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Trade Makes States: Governing the Greater Somali Economy: A book Review

Reviewed by: Abdirahman A. Issa 
Editors: Tobias Hagmann and Finn Stepputat
Publisher:  Hurst Publisher
Pages: 274
Publication date‏: ‎2023

Trade Makes States is an interesting addition on the growing corpus on the debates of Somali state formation. The book, edited by Tobias Hagmann and Finn Stepputat, explores the governance of trade within the context of limited statehood and the interaction between the state and trade. The authors propose a theoretical framework that argues “trade makes States”, meaning that traders have generated stateness in the post-conflict Somalia. They emphasis the centrality of trade in (un)making state and state like entities in Somali inhabited territories. The edited volume offers interesting perspectives on social infrastructure of trade, how commodity trading and marketplaces are governed, the movement of commodities across borders, the significance of ports on state formation, and the political economy of taxation. The book is a product of a collaborative research programme that examines the impact of economic hubs and flows on the formation of states in East Africa’s Somali regions since 1991.

The book highlights that controlling and facilitating trade has been a crucial factor in the formation of polities in the Somali territories. Trading commodities has provided substantial financial resources for those striving to establish states, whether these are formal governmental entities or competing non-state groups. The ability to manage and influence the flow of goods is a critical factor that distinguishes successful state-builders from less successful ones. According to the authors, states and state-like entities cannot achieve the necessary financial means without controlling commodities. Moreover, if they cannot regulate or maintain trade within their territory, they will miss out on trade-related revenues. Aspiring political leaders must overcome, the editors contend, competitors who also seek to tax trade to succeed. Therefore, it is vital for states and state-like entities to manage trade flows efficiently to generate revenue.

The collapse of the military government in 1991 led to positive changes in the economy, including the redirection of trade and the growth of the private sector. Despite common misconceptions about an unregulated economy, the editors argue its governed by a complex web of roles, norms, and routinized practices that help to keep things running smoothly. However, they note that traders face many challenges due to the absence of viable state, including insecurity and the absence of insurance, licenses, regulations and banking systems. During the long period of limited statehood, social-legal structures emerged to fill the void left by the state. These structures were embedded in kin and business networks and traders had to navigate between international norms and messy, informal local realities. The book shows availability of protection for goods and mechanisms for conflict resolution and contract enforcement have a significant impact on marketplaces. It emphasis that producers and traders have a complicated relationship with authorities as they depend on security to trade goods, but also tend to avoid authorities that tax and regulate trade.

in the South where government presence is limited, traders have taken on the responsibilities of the state, dealing with (in)security, crime, and conflicts. The authors observe that the interactions between market associations and local government showcase the ongoing processes of state making  and unmaking.  The traders, brokers, and market committees are shaping the concept of the state. Despite the challenges of insecurity, political instability, and economic uncertainty, both small and large-scale traders have managed to protect their goods, settle disputes, and uphold contracts.

The book stresses that  state collapse in south  and central Somalia persisted for a long time due to economic interest groups who were concerned about losing their profits if a functional state was established. Large-scale traders exert influence in shaping government policies and regulations to protect their business interests. Traders in Puntland and Somaliland, the editors maintain, have demonstrated a positive attitude towards the state and recognize the authority of state and municipal governments to impose taxes. They benefit from improved security and basic services, and contribute to the stability and development of the state.

Ports has been instrumental in peace building and state building in Somaliland and Puntland. However, they have also been a source of conflict as warlords vied for control over the Kismayo and Mogadishu ports. The revenue generated from the ports has been utilized to disband clan militias, establish an army, and create a basic administrative system. Controlling ports is a valuable asset because it grants access to revenue, political power, and influence. States such as Puntland and Jubbaland, which have functional ports, have been more successful in generating revenue compared to states such as Galmudug and Hirshabelle, which lack working ports. In other words, the port sets successful states apart from less successful ones.

The editors examine the different trajectories Somali’s state-building project has taken. Al-Shabab resorted to coercive means to establish its state, mainly by imposing taxes, fees, and contributions from the local population. On the other hand, Somaliland and Puntland were able to raise funds domestically to support their state-building efforts. However, the FGS and FMS in the south encountered challenges in mobilizing local resources and had to depend on foreign aid and protection.

The editors express skepticism about the success of the state-building project in Somalia, which is being funded by the international community. They do not believe that it will result in the establishment of a unified state endowed with effective regulatory instruments. Rather, they anticipate a fragmented state with minimal control over its economic policies, largely controlled by a few powerful oligopolies and heavily reliant on external funding and protection. However, More discussion about the specific type of future state that needs to be created would have been helpful.

The medieval coastal city-states were trading states, as evidenced by the available literature. These cities were booming as maritime trade increased. They were trading with Arabia, Egypt, and India and Persia. There was a high demand for Somali commodities, including frankincense, Livestock, Spices, and hides. In fact, a recent archeological study points out that the decline in trade resulting from the Portuguese blockage of the red sea was one of the factors that led to the collapse of the Adal state.1 The study confirms the premise of the book that trade can (un) make the state. It would have been beneficial for the book to draw upon the literature available on the trade activities of medieval city-states.

Reviewed by: Abdirahman A. Issa 
Abdirahman A. Issa is a researcher of Somali History, culture, society and politics. His interests also include governance and development in fragile and post conflict contexts.  He can be reached at [email protected]

1. Torres Rodriguez, J. d. (2020). Built on diversity: Statehood in Medieval Somaliland (12th-16th centuries AD). p. 164

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