Challenges to Somaliland Economic Governance: Private Sector Investment Perspective

Somaliland is one of the world's least developed countries and its economic performance is heavily dependent on the livestock and majority of the population depends either directly or indirectly on livestock and livestock products for their livelihood. The country exhibits very open economy with a high ratio of foreign trade to gross domestic product, a low level of monetization and a dominant informal sector. Due to the limited capacity of the government, the private sector provides most of the basic services and it accounts for over 90% of the country's gross domestic product (GDP), and employment. Despite the substantial growth in the Somaliland's private sector and its contribution to the development of the economy, it has been constrained by a number of factors, including, the absence of financial institutions, Inadequate infrastructure and lack of effective enabling legal and regulatory frameworks. Therefore, the purpose of this paper is to address the above mentioned problems and challenges through investigating factors that affect the overall performance of the private sector investment which need to be mitigated in order to create an enabling environment for businesses and achieve government policy objectives of promoting private sector as key drivers of economic development in Somaliland.