the region. This closure exacerbates the already dire economic situation, as it disrupts the movement of goods and services, further isolating Somaliland from key markets and crippling its economy.
The Erigabo conflict shares striking similarities with the earlier Lascaanood events, where tensions between Somaliland forces and SSC erupted into violent clashes. According to reports, the violence began when Somaliland forces allegedly killed civilians in the town of Ceerigaabo, which then triggered retaliatory attacks from the families of the victims. What initially seemed like a localized confrontation escalated into a full-blown conflict, with a prolonged standoff that eventually led to open warfare between the two sides. The SSC forces, after facing significant pressure, were forced to withdraw and regroup in areas near the town.
The intensity of the conflict has caused massive displacement, with over 45,000 civilians fleeing their homes in fear of further violence. The town of Erigabo, once a bustling local hub, now lies deserted, as residents have been forced to abandon their properties. The conflict has left a trail of destruction, not only from the fighting but also from the actions of the Somaliland forces, who have been accused of looting homes and businesses in the wake of the violence. This looting further compounds the devastation faced by the civilian population, stripping them of their few remaining assets and deepening the human suffering.
The eruption of the Erigabo conflict casts a long shadow over President Irro’s early days in office. Rather than focusing on economic recovery and diplomatic reconciliation, his leadership is now being tested by an escalating internal crisis that threatens to destabilize the region even further. With the loss of the last functional trade corridor and the deepening rift with SSC, Irro faces an uphill battle to restore peace and economic stability to Somaliland.
Challenges Ahead for President Irro
For President Abdirahman Irro, theErigabo conflict represents a significant and immediate challenge to his leadership. His ability to address the economic, political, and security fallout from the violence will define his tenure as president. The conflict has exacerbated an already fragile situation, testing his capacity to navigate the complex issues facing Somaliland. In order to move beyond the current crisis and chart a path toward stability, Irro must take decisive and multifaceted action in several critical areas:
1. Reopening Trade Routes
The closure of key trade corridors, including the recent one linking Erigabo to other regions, has disrupted vital economic connections, severely impacting Somaliland’s recovery. Restoring access to external markets is critical for revitalizing the economy. These trade routes, which previously facilitated the movement of goods to and from neighboring federal member states and regions, must be reopened and secured to enable businesses to resume operations. Achieving this goal will require not only political solutions but also a commitment to rebuilding infrastructure, ensuring security, and negotiating access for traders deterred by ongoing violence. Without the free flow of goods and services, economic stagnation will persist.
2. Rebuilding Confidence
The political environment in Somaliland has been severely shaken by the conflict, which has fostered an atmosphere of fear, distrust, and uncertainty. For the economy to recover, President Irro must focus on stabilizing the situation, ensuring that peace and security are restored. This involves rebuilding trust among the population, especially in regions directly impacted by the conflict, and providing assurances to traders and investors who are now wary of the risks involved. Confidence is key—without it, businesses are unlikely to invest, and regional cooperation will remain elusive. Irro must work to rebuild a sense of security by engaging in effective governance and addressing the needs of local communities.
2. Reintegrating Economies
One of the most pressing tasks for President Irro is to repair the fractured relationships between Somaliland and its neighboring regions, including SSC, Puntland, and other key stakeholders. The conflict has deepened regional divisions, and Somaliland’s isolation is further threatened as economic ties are severed. Rebuilding these relationships will be crucial not only for regional stability but also for economic recovery. Reintegrating the economies through trade agreements, resource-sharing, and joint development projects could help rebuild trust and offer a foundation for long-term cooperation. Ensuring that these regions can benefit from peace will make them more willing partners in the recovery process.
3. Diplomatic Efforts
The root causes of the Erigabo conflict are complex, and it will take more than just military or security measures to bring about lasting peace. Diplomacy must play a key role in addressing the underlying grievances of the SSC fighters and other involved groups. Engaging in dialogue, listening to the concerns of the people in these areas, and offering solutions that address their needs and aspirations could prevent the escalation of violence in the future. Irro will need to reach out to these factions, perhaps through third-party mediation, to negotiate and find a peaceful resolution to the conflict. Without addressing the deeper issues that fuel discontent, the cycle of violence will continue, further destabilizing Somaliland and undermining economic recovery.
Conclusion
The Erigabo conflict has placed Somaliland at a crossroads, with its economy, political landscape, and security situation facing unprecedented challenges. President Abdirahman Irro’s leadership will be crucial in navigating these turbulent times. To restore Somaliland’s economic vitality, he must prioritize the reopening of trade routes, rebuild confidence among local and regional stakeholders, and pursue diplomatic efforts to resolve underlying tensions.
Without decisive action, the region’s economic and political instability could continue to spiral, further isolating Somaliland and deepening its crisis. However, with a strategic, multifaceted approach to peace and recovery, there remains a path forward for the beleaguered region.
Abdiqani Haji Abdi
Email: Hajiabdi0128@gmail.com
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