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From Pastoral Livestock Based economy to Artisanal and Small Scale Mining (ASM) driven, the way forward to jumpstart Somalland’s Economy!

December 17, 2019

Jointly co-authored by Mohd Faisal Hawar and Mohamoud Faisal Hawar, both Oil and Gas Management Graduates, specialized in Oil and Gas Fiscal Regimes, Oil and Gas Economists, Trainers & Consultants on all the Extractive Fiscal Regimes. Both are currently attached to the Ministry of Energy and Minerals of Somaliland, as Internship – junior Upstream Petroleum Economists / Advisers.

Somaliland, a wealthy nation in terms of natural resources like marine resources, hydrocarbons and mineral resources located in the horn of Africa could be seen as one of the world’s major attractions for mining-based activities as well as oil explorations due to its favorable geographical settings that remains vastly untapped. With favorable conditions, Somaliland has done little to fully exploit the potential wealth.

It has been nearly three decades since Somaliland got re-established itself as an independent nation since 1991, having a strong and a fair government for over 29 years alongside the recent emergence of more stable institutions and accountable government institutions in Somaliland has made it somewhat of an attractive resources hotspot. Despite all these factors, Somaliland has solely relied on the inter-export of livestock. About 60% of the Somaliland population relies mainly on the products and by-products of their livestock for daily sustenance, according to the Food and Agriculture (FAO) organization. With an ever-growing population and with over 65% of youth below the age of 35 years it is important that Somaliland diversifies its economy and encourage the growth of other sectors none other than the lucrative mining sector.

Mining plays a vital role in the economic development of many countries. Historically this has been the case in many parts of the developed world, and while mineral development is animportant factor for economic growth it can also if done responsibly, be a catalyst for socio-economic growth in the developing countries. By creating high-paying jobs and providing the raw materials essential to every sector of our economy, mineral mining helps stimulate economic growth. In 2005, mining accounted for about 38% of Botswana’s real gross domestic product (GDP), and more than 50% of government revenues were derived from mining and mineral-processing activity.

Theoretically looking at the picture of Somaliland, it is understandably fair to assume why has its mineral extractive industry not yet kick-started into fully operational. The issues lie deep between the lack of huge investment in fully-fledged mining operations and the absence of mining operation know-how. No substantial direct foreign investment in the country’s mineral resources will take place due to the nature of investors requiring a recognized and sovereign state with which they can sign a treaty that is binding under in conjunction with international laws in order to protect their rights. This acts as a huge deterrent to many foreign and international investors who see Somaliland as fruitful and commercial site beaming with vast resources.

While that is the major challenge for the big money boys to handshake with Somaliland, yet, this awards golden opportunities to the Artisanal and Small-Scale mining also known by its abbreviation form ASM to enter void and steal the show. ASM is a subsistence miner who is not officially employed by a mining company, but works independently, mining various minerals or panning for gold using their own resources. Small-scale mining includes enterprises or individuals that employ workers for mining, but generally using manually intensive methods, working with hand tools. Artisanal mining and Small-Scale mining are recognized by the World Bank as a poverty alleviation providing rural areas with the funds to gradually raise their standard of livings. In developing nations such as Somaliland, Small mines can be used as a major source of revenue and can generate necessary revenues in order to develop the ailing infrastructure.

The fact that they can take advantage of sites that are deemed not to be economically viable or profitable by big mining investors and fully exploit the areas to their best of their ability is another sign to encourage Somaliland to further develop and internally raise its GDP. Around the globe, it is estimated that around 30 million artisanal and small-scale miners extract about thirty mineral commodities using artisanal techniques in almost all developing countries often enduring tough working conditions in unfavorable climates ASM is an important socioeconomic factor in Somaliland. The absence of skills, equipment’s and human resource has prompted ASM forward. It is seen as approximately 300 million humans living around 70 countries depend on ASM as their livelihood, as such this is the big employer sector not to ignore.

The shifting of a livestock driven economy to Artisanal and Small-Scale mining is gradually picking up the pace here in Somaliland. Below are the few advantages it has to offer in return to our community:

Job Creation – Employment has risen from 10 million miners in 1999 to potentially around 20-30 million globally. This factor alone has promoted the agenda of ASM. This creates a ripple effect of where the employees will now spend the money rightfully earned in their home country which will raise the GDP.

Community Development –Infrastructure, technological, human resources, railways now have the potential to be developed alongside rural communities.

Income Generation – Different stream of income has been added to the list of the nation whereby it diversified its economy into separate avenues.

Youth Engagement – A country with such a high number of youth in the population, and with thousands of graduates from local universities and abroad, coupled with higher unemployment, sure Artisanal and Small Mining (ASM) could become a choice of youth engager through rewarding benefits and experience.

Reasons for supporting and formalizing ASM in Somaliland!

It is no secret that Somaliland is experiencing a Gold Rush sort of awakening in the eastern part of the country, therefore it is better to formalize and brining to books the revenues from the prevailing gold rush in the country.

The number of artisanal and small-scale mining (ASM) operations, in fact, dwarfs the number large-scale projects, and the ASM sector can be an incredibly important part of the extractive economy in many resource-rich states.

Therefore, it is worthwhile for the Somaliland government to encourage and facilitate the Artisanal and Small Scale Mining (ASM) sector, so the outperform the livestock-based economy and awaken the rich and rewarding ASM driven economy, not only harvesting revenues but also creating jobs and newer skills for the local populations. Somaliland is currently witnessing the birth of its mining sector and will reap all it’s rewards.

The authors, young graduate brothers, Mohamed (22 Yrs old) and Mohamoud (21 Yrs old) are currently attached to the Ministry of Energy and Minerals of Somaliland, and could be reached at: