The Informal Economy in Civil War:

Hargeisa - Somaliland

i
 Project Background

This study was undertaken as part of a 2.5 year research project on Economic Recovery in Post-Conflict
cities: the role of the urban informal economy, funded under the DFID-ESRC Joint Fund for Poverty
Alleviation Research (Project ES-M008789-1). The research explores the role of the urban informal
economy in poverty-reduction, peace-building and development in post-conflict cities, and its scope to
provide both livelihoods for the extreme poor and a platform for economic recovery.
Post-conflict recovery is a long and cyclical process and this research examines cities with different drivers
of conflict, including urban areas in post-civil war settings, and cities affected by protest, violence or on-
going turf wars. The research explores the drivers of conflict and links to the informal economy, examining
both structural and individual factors that support/inhibit the informal economy’s role and growth in
post-conflict settings. Fieldwork is being carried out in four cities: Cairo, Hargeisa, Karachi and
Kathmandu, exhibiting different facets of conflict and violence.

















Research Partners

Cardiff University: Professor Alison Brown; Dr. Peter Mackie; Kate Dickenson
Research Expert: Eid Ali Ahmed
Gollis University: Dr. Saeed Ahmed Hassan, Dr. AbdiRahman Ahmed Hussein, Masters’ Research
Assistants
Peace Negotiator: Joan McGregor
SONSAF: Mohammed Ahmed Barwani, Ismail Ibrahim
Content and Photos © Cardiff University 2017

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Contents

PROJECT BACKGROUND ............................................................................................................................................. I
CONTENTS ................................................................................................................................................................. II
TABLES AND FIGURES ............................................................................................................................................... III
1. INTRODUCTION .................................................................................................................................................... 1
1.1 INTRODUCTION TO THE REPORT ........................................................................................................................................ 1
1.2 STRUCTURE OF THE REPORT ............................................................................................................................................. 1
2. SETTING THE CONTEXT: CONFLICT & THE CITY ...................................................................................................... 3
2.1 INTRODUCTION ............................................................................................................................................................. 3
2.2 CONFLICT IN HARGEISA .................................................................................................................................................. 3
2.3 POLITICAL AND SOCIO-ECONOMIC CHARACTERISTICS OF HARGEISA .......................................................................................... 4
2.4 LOCAL GOVERNMENT IN HARGEISA ................................................................................................................................... 4
2.5 THE INFORMAL ECONOMY OF HARGEISA ............................................................................................................................ 5
3. METHODS ............................................................................................................................................................ 7
3.1 INTRODUCTION ............................................................................................................................................................. 7
3.2 CONFLICT MAPPING AND RESOLUTION ............................................................................................................................... 7
3.3 INFORMAL ECONOMY ANALYSIS ........................................................................................................................................ 7
4. HARGEISA’S INFORMAL ECONOMY TODAY ........................................................................................................ 11
4.1 INTRODUCTION ........................................................................................................................................................... 11
4.2 DESCRIBING THE CONTEMPORARY INFORMAL ECONOMY IN HARGEISA ................................................................................... 11
4.3 CHALLENGES AND PROBLEMS IN THE INFORMAL ECONOMY TODAY ......................................................................................... 14
4.4 POTENTIAL PROTECTIONS FROM PROBLEMS AND CHALLENGES .............................................................................................. 17
4.5 KEY FINDINGS ............................................................................................................................................................. 20
5. THE INFORMAL ECONOMY IN CONFLICT ............................................................................................................. 23
5.1 INTRODUCTION ........................................................................................................................................................... 23
5.2 GENERAL EFFECTS OF CONFLICT ...................................................................................................................................... 23
5.3 EFFECTS OF CONFLICT ON THE INFORMAL ECONOMY ........................................................................................................... 25
5.4 CONTRIBUTION OF THE INFORMAL ECONOMY TO DEVELOPMENT ........................................................................................... 28
5.5 KEY FINDINGS ............................................................................................................................................................. 30
6. CONCLUSIONS AND RECOMMENDATIONS ......................................................................................................... 33
6.1 INTRODUCTION ........................................................................................................................................................... 33
6.2 KEY FINDINGS ............................................................................................................................................................. 33
6.3 RECOMMENDATIONS ................................................................................................................................................... 35
REFERENCES ............................................................................................................................................................ 38
APPENDICES ............................................................................................................................................................ 41

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Tables and Figures


Table 3.1: Age group ................................................................................................................................................. 8
Table 4.1: Age group and gender ............................................................................................................................ 11
Table 4.2: Education levels ...................................................................................................................................... 11
Table 4.3: Business premises and birthplace .......................................................................................................... 12
Table 4.4: Business premises and education levels ................................................................................................. 13
Table 4.5: Daily income and gender ........................................................................................................................ 13
Table 4.6: Daily income and birthplace ................................................................................................................... 13
Table 4.7: People in business and business premises ............................................................................................. 13
Table 4.8: Challenges by business premises ............................................................................................................ 14
Table 4.9: Challenges by birthplace ......................................................................................................................... 14
Table 4.10: Problems with local authority .............................................................................................................. 15
Table 5.1: Origin of goods ....................................................................................................................................... 27

Figure 2.1: Map of Somaliland .................................................................................................................................. 3
Figure 3.1: Business type ........................................................................................................................................... 8
Figure 4.1: Birthplace .............................................................................................................................................. 12
Figure 4.2: Seasonality of business and gender ...................................................................................................... 14
Figure 5.1: Effects of conflict on families ................................................................................................................ 23
Figure 5.2: Disrupted goods and services ................................................................................................................ 25
Figure 5.3: Replacement goods and services .......................................................................................................... 26

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1. Introduction
This report examines the role of the informal economy in recovery from
civil war in Hargeisa and current development challenges.
1.1 Introduction to the report
This report summarises the findings from a research visit to Hargeisa during August 2016, to examine the response
of the urban informal economy (IE) in the recovery from civil war during the late 1980s and early 1990s, and its
role in current development trajectories.
In post-conflict cities, and many developing world cities across the globe, working in the IE is an important coping
strategy. Worldwide, the contribution of urban informal enterprises to gross domestic product (GDP) and jobs is
substantial. Even when political stability is assured, informality remains a structural characteristic of low-income
economies, yet local and international policies see the IE as a temporary solution and rarely provide supportive
and enabling environments for its development. In post-conflict settings, the IE’s role is vital in providing
livelihoods during recovery and in replacing basic services lost during conflict.
Hargeisa, capital of the self-declared state of Somaliland was selected for the research because the modern city
has emerged from civil war. After a 10-year struggle, when thousands of people were killed and towns destroyed,
and the heavy bombardment of Hargeisa in 1988 when the city was flattened, Somaliland finally declared
independence from Somalia in 1991. Hargeisa is of particular interest because of the clan-led peace and
reconciliation process, and its success in establishing a functioning government.
Thus, the core focus of interest for the research in Hargeisa is the trajectory of urban informal economy (IE) since
1988, how the IE changed during the conflict, its evolution and its current economic contribution today. The
research team also sought to understand how different livelihood routes reduced the impact of violence and
instability on poor people, and the role of the informal economy in economic recovery, as a basis for improving
development interventions in Hargeisa. Within this framework, the report sought to address three main questions:
• How does the IE operate in Hargeisa today and what are the main challenges and problems?
• How can support for the IE contribute to wider development initiatives of poverty reduction and
economic growth?
• What were the short-term and long-term impacts of conflict on the urban IE, and how did it respond?
How does this response contribute to improved development outcomes?

1.2 Structure of the report

Following this introduction, the report provides a short background to the city of Hargeisa and the conflict of 1988
(Chapter 2) before briefly discussing the three-stage methodology used in the fieldwork (Chapter 3). The findings
of the report are then set out in two chapters: Chapter 4 explores the characteristics of the IE in Hargeisa today.
It builds a profile of the IE workers and businesses involved in the sector, as well as the challenges and problems
that the IE faces, before concluding with a commentary on the potential protections against them, with particular
attention to local governance structures. Chapter 5 discusses the impacts of conflict on society, but more
specifically the short and long-term impact of conflict on the IE, and then evaluates how the IE responded to
conflict in Hargeisa. The final chapter examines the IE’s contribution to development and conflict reduction in the
city, and sets out a series of recommendations to better support the urban IE in Hargeisa (Chapter 6).

1

Some basic service delivery is still
informal - a water seller

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2. Setting the Context: Conflict & the City
Hargeisa experienced an acutely disruptive conflict and, in the absence
of humanitarian aid, post-war reconstruction has been community-led.
2.1 Introduction
This chapter gives a brief overview of the conflicts between 1982–1991 and 1994–1996 and summarises the socio-
economic characteristics of Hargeisa today.

2.2 Conflict in Hargeisa

2.2.1 First Civil War
The Somali civil war has multiple and complex political, economic, cultural and social causes. Although politicised
clan identity, the availability of weapons and the large numbers of unemployed youth have all been cited as
contributing causes, the fundamental causes of the Somali conflict were competition for resources and power
within a repressive state (Elmi and Barise, 2006).
Grievances in Somaliland were deep-rooted and stemmed from the inequality that results from the union of two
former colonies. Somaliland received its independence from in 26 June 1960, but was independent for only five
days before merging with Italian Somalia on 1 July 1960 forming the Somali Democratic Republic. While
competition for resources between clans and corruption and cronyism within government had been evident in
the post-colonialist democratic era (1960-1969) the establishment of a military regime in 1969 by General
Mohamed Siad Barre worsened societal tensions (Elmi and Barise, 2006).
The concentration of power in Mogadishu led to the political and economic marginalisation of the north-western
clans, and settlements in the region. Grievances were expressed in particular by the Isaaq clan, who felt excluded
from the political process, and bore the brunt of the more brutal oppressive and exploitative policies of Barre’s
military regime.
The civil war in Somalia started in 1982 when the Somali National Movement (SNM), established in London in
1981 by the largely Isaaq diaspora who rejected military control of the north-west of the country, moved
operations to Ethiopia and began active resistance to the Barre regime (Walls, 2009). Tensions heightened in 1988
when the attempt by the SNM to take Hargeisa and Burao was met with an extremely violent counter-attack by
government troops and Barre gave his army a mandate to kill all but the crows (Al Jazeera, 2012). During May and
June 1988 Hargeisa was shelled with heavy artillery and bombarded constantly from the air, leading to thousands
of civilian casualties and mass exodus across the Ethiopian border and to rural areas of the country (Prunier, 1996;
Human Rights Watch, 1990). The civil war destroyed transport routes and closed the Berbera port to animal trade
which devastated the pastoral economy that depended on animal exports to Gulf countries (Ahmed and Green,
1999).
More than half a million people, many from the
Isaaq clan fled to Ethiopia and around half and
million became internally displaced (Jhazbhay,
2008). However, resistance was strong and by
the end of 1990 the government controlled less
than 10-15% of the national territory, the rest
being in the hands of various clan-based
political movements, with the north-west being
held by the SNM (Prunier, 1996). These
insurrections along with widespread famine
forced Barre’s forces to retreat to Mogadishu,
and the eventual overthrow of the Barre regime
in 1991 paved the way for the declaration of the
north-west region as an independent
Somaliland.
Figure 2.1: Map of Somaliland

3
2.2.2 Second Civil War and Reconciliation Process
The physical destruction of Hargeisa during the war was near total and the city had to be rebuilt in its entirety.
Recovery was delayed due to the second civil war from 1994-1996 which was generally perceived to be in
opposition to economic reforms in 1994/95 including introducing a new currency and fixing the exchange rate
(King et al., 2003).
Thirty-nine clan-based peace and reconciliation conferences took place between 1990 and 1997, leading to
restoration of relations between communities affected by war, establishment of a relatively stable security
regime, establishment of local and national institutions of government, and creation of an environment conducive
to growth and development (Walls et al., 2008).

2.3 Political and socio-economic characteristics of Hargeisa

Somaliland has never been internationally recognised and as such has received no foreign assistance. It is thus
argued that state formation and accountability was dependent on building a viable tax base (Eubank 2012). Light
regulation and lack of corruption has also helped a flourishing private sector to develop which has contributed to
economic stabilisation in the country (Mackie et al., 2017).
Somaliland has been skilful in integrating traditional governance (xeer) with the apparatus of a modern state and
the country has a working and stable political system (Jhazbhay, 2003; Kaplan, 2008; Shinn, 2002). Peace, stability
a democratically elected government are the cornerstones of development, which has been “supported by an
unusually talented and active diaspora” (Shinn, 2002). As highlighted by the United Nations and World Bank Joint
Needs Assessment on Somaliland:
Since the beginning of the 1990s, Somaliland has seen remarkable progress on many fronts, not least
in a unique reconciliation process, the creation and implementation of functioning governance and
judiciary systems, and a democratisation process that has led to free and fair elections and multiparty
legislative system. This has been made possible primarily through active involvement of a vibrant
private sector, non-governmental organisations (NGOs), civil society, the participation of traditional
leaders, and large inflows of remittances (UN and WB, 2006).
A constitutional referendum was held in 2001, and there have since been presidential, legislative and local council
elections but the economy remains highly dependent on diaspora remittances and GDP per capita is estimated to
be US$347, the fourth lowest in the world. Poverty in urban areas is estimated at 29%, and only half of children
aged 6-13 go to school (World Bank, 2014).
Hargeisa itself has undergone rapid reconstruction and expansion since 1994. In 2005 the city was estimated to
contain 300,000 inhabitants, which had risen to 450,000 in 2007, and 780,000 in 2015. Generally, the population
is growing at the rate of 3.1% annually and 15% of the population are internally displaced persons (IDPs), refugees,
or returnees to the country (World Bank, 2012). Urban labour force participation rates are low, totalling 72% for
men and 36% for women aged 25-54 (World Bank, 2012).

2.4 Local government in Hargeisa

Despite the introduction of a formal democratic system, clan based politics and leaders still have a key role. This
role is particularly apparent at a local level where elders help resolve disputes and maintain peace within
communities (Rossi, 2014).
Though there is stability, local government faces challenges and the financial constraints and limited capacity
hinder the implementation of policies (Mohamoud, 2012). A vague legal and regulatory framework means that
there is no clear distinction about which taxes should be collected by the central government and by the local
governments (Mohamoud, 2012). Hargeisa suffers from poor infrastructure and though local government has
legal responsibility for the provision of key services insufficient resources means they unable to provide them
(Rossi, 2014). As a result, expensive services such as garbage collection, water and electricity are largely delivered
through private providers, rather than the municipality.

4
2.5 The informal economy of Hargeisa
The Somali private sector is dominated by Micro, Small and Medium Enterprises, many of which are informal
(MSMEs). The majority of small and medium enterprises are in the services sector while the bulk of
microenterprises are involved in trade (UNDP, 2014). In the city of Hargeisa, the IE provides about 77% of the total
employment in the city (World Bank, 2012). Most of the enterprises are indigenously owned and family run (UNDP,
2014).
Through the private sector in Somaliland is strong, economic growth is hindered by the absence of legislative
frameworks and adequate infrastructure and banking institutions though the impending National Development
Plan should address some of these issues (World Bank, 2012).

Street vending is an important

economic sector

6
3. Methods
This study adopted a mixed-method approach and used a combination
of three key methods.
3.1 Introduction
This chapter summarises the key methods employed during the fieldwork for this research. The study adopted a
mixed-method approach and used a combination of three methods, outlined below. Where possible the findings
from Hargeisa have been linked to relevant points in the literature to show the extent to which the findings here
reflect, or differ from, findings elsewhere.

3.2 Conflict mapping and resolution

IE workers engaged in a diverse range of economic activity were selected to participate in a three-day participatory
workshop using peace-building and conflict-resolution approaches (Appendix 1). The workshop aimed to map the
main urban actors involved in operation of IE value chains, and in its management and regulation in Hargeisa, and
the conflicts between those involved, in order to strengthen the capacity of workshop participants to articulate
any challenges they face, acknowledge different perspectives, and identify potential resolutions to those
challenges (Appendix 2).
The workshop was facilitated by the NGO SONSAF (Somaliland Non-State Actors Forum) which aims to enable
non-state actors in Somaliland to engage in domestic and international policy dialogue, to bring about a secure
and peaceful future for the people of Somaliland. The workshop was facilitated by peace-negotiator, Joan
McGregor, and attended by 24 participants from different market sectors, including food sellers, qat sellers1 and
transport workers.

3.3 Informal economy analysis

In order to gain in-depth comparative information of individual experiences, extended semi-structured pathways
interviews were conducted with two groups. The first group included those workers who are involved in the IE in
Hargeisa today. The second group consisted of those who were in Hargeisa before, during, or directly after the
conflict of 1988, most of whom had worked in the IE but no longer do so having made the transition to formal
work or are no longer working. Some of the first group had also been working in 1988 so had experienced the
impact of conflict on their livelihoods. Two different questionnaire formats were used:

3.3.1 Interviews with IE workers today

Semi-structured interviews were conducted with 168 current IE workers in Hargeisa. For the purposes of this
report “current IE workers” is used to refer to these interviewees. The questionnaire was designed to elicit
people’s experience of the IE: the challenges and problems they face, engagement with local authority and the
impacts of conflict. Questions fell under the following broad categories: people, business, links and networks
(including engagement with local authorities), safety and security. If they could, respondents were then asked to
comment on the impacts of the past conflict on society generally, and the IE more specifically.
In order to get a diverse range of participants, selection was based on a range of observed factors including gender,
age, business type, business premises and district of business. Factors such as time restraints of the fieldwork, and
the unwillingness of some IE workers to participate, means that an equal mix of participants within these
groupings was not possible. This is acknowledged as a restriction within the data collection and methodology.

A brief profile of the 168 IE workers interviewed and their businesses is given below:

Gender
Some 94 men were interviewed compared with 74 women, a difference of around 12% of the total sample. This
does not accurately represent the number of women in the urban IE in Hargeisa whose participation is thought to

1 Qat is a narcotic leaf chewed (mainly in the afternoon) by many people in Hargeisa.

7
be greater than that of men (UNDP, 2014). This is likely to reflect willingness of IE workers to be interviewed,
however it is more than a sufficient number of women to be able to draw conclusions about differences in
experiences.

Age group
The vast majority of those interviewed were aged Table 3.1: Age group
between 26–35 years. There were very few young Age Group Frequency Percent
(under 18 years) and older (55 years and over) involved 0 -17 Years 2 1
in the interviews (Table 3.1). Although this makes it 18 – 25 Years 25 15
difficult to draw out differences in experience by age, 26 – 35 Years 79 47
the sample is broadly representative of the IE workforce 36 – 55 Years 50 30
in Hargeisa (ILO, 2012).
55+ Years 12 7
Total 168 100
Business district
Most IE workers (37.5%) interviewed conducted businesses from 26 June district, 25.6% had businesses in Koodbur
while 23.8% worked in Gacan Libax. The remaining 13% worked in other areas across Hargeisa City. This is a good
mix accounting for different income areas

Business type
Some 82% of those interviewed were traders. Traders included Figure 3.1: Business type
those selling perishable goods such as fruit, vegetables, milk,
cooked foods and raw meat, as well as non-perishable goods like 8%
qat, clothing and charcoal (Figure 3.1). The sample mainly focussed 10%
on traders, partly because they are often amongst the most
vulnerable of IE workers, and also because several surveys list trade
and petty trade as a predominant source of income in Hargeisa
(ILO, 2012). 82%
Some 10% of those interviewed were involved in the service
industry including cobblers and tailors, as well as electrical repair
services and money exchange services.
Vending Service Industry Other
The “other” sector includes drivers, those running internet cafes
and those working in the restaurant industry, which included tea
shops.

Business premises
Over 55% of current IE workers interviewed operated from the street, 25% conducted business without a
permanent roof (like a market place), while only 20% ran their business from within a roofed building. This is a
good mix of varying degrees of precariousness and ensures a good mix to understand any variation in challenges.

Analysis
Numerical data from the questionnaires was analysed in SPSS. Simple descriptive statistics were used to explore
distributions of each numerical variable. Cross-tabulation of variables against one another, particularly
demographic indicators and current challenges within the IE sector, were used to explore associations within the
data and to ascertain groups of people and businesses.
Only 29 of the current IE workers interviewed could answer questions about the conflict. These questions regarded
the experience of conflict from a personal and business perspective as well as the ability of the IE to contribute to
economic development and peace-building.

3.3.2 Interviews with workers in the Hargeisa at the time of conflict

A shorter questionnaire was used to interview 18 previous IE workers, who had been working in the IE in Hargeisa
prior, during or soon after the conflict of 1988. These interviewees are referred to as “conflict-affected people”
(CAP) within this report. The questionnaire asked respondents about current employment and previous job history
but focussed mainly on questions regarding the impacts of past conflicts on the IE and society generally.
8
Analysis
The 18 interviews with people working in the IE around 1988 were analysed together with the 29 current IE
workers who were also working in the IE around 1988 to assess the impacts of conflict on livelihoods and society.
This gave 47 respondents in total who had been affected by conflict and the qualitative data was analysed and
coded using NVivo.

3.3.3 Governance analysis

In parallel, key informant (KI) interviews were conducted with stakeholders, including central government
ministers and ministries, senior staff from Hargeisa City Council, UN agencies, international and local NGOs,
academics and community groups (Appendix 3). A total of 22 KI interviews took place, including a workshop with
government agencies, SONSAF and IE traders. These interviews focussed on the historic and current role of the IE
in Hargeisa, gender issues and work, national economic trajectories and current attitudes and policies of central
and local government to the urban IE and potential opportunities within this.

Analysis
Again, analysis was performed using NVivo. This allowed KI interview write-ups to be coded alongside the
experiences of the 47 IE workers affected by the conflict (Section 3.3.2) which ensured triangulation of data.

Women play an important

economic role

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4. Hargeisa’s informal economy today
IE workers face a host of challenges in Hargeisa which restricts their
ability to secure sufficient livelihoods and increases insecurity.
4.1 Introduction
This chapter describes how the contemporary IE in Hargeisa operates by examining the profile of workers and
businesses and the challenges and problems they face. It also investigates potential ways to address these
problems and improve support for the urban IE through the initiatives of central and local government and other
urban actors.
The chapter draws on information from the 168 interviews with current IE workers, the 22 KI interviews, and
secondary data where relevant.

4.2 Describing the contemporary informal economy in Hargeisa

This section builds a profile of some of the people and businesses working in Hargeisa today to examine issues of
age, gender, migration status, business characteristics and business operations of those currently involved in
various economic activity.

4.2.1 Profile of informal economy workers

Though the IE provides poor urban residents with crucial opportunities for income generation in conflict-affected
situations, there are entry barriers to participation (Günther and Launov, 2012). This section analyses the profile
of the current IE workers interviewed, with particular attention to structural inequalities such as gender, age,
education, migration status and political affiliation, all of which have been recognised as factors which can enable
or inhibit access to the IE, to examine the extent and type of barriers and challenges that operate in Hargeisa.

Age and gender

The breakdown of IE workers interviewed by gender and age was given in Section 3.3.1 but there are clear
differences in the age profile of men compared to Table 4.1: Age group and gender
women.
Age Group % of Men % of Women
Of those aged 18-25, 21% were men, compared with just n = 94 n = 74
7% of women. In contrast, of those aged 36-55, 21% were 0-17 Years 2 0
men, compared to 41% of women (Table 4.1). As women 18–25 Years 21 7
26–35 Years 54 38
and older people have been highlighted in IE research as 36–55 Years 21 40
potentially vulnerable groups, it is significant that in this 55+ Years 2 15
study older IE workers are generally female. Total 100 100

Education
Lack of educational attainment can increase vulnerability levels. Of the current IE workers interviewed 32% had
no formal education, and only 38% had secondary or higher education (Table 4.2).
There was a significant difference between the
Table 4.2: Education levels
educational attainment of different genders in the 168
Education level Frequency Percent
current IE workers interviewed. Some 41% of women
None 54 32
had no primary education, compared to 25% of men. Primary 50 30
In contrast, 49% of male interviews had been educated Secondary 39 23
to secondary level or above compared with just 24% of Higher 25 15
women. Thus, women in the sample were generally Total 168 100
older and had received less formal education than
men.

11
Migration Status
Ethnicity, migration status, or nationality can also inhibit or Figure 4.1: Birthplace
enable access in the urban sphere (Sen, 2008). Only 57% of
current IE workers interviewed were born in Hargeisa which 5%
means a significant proportion (43%) migrated to the city.
Most of these are internal migrants with fewer than 5% born
outside wider Somaliland or Somalia (Figure 4.1). Those that 38%
were born outside the country came from Ethiopia, Djibouti, 57%
Yemen and Saudi Arabia.
Birthplace is not the only indicator of movement; migration
patterns and dates of moving are also important. Some 87
(52%) of the 168 current IE workers interviewed said when Hargeisa Somaliland/Somalia External
they moved to Hargeisa. Of these, 19 moved in the conflict-
affected period up to 1996, and 28 moved soon after the end
of hostilities in 1996. While there were 32 migrants who moved between 2004 and 2010, only 8 had moved in the
last five years. Several people interviewed were born in Hargeisa, displaced during the conflict and later returned.
Former IDPs are often presumed to have weakened social capital and are another vulnerable group within the
urban IE (Haider, 2014).

Households
Large numbers of dependents in households can also increase household vulnerability. Within the sample, the
number of people in a household ranged from 1-34 and the mean was 8.28. Similarly, the number of children in a
household ranged from 0-18, and the average was 3.96. While the averages are not particularly high there were
a large number of dependents in some households.

4.2.2 Profile of informal businesses

This section looks at the profile of IE businesses, with particular attention given to differences in business practices
of the different demographic groups outlined above.

Key businesses
A recent study estimated that 77% of all employment in Hargeisa was informal in nature (World Bank, 2012).
Within the IE, petty trade is the predominant source of income in the city (King et al., 2003). As discussed in Section
3.3.1, of the current IE workers interviewed, 82% were traders.

Business premises
Section 3.3.1 demonstrated that current IE workers interviewed operated from very different types of business
premises, with some running businesses from the street, others from the market-place and others from a roofed
building. Businesses operating from roofed buildings probably have higher turnover to afford rental or the costs
of building a structure, and are therefore likely to be less vulnerable than those operating from the street or a
temporary location. It appears in this study that the degree of precariousness is associated with both education
levels and birthplace. Those born in Hargeisa are also more likely to trade from the street as opposed to a trading
site with a permanent roof or roofed building than internal migrants (Table 4.3). Similarly, workers with limited
formal education are more likely to run businesses from the street (Table 4.4).
Table 4.3: Business premises and birthplace
Business Premises % Born in Hargeisa % Internal migrants % Born external
n = 96 n = 64 n = 8
Street 67 39 38
No permanent roof 10 45 37
Roofed building 23 16 25
Total 100 100 100

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 Table 4.4: Business premises and education levels
Business premises % No education % Primary education % Secondary education % Higher education
n = 54 n = 50 n = 39 n = 25
Street 68 60 44 32
No permanent roof 19 18 41 28
Roofed building 13 22 15 40
Total 100 100 100 100

Business income
The average daily income (Somali Shillings) of each informal business was assessed. Daily income ranged from 1–
500 shillings, however the mean was about 90 shillings a day, which is the equivalent of USD 0.16. Just under half
of the current workers interviewed (45%) earned 20 shillings or less a day.
The average daily income was assessed and measured
Table 4.5: Daily income and gender
against some of the demographic groupings above. Of
Average Daily % Male IE % Female IE
greatest significance was the discrepancy in income Income Bracket workers workers
between men and women (Table 4.5). Generally, men (Shillings) n = 94 n = 74
earn more than their female counterparts with double 0–10 12 35
the amount of men than women earning between 101– 11–20 27 18
200 shillings per day. Conversely, 35% of women earn 0– 21-100 27 24
101-200 18 7
10 Shillings a day in comparison to just 12.8% of men.
Over 200 16 16
There was a link between education levels and income, Total 100 100
and those with less formal education also earning less. Of
those earning less than 20 shillings per day, 57% had no formal education compared with just 23% with secondary
education. Conversely, 18% of primary school graduates earn 21–100 shillings a day compared with 40% of those
with diplomas. As those with less education were predominantly women, this suggests that many women
interviewees are doubly disadvantaged by limited education and low income.
There was also a degree of correlation between income and birthplace, with those born in Hargeisa earning less
than internal migrants (Table 4.6).
Table 4.6: Daily income and birthplace
Average Daily Income % born in Hargeisa % internal migrants % born external
Bracket (Shillings) n = 96 n = 64 n = 8
0–10 29 13 25
11–20 24 20 25
21-100 25 28 12
101-200 6 25 0
Over 200 16 14 37
Total 100 100 100

People in business
Around 47% of all IE workers work alone, which can also signify vulnerability, 47% worked with family or friends,
while 6% work with colleagues or employees. There is a difference between the number of people in a business
and the business premises they work from, with those working from the street more likely to work alone than
those working from a market place or roofed building (Table 4.7).
Table 4.7: People in business and business premises
Number of People in % from street % without permanent roof % from roofed building
Business n = 92 n = 42 n = 25
Work Alone 64 31 21
2 – 3 People 30 62 58
4 + People 6 7 21
Total 100 100 100

There is also a link between the number of people in a business and their birthplace and those who were born in
Hargeisa (57%) were more likely to work alone than internal migrants (31%).

13
Seasonality of business
Studies have found that seasonal businesses bring “risks” to the income flow of informal workers, with decreased
capital from the structural and cyclical features of the business
Figure 4.2: Seasonality of business and gender
increasing vulnerability (Lund and Srinivas, 2000). Of the 168 current
IE workers interviewed, 54% associated their businesses with
seasonality. The rainy season, summer period and winter periods were
all highlighted as times in the year when business either increased, or
33.8%
decreased, for IE workers.
Some groups of IE workers were more affected by seasonality than 66.2%
others. Businesses run by women were more likely to vary by season
than those run by men (Figure 4.2). Similarly, businesses run by
workers with limited formal education, or by people over 36 years old
were more likely to be affected by seasonal change. This is Women Men
unsurprising, given that women predominate in the older age groups
and generally have less formal schooling experience than men.

4.3 Challenges and problems in the informal economy today

Worldwide, the IE is a structural characteristic of urban economies in low and middle-income countries and a
source of innovation and jobs. However, even under relatively stable political regimes, state policy marginalises
the urban IE and problems and challenges are commonplace (Brown, 2015). This section investigates some of the
challenges and problems faced by IE workers in contemporary Hargeisa, specifically regarding decreases in
income, lack of inclusion in government policy, economic variables, inadequate infrastructure and absence of skills
and training provision.
Information on people’s ongoing challenges and problems were drawn from the conflict mapping workshop, the
168 interviews with current IE workers and 22 KI interviews.

4.3.1 Challenges in the informal economy

Of those 168 workers interviewed, 69% admitted they faced one or multiple business challenges.
Women were more likely to say they faced challenges or problems in their work than men with 78% of women
stating they had challenges in comparison with 62% of men.
Also significant was the difference between those who worked from the street and other workers, with more of
those working on the street facing challenges than those working from markets without a permanent roof or
roofed buildings (Table 4.8). Similarly, people born in Hargeisa were more likely to face challenges than those born
in wider Somaliland (Table 4.9).

Table 4.8: Challenges by business premises

Challenges in Business % street % no permanent roof % roofed building
n = 92 n = 42 n =34
Yes 77.2 42.9 38.2
No 22.8 57.1 61.8
Total 100.0 100.0 100.0

Table 4.9: Challenges by birthplace
Challenges in Business % Born in Hargeisa % Internal migrants % Born externally
n =96 n =64 n = 8
Yes 78.1 53.1 87.5
No 21.9 46.9 12.5
Total 100.0 100.0 100.0

While there are challenges in the IE in Hargeisa today, they are significantly different from those faced in other
countries where the research team has worked. For example, IE workers are frequently vulnerable to
victimisation, police harassment, evictions and confiscations (Bromley and Mackie, 2009). However, very few
involved in this study in Hargeisa had faced these challenges.

14
Out of the 168 current IE workers interviewed, only 7% had Table 4.10: Problems with local authority
experienced any sort of harassment, eviction, imprisonment, Type of Problem Count of IE Workers
theft of goods, or had been made to pay fines by municipal Harassment 1
officials (Table 4.10). Furthermore, when explicitly asked about Fines 1
“laloush” (small scale bribes), only 5% reported ever having had Confiscations 0
Eviction 1
to pay this to local authorities or others. This is extremely
Imprisonment 1
unusual in Africa and elsewhere. Theft of Goods 7
In contrast trust, mutual association and community sharing None of the Above 157
seems to be a feature of the IE in Hargeisa which creates an Total 168
enabling environment for its workers.
Trust develops in so many ways – father’s relative, mother’s relative, from the same district, cousin, by
marriage, our past, neighbourhood, the same city, shared history. It’s something that you earn. We don’t
cheat each other (most of the time)…If we see anyone attempting to threaten, we will tell them to stop
and we will punish them…To us a receipt is unusual, what is important is ‘danwidag’ - sharing the same
interest (KI1, Market trader).

4.3.2 Specific Problems

This section investigates the specific challenges and problems that the 69% of current IE workers interviewed
reported to experience in Hargeisa today. They were:
• Decrease in business
• Lack of inclusion in government policy
• Economic variables and lack of access to finance
• Lack of literacy, numeracy and business skills
• Difficulties with infrastructure and operating space

Decrease in business
Much emphasis is put on the survivalist nature of the urban IE and its importance for household resilience in times
of shocks (Jha et al., 2013). A decrease in business threatens this resilience, and poses a threat to urban livelihoods.
In this study only 16% of current workers interviewed reported a decrease in business in the last five years, while
40% claimed it had stayed the same, and 44% that business had increased. This reflects trends reported in a recent
study on informal trade networks in wider Somaliland that suggests businesses and the economy are generally
growing (Carrier and Lochery, 2013).
Of greatest significance was the difference between the genders with 27% of women experiencing a decline in
business compared with just 7% of men. The decrease in business was attributed to various factors including the
depreciation of the shilling against the dollar, inflation, price fluctuations, the saturation of certain IE sectors and
the increased competition that results. The main reason cited, however, was drought which could perhaps be
linked back to women more commonly working in businesses affected by seasons.

Lack of inclusion in government policy

Within wider Somaliland there is a lack of national legislation, policies and action plans regarding labour rights and
employment, particularly in regards to the IE which is not effectively regulated at local government level (World
Bank, 2012).
There is no programme to remove the informal sector. There is no policy or legal framework to promote
or remove the informal sector. The informal private sector is left alone. The government is not helping
but it is not hindering (KI2, Senior government official).
Several government agencies support businesses, including the Ministry of Industry, the Ministry of Finance, the
Ministry of Planning and Development and the Ministry of Labour, Employment and Social Affairs, while the
Ministry of Commerce and Investment also represents larger businesses. However, these organisations have little
contact with the urban IE. Indeed, the IE is not recognised in the Five Year National Development Plan 2012-2016.
In contexts where government regulation is weak, the urban IE tends to thrive, but it is difficult to introduce tax
systems or business registration measures. Lack of legal status and social protection can also disadvantage IE
workers, who may then be vulnerable to fluctuating policy and poor working conditions. Although generally there

15
is very little harassment of street traders and IE workers within Hargeisa, qat traders that participated in the
conflict mapping workshop recorded harassment by local government tax collectors, which has led to problems
with livelihood security in the sector.

Economic variables and lack of access to finance

For the purposes of this report economic variables are considered to be those which affect profit margins on an
informal business and include price inflation, competition, and fees, all of which were acknowledged in the
research as key problems for IE workers (Roever, 2014).
Price inflation and conflict between suppliers and IE workers over goods were cited by 17% of current IE workers
interviewed as a severe problem. Participants in the conflict mapping workshop also recorded conflict between
vegetable sellers and vegetable producers in Hargeisa, as price fluctuation caused profit differences that damaged
business resilience and household income and also increased competition over customers amongst vegetable
sellers themselves.
The current IE workers interviewed also admitted struggling with competition and fees. Competition over
customers and saturation of the market by the same type of IE businesses affected 29% of current IE workers
interviewed. The payment of fees to the municipality for the use of public space and amenities was usual (96% of
current IE workers regularly paid fees), and highlighted as an expense which damaged already low business profit
margins.
Lack of access to finance including savings, credit and insurance is also a problem in Hargeisa.
Petty trade comes and goes, the problem is that it is not sustained. They have no financial assistance, only
support from the family, it’s a survival economy (KI12, NGO worker).
There are major challenges; access to finance and expensive energy are the top challenges (KI7, Senior
government official).
In the absence of formal finance or credit provision, remittances and informal cash transfers influence the ability
of IE workers to start and maintain livelihoods ventures, particularly in times of economic shocks (Bradbury, 2008).
However, while remittances have been extremely important in rebuilding the Somaliland economy and constitute
around 40% of average household incomes in Hargeisa, very few current IE workers interviewed received
remittances. Indeed, only 4% of the 168 current IE workers interviewed confessed to receiving cash transfers,
questioning the availability of remittances for low-income groups and emphasising the need for better access to
finance for the urban IE.

Lack of literacy and business skills

IE workers, particularly street traders and women, generally have less formal education than other groups. A
government representative highlighted the lack of business skills within the IE in Hargeisa and the effect this has
on the ability of urban IE workers to sustain their livelihoods.
[There is] no skilled manpower, small enterprises do not have the skills in marketing, [they] have
entrepreneurship but no planning. They will open a shop, and get benefits for a short period of time. [They]
don’t have the capacity to break the frontiers. We need a paradigm shift to strengthen the whole Private
Sector (KI7, Senior government advisor).
Women seem particularly vulnerable and struggle to improve their businesses to provide effective livelihoods.
[Women] are very wise people, even if not literate, but their businesses don’t grow because they can’t
read and write (KI9, NGO worker).
[Women] have no experience in business planning. When I first started I went to a shop and bought some
clothes, and found I had bought the most expensive ones. I didn’t know to shop around… [Women
struggle] in paying back a loan, the family are eating the capital she has, it’s a problem. Some understand
they need to pay back a loan but others don’t… [There is also] lack of skills. When starting a business, they
do not do an assessment. When they travel abroad to buy they don’t include the cost of travel or hotels.
Somaliland education is general, but it should focus on technical skills (KI15, IE worker and women-to-
women loan beneficiary).

16
Difficulties with infrastructure and operating space
As demonstrated in Section 3.3.1 most current IE workers interviewed run businesses from the street and the lack
of infrastructure, amenities or property rights, as well as inappropriate operating spaces were all cited as
challenges to IE workers in Hargeisa. There is ambivalence within local government, which recognises that certain
IE workers need to be in the street while acknowledging the congestion this brings.
The government is very relaxed about the informal economy. We are not applying the letter of the law,
despite the crowded city. The problem can be prevented. The Municipality is building markets, but this
[the street] is their territory and the only place they can find customers…We talk about good governance,
but there is a lack of good workspace and the informal economy is crowded and abusing the city, it’s
difficult to regulate (KI5, Senior government official).
Participants in the conflict-mapping workshop highlighted the safety concerns that congestion brings with the
absence of operating spaces and services in areas such as bus stations causing great conflict between street
traders, transport workers and local people. Even when trading is permitted, as in markets, the space provided
often fails to meet the needs of workers, either because of the location or the absence of amenities and services
such as shelter, water, energy, storage and waste provision.
Despite the lack of adequate business space, physical safety while conducting business in Hargeisa did not seem
to be an issue for the vast majority of current IE workers interviewed, with 98% feeling “very safe” in their business
environments. Women felt slightly less safe than men with only 92% feeling business areas were “very safe” for
women and some reports of theft and sexual assault. This corresponds with key informant interviews with local
NGO workers:
Violence against women on the street and in the home is high…. There are security problems, and women
coming home late from work sometimes get raped. We are now asking for safer cities and street lights.
The government knows that rape is an issue…There is now a law proposed by the Minister of Labour and
Social Affairs which says that any issue has to be solved in the courts (KI10, NGO worker).
Although IE workers reported feeling broadly safe, which is different from many other major cities, there are
obviously some underlying problems. Women do seem to be slightly more vulnerable in the business environment,
and more needs done to ensure business environments are adequate for all IE workers.

4.4 Potential protections from problems and challenges

Local government and other urban actors have an important role in ensuring legitimacy for the IE by providing
support, combatting corruption and expanding participation in the post-conflict setting (Roberts, 2011). Of
particular importance is their ability to facilitate the inclusion of groups who may feel marginalised (Ernstson et
al., 2010). This section explores possible protections to the contemporary challenges for IE workers in Hargeisa.
Several possible protections were investigated using data from interviews with current IE workers and key
informants as well as from the conflict mapping workshop. Through this process, four key protections were
identified that could dilute the challenges faced by IE workers in Hargeisa:
• Policy Inclusion
• Support for associations
• Increased literacy and business training
• Improved infrastructure and operating spaces

4.4.1 Policy inclusion

Senior officials from both central and local government contacted for this research recognised that it is necessary
to begin genuinely supporting and empowering IE workers to overcome challenges in their businesses, by
regulating and legislating for the urban IE. As one government minister explains in the quotes below:
This country has seen a tremendous recovery [and] we can see tangible progress. The private sector is
leading the machinery, but we also need to see business improvement, capacity building, and a legal
framework (as we cannot get help from the IMF or World Bank) (KI5, Senior government official).
We have weak institutions…peace without development has its own issues. Now we need strong
government institutions and new strategies (KI12, NGO worker).

17
Recognition of the IE in wider employment strategies and the National Development Plan would raise the profile
of the IE on the governmental agenda. However, legislative support at various levels is needed in order for the
most vulnerable IE workers to be protected. For qat traders who participated in the workshop, for instance, the
priority is regulation of designated trading spaces and working hours so they could trade without harassment from
government or anti-qat lobby groups.

4.4.2 Support for associations

Associations, trade unions and co-operatives are well known approaches used by IE workers to enhance their
livelihood prospects (Bonner and Spooner, 2011). There is a recognition amongst the Somaliland government that
greater organisation and representation of IE workers is needed, particularly if the IE is to be included in the
National Development Plan.
Development starts from a point and this is what drives the country forward. In our country, it’s the vision
and the power of the private sector which drives us forward. The government wants to bring a bottom up
approach. The IE grows into larger enterprises, if there is no IE there will be no economy. So, it’s extremely
important that the IE is empowered (KI22, Senior government official).
Savings and credit associations, self-helps groups and co-operatives can also be important sources of savings and
credit. Indeed, increased support for associations was highlighted in the conflict mapping workshop by vegetable
sellers who were vulnerable to inflation and increased pricing from suppliers. Weak and ineffective as lone traders,
association was cited as a key way to strengthen their position against more formalised agricultural farms and
suppliers. In Hargeisa, there are some NGOs that have been working with groups, particularly women, to associate,
organise and accumulate capital together which alleviates to some degree, the economic variables of business
and the lack of access to credit of IE workers.
[We] encourage the formation of groups of 5 women, to set up credit unions. Around 15 groups have
come together. There is a tailoring business that is [formed from] a cooperative of savings groups (KI10,
NGO worker).
[They] agree minimum savings each week – 1,000 shillings, or 6,000 shillings, or $5. They make small loans
for up to 3 months – it might be $500, and they repay $10 a week. They charge a ‘service charge’ of 10%
or 5% - this is investment which is returned to the group (KI14, NGO worker).
While the positive effects of savings and credit associations are widely recognised by both NGOs and local
government, and there is demand amongst IE workers for them, there is a complete lack of evidence of the
numbers of associations or cooperatives in Hargeisa.
The informal sector is the main employer. The main problem is that the informal sector is not organised.
This is a major problem – we need to organise them – cooperatives and associations. However, they are
conspicuous by their absence – you don’t see them…we have no legislation for co-ops, so we can’t regulate
them. In Hargeisa, we might have 6,000-7,000 businesses but only a handful of associations. NGOs help
some sectors, but we don’t. [There is] no micro-policy or micro-programme to develop or support
associations from government (KI2, Senior government official)
This lack of association is corroborated by interviews with current IE workers. Of the 168 workers, only 7% were
part of a trade union or informal association highlighting the potential for increased association to encourage
collective voice.

4.4.3 Increased literacy/numeracy and business training

The encouragement of associations, cooperatives and other business strategies can only happen if there is
increased access to business training and skills resources among IE workers. As one IE worker who was part of the
KI interview process states:
We need guidance, establishing cooperatives and associations, certified by the Ministry of Planning. In our
three associations, we have 513 women registered. We are willing to merge with other associations to get
heard. The meat traders tried to set up an association but it failed, they rented an office but could not pay
the rent. We tried twice but had no resources so it failed, but I think now we will try again. If you are small
you have no resources, if you are larger you have more resources. We need guidance on how to set up an
association (KI22, Female IE worker, Meat seller).

18
There are some positive signs from local government in regard to funding business training for IE workers as a key
government official explains below. However, access to such schemes is dependent on registration which is not
available to all IE workers.
The WB has helped us set up the Somaliland Business Fund, and we are trying to attract SMEs.
Providing training, small grants, microfinance and we are making grants of $10,000-50,000. The
launch is tomorrow. 100 people have so far expressed an interest. The condition is that you must
have been registered for at least a year (KI5, Senior government official).
There is also acknowledgment from NGO workers that have been providing business training to IE workers that
schemes are difficult to fund and to deliver.
In the urban [context] we focus on financial training… [but] financial training is difficult ….When we
get donor support we give training for free (KI9, NGO worker).
Even when funding is received by NGOs and training can be delivered, there are not enough resources to reach
some of the IE workers who need it most. Out of the 168 IE workers interviewed operating in Hargeisa, not one
had regularly engaged with an NGO, demonstrating the need for an increase in access to business training.

4.4.4 Improved infrastructure and operating spaces

Despite the daily taxes levied by local government taxing on some informal business there is still a great need to
improve infrastructure and operating space for the IE. Improved infrastructure and services at bus stands were
highlighted by workshop participants as key to protecting street traders from conflict with other IE workers in the
transport industry. Busy bus terminals and stops are often important locations for street traders to operate,
because of the flow of pedestrians they generate. Improved infrastructure would not just protect vulnerable
members of the IE and increase resilience but would encourage business growth and development as one
government official explains below:
Its development of the bottom strata of society that’s important. For example, they need microfinance
and very basic facilities. [Small businesses] can grow if you give them shelter, for example (KI5, Senior
government official).

19
1

4.5 Key findings

In most cities in sub-Saharan Africa, urban policy marginalises the urban IE and IE workers are often
victimised and harassed (Lyons et al., 2012). This is not the case in Hargeisa, where IE workers interviewed
reported very low levels of police harassment, with less than 7% of the 168 current IE workers interviewed
stating they had experienced problems with local authority. Furthermore, there are high levels of trust
and reciprocation amongst IE workers and in society generally, and a lack of effective municipal regulation
which enables and encourages the growth of the IE.
Women in Hargeisa play a key role in the IE. Although they only formed 44% of the current IE worker
sample, evidence from other reports suggests they are in the majority. That said, this study suggests that
women are amongst the most vulnerable of workers, with a higher percentage of women interviewed
who: were in older age groups; had less formal schooling and were in low-income categories, than their
male counterparts. Policies and programmes targeted at support for women workers with limited formal
education would therefore address some of the needs of vulnerable women workers.
While generally there is a positive environment for the IE workers, 69% of current IE workers admitted
facing challenges. The main challenges were:
Lack of literacy, numeracy and business skills: Only 38% of IE workers are educated beyond primary
school and lack of literacy and business knowledge means that there is a lack of capacity for business
growth.
Difficulties with infrastructure and operating spaces: 55% of IE workers interviewed operated from the
street without any designated trading space, or amenities such as water, electricity and waste
management provision. This not only causes conflict between traders and other users of public space,
but causes congestion in the city which causes health and safety concerns. Even when market spaces are
provided by the municipality, they are often underused as they are inappropriately located or inadequate
to meet the needs of IE workers. However, working environments are generally safe, although less so for
women.
Business decrease: 15% of current IE workers had suffered a decrease in business over the last 5 years
threatening household resilience and urban livelihoods, mainly because of increased competition.
Lack of inclusion in government policy: There is a lack recognition of the role of IE work in providing
livelihoods for many households in Hargeisa. The IE remains unrecognised in Somaliland’s National
Development Plan, and there is no enabling regulatory framework. While this means that harassment
levels are low and businesses can generally survive, there is also an absence of protection for IE workers.
Economic variables and lack of access to finance: The lack of access to finance and credit, and the fact
that only 4% of IE workers receive informal cash transfers from family, means that it is hard for IE workers
to start and maintain livelihoods ventures, particularly in times of economic shock.

Within the IE there are vulnerable groups emerging who are more affected than others by the
challenges above. Women, tend to be older, and have less formal education than their male
counterparts operating in the sector, which impacts on their livelihoods. Indeed, 27% of female current
IE workers have experienced a decline in business over the last 5 years compared with just 7% of men.
People born in Hargeisa also have lower education levels, and tend to be older, and are another
vulnerable group in the contemporary IE. Out of the 168 current IE workers, 78% of those born in
Hargeisa faced challenges compared with just 53% of internal migrants from wider Somaliland or
Somalia.

These vulnerable groups tend to be involved in more precarious sectors such as low-income businesses,
businesses that are affected by seasonality and businesses that are run from the street with no access
to services. They also tend to work alone which increases vulnerability.

20
2

While 54% of current IE businesses are affected by seasonality, signalling a high number of vulnerable

businesses in the IE generally, women are more affected than men, with 66% of women workers affected
by seasonality compared with just 34% of men. Similarly, more current IE workers who were born in
Hargeisa (67%) run businesses from the street compared with internal migrants (39%). Both women and
people born in Hargeisa are also more likely to run low-income businesses compared to other IE workers.
The report has identified several key protections that could alleviate the challenges and problems in the
contemporary IE in Hargeisa:
• Policy inclusion to genuinely support and empower IE workers and their businesses. Small-scale enabling
actions could begin to aid IE workers overcome some of the challenges above.
• Support for associations: Enabling workers to organise into associations, trades unions or co-operatives
can be important in providing a platform for IE workers to articulate and negotiate their needs, establish
rights, and address conflicts in the urban context. Savings and credit associations and financial co-
operatives can be important sources of savings and credit. Currently only 7% of IE workers interviewed
were part of a trade union or informal association, and there is no co-operative legislation in the country.
• Increased literacy and business training: Increased literacy and business training could address some of
the difficulties of lack of formal education faced by some members of the IE. A focus on women would
help the most vulnerable groups. However, training sessions should be affordable and timed so that
people can combine training with income earning. Some training is provided by NGOs, but none of the
current IE workers interviewed had engaged with NGOs, and increased training opportunities are needed.
• Improved infrastructure and operating spaces: Despite over 90% of current IE workers paying daily fees
to the municipality, there is virtually no infrastructure or provision for IE businesses, and trading space
can be inadequate, congested and dangerous. Better operating spaces would not only protect IE workers
and increase resilience but would encourage business growth and development.
While these measures could provide protection and support for IE businesses, the presence of vulnerable
groups and businesses call for focussed interventions beyond the broader ones aimed at the entire sector.

21
Self-help, trust and enterprise are the

backbone of Hargeisa’s economy

22
5. The informal economy in conflict
Civil war has numerous impacts on the urban IE but this sector has huge
potential to contribute to ongoing development outcomes in Hargeisa.
5.1 Introduction
This chapter will summarise the general effects of conflict in Hargeisa before investigating the short-term and
long-term impacts of conflict on the urban IE. It will analyse the way in which the IE responded and the effect on
development outcomes within Hargeisa. The findings incorporate qualitative data from interviews with 47
conflict-affected people (CAP) from two sources: a) 29 interviewees from the survey of 168 current IE workers
who had experienced the conflict, and b) 18 previous IE workers who had been working during the conflict. These
findings were combined with qualitative data from the KI interviews (KI).

5.2 General effects of conflict

Cities are often the arena for a range of global conflicts which all have devastating effects politically, socially and
economically on their residents (Beall et al., 2011). Of the 47 CAP interviewed, 39 were in Hargeisa during the
conflict, and 43 were affected directly by the conflict

5.2.1 Effects on families

Figure 5.1: Effects of conflict on families
The 43 CAP interviewed who had been directly affected by
conflict summarised the main effects on their family unit
(Figure 5.2). The majority defined loss of family and friends, Loss of
displacement and loss of livelihood as the most damaging Family and
impact of the conflict. Friends

5.2.2 Effects on women Loss of

Ill Health
Livelihood
Female experience of conflict is often complex and while or Injury Effects
women face victimisation and insecurity they are also active of
agents in resistance and conflict (Denov, 2007). This study Conflict
explicitly sought to explore impact on women in Hargeisa.
Women were active in supporting the resistance and one Imprisonment
interviewee had acted as a courier from Djibouti to fighters Displacement
in Hargeisa. However, the study also found that women
faced particular problems during the conflict, with 24 of the
47 CAP claiming that women were particularly affected by conflict. Displacement and loss of family (particularly
husbands and children) were both highlighted, but three effects were uniquely felt by women alone: gender-based
violence; the need to become the household breadwinner; and a change of role in peace-building and political
processes.

Gender-based violence
The literature suggests that gender-based sexual violence is a common by-product and strategy of conflict and it
often continues in the post-conflict environment (Nordås, 2013). In Hargeisa, 16 of the 24 CAP interviewed who
claimed that women were particular victims of conflict, noted sexual abuse, rape and harassment during conflict
as female experiences. One KI claimed that the habits of war persisted even after the peace. Her car was hijacked
by the militia and the roof cut out for patrols.

Women become breadwinners

Conflict sometimes has the effect of changing women’s role within the household. As the literature suggests
women often become heads of household over the course of war (Mallett and Slater, 2012). Even where women
are usually excluded from paid work because of traditional gender roles, in conflict situations where household
survival is precarious, female participation in labour markets is mandatory (Beall and Schutte, 2006).

23
It is beyond the scope of this research to investigate how many women in Hargeisa entered the informal economy
before and during the war, becoming the household’s main breadwinner. However, case studies from the female
CAP and KIs can be used to formulate an idea of the livelihood trajectory before, during, and after outright conflict
for women in Hargeisa.
I worked in Somaliland before and after the war. I walked to Ethiopia during the crisis and lived in a refugee
camp. There we had to collect water and wood, Somaliland men were the fighters. In the camps, we had
to start some sort of business. Some could travel and brought dried meat and ghee from Djibouti, then
they brought hard currency into Somaliland….Women were the breadwinners (KI11, Senior government
official) .
Researchers have found that women’s entry into the workforce, tends to be sustained in the post-conflict period,
and the can lead to empowerment for women and economic opportunities for them (Sørensen, 1998). This has
certainly been the case in Hargeisa.
Women are still heavily involved in feeding families and the number is increasing by the day. There are
critical problems of population growth and high unemployment. There are more women in the IE than
men. Somaliland women can make their own decisions. They can travel, own property, even though we
are a conservative Muslim nation. Women are becoming big business owners now, the main hotel in Burao
is owned by a woman. Some women are involved in clothes imports from China (KI12, NGO worker).
While conflict undoubtedly provides opportunities for women to enter the job market, the increased opportunity
and empowerment of women does not always translate fully into social or political rights in the post-conflict
period and these are often neglected by local government (Herbert, 2014). While female social capital increased
in Hargeisa due to women’s participation in the labour market, the reversal in traditional gender roles over the
period of conflict has caused tension within society and impacted marriages.
Since the civil war women have lost their traditional roles, because women normally feed the family...In
many towns, women are the breadwinners and manage the resources…Psychologically this undermines
men, the socio-economic norm is reversing (KI10, NGO worker).
If he is not educated he says, “a lady should stay home, what are you doing away?” Even if he is
undereducated and unemployed he still insists on his wife staying at home…There is also a new trend of
young men, able, educated but can’t find a job. He blames the government, but the kids need food. Women
have to go out, [it’s] not a matter of choice. But the husband is used to getting food and qat and he is
happy to be unemployed. [He] may even take another wife (KI15, NGO worker).

Role in peace-building and political processes

According to the literature, women often play a central role in informal reconciliation, by reviving local economies
and rebuilding social networks (Sørensen, 1998). In Hargeisa women played a central role in the peace process as
one KI articulates:
After the war [women] came together and said, “we have to have peace”, so we went around the
country…The peace was created under the trees in different regions. If one did not agree, his wife made
him, because the peace is ours (KI11, Senior government official).
While women were key in informal peacebuilding discussions and in convincing sons and husbands to lay down
arms, today they face barriers to political participation and are not fully integrated in national decision making. In
Hargeisa, the clan structure, dominated by male elders, does not allow for female representation on an equal
platform to men. There is an ongoing campaign by women’s representatives, and discussions with government to
ensure female quotas in parliament, but this has not yet been agreed.
We have been campaigning for a women’s quota in Parliament for the last 5 years. When the current
president came to power, he said he would include a quota of 25% in government would be women.
However, parliament said it’s unconstitutional and everyone should have an equal chance of being elected
[but] there is a lack of women’s political representation in Somaliland. There are 82 seats and only 1
woman (for Sanaag). [In the] House of Elders there was one woman, but she resigned due to family
pressure. The problem was that she married outside her clan, she takes the husband’s clan, so people feel
she does not represent her clan (KI9, NGO worker).
Certain NGOs have been trying to change this through consultation between women and clan elders, campaigning
for money to support female candidates, and by attempting to solve an apparent disconnect between female
elites and grassroots female voters.
24
5.2.3 Effects to the supply of goods and services
Figure 5.2: Disrupted goods and services
Much of the literature on conflict surrounds the devastation to physical
infrastructure and the disruption to the supply of goods and services this
creates, impacting on the assets and livelihoods or the urban poor
(Luckham et al., 2001). CAP were asked during the interview to describe
the changes in supply of goods and services in Hargeisa during the conflict.
Their answers were analysed through NVivo, which allows a ‘word cloud’
showing word frequency in response to questions. This provides a useful
visual representation of words frequently mentioned in response to
specific answers.
In response to the question about change in the supply of goods and
services during the conflict, the word cloud suggests that water, food, and
electricity supplies, as well as security, transportation services and access
to health services were all affected by conflict in Hargeisa (Figure 5.2).

5.3 Effects of conflict on the informal economy

As the literature suggests, during conflict, economic turmoil leads to high inflation, loss of formal work and civil
unrest. Initially, livelihoods are more constrained as vulnerability is heightened and job opportunities reduced
(Farrington, 2015). However, as the conflict develops and certainly in the post-conflict environment, there is
generally a large increase in the urban IE, as it expands to provide livelihood opportunities to vulnerable people
(Beall and Schutte, 2006). This section looks at the impact of conflict on the urban IE as well as the way livelihoods
responded in post-conflict settings. It then analyses whether the urban IE in Hargeisa can contribute to broader
economic growth and violence reduction. This section uses data from the interviews with CAP, KIs and current IE
workers from Hargeisa.

5.3.1 Short term effects

The immediate impact of conflict is often total collapse of urban infrastructure and livelihoods are often destroyed
(Farrington, 2015). Out of 47 CAP interviewed 41 saw their IE businesses destroyed as a result of conflict in
Hargeisa. These interviews, as well as interviews with KIs provided some reasons for this business collapse and
each is summarised below.
Displacement was a major effect of conflict on the IE; businesses were abandoned as people fled from Hargeisa;
and businesses failed because of the dwindling customer base within the city itself.
During the fighting, I lost $407,000 in 1988 as a result of bombing and looting. I ran and was running for
20 days…There were 4 planes doing the bombing…People fled to Ethiopia, Djibouti, Jeddah (KI1, IE market
trader).
I lost all my customers at the beginning of the war, because all the people left…It caused me to go bankrupt
and I lost all my business (CAP, Male vegetable seller).
The lack of security and transportation services during the conflict also destroyed business with looting of goods
and operating spaces common place and goods hard to acquire due to the mined roads.
Everything was destroyed…During the conflict, revolutionary soldiers looted everything, goods from
businesses, pipes, electric cables…Transport was a problem as all the roads were mined, there were no
taxis (KI1, IE market trader).
The physical infrastructural impacts of war affected the IE and even in the post-conflict period, there was a lack of
adequate operating spaces and services following the warfare.
We left for Pakistan during the war, but we came back after. There was no electricity or running water…The
whole city had been destroyed. There were refugee returnees, little money and no business. People were
still leaving for the EU and the US (KI12, NGO worker).

5.3.2 Medium term effects

Generally, as conflict continues, the IE performs a vital labour absorbing function through its ability to provide
poor citizens with employment opportunities despite of, or because of, crisis (Vaillant et al., 2014). These

25
livelihood strategies are driven by blended motives of coping and survival, adaptation and accumulation
(Farrington, 2015). Here, the focus is on different types of informal economies present in Hargeisa during the
conflict:
• Conflict economies
• Replacement economies
• Refugee economies

Conflict economies
Some writers have discussed the emergence of ‘war economies’, which are inherently informal and linked to the
markets that assimilate with armed violence of war (Taylor, 2014). These violent economies, which include the
sale of and use of arms and opportunistic looting are attempts to provide alternative sources of income and
accumulate assets in the midst of chaos (Davis, 2012). The looting of business in Hargeisa has been demonstrated
in the previous section, but some male CAP interviewees also left their IE jobs to become soldiers during the
conflict.
Before the conflict I was a truck driver and I was travelling to Djibouti bringing home goods. During the
conflict, I couldn’t do this and I became a warrior against the Somali government. Immediately after [the]
war I become a truck driver which delivered water to Hargeisa (CAP, Male truck driver).
This not only demonstrates the presence of a conflict economy but also how Hargeisans adapted and diversified
their livelihoods to cope with the loss of IE businesses in the city itself. In the absence of former work, the fighting
presented a range of marginal informal work which became viable livelihood alternatives for conflict-affected city
dwellers.

Replacement economies
In Hargeisa, the IE became vital in replacing services and utilities destroyed by the war within Hargeisa city which
both provided livelihood opportunities for the conflict-affected urban population and replaced key goods and
services which had been disrupted by the conflict.
The 47 CAP were asked if any informal replacement services emerged over Figure 5.3: Replacement goods and services
the period of conflict, to replace the disrupted provision of goods. The
quote above demonstrates how, after water supplies were damaged
during conflict, people found ways to bring water to the city. This self-
help approach was replicated across Hargeisa. Figure 5.3 represents a
‘word cloud’ from responses to the question about whether replacement
services emerged during or after the conflict. It suggests that the main
priorities were food, water, electricity and transformation and that an
informal and sharing economy emerged to help people and refugees.

Refugee economies
As demonstrated in the earlier section, migration was a key strategy in
avoiding conflict and protecting livelihood sources after conflict, and
many people who had fled Hargeisa ended up in refugee camps in Ethiopia, based near Dire Dawa. Refugee camps
often provide ways for the displaced to combat unemployment as they adapt and acclimatise livelihoods to the
new setting (Abdelnour et al., 2008). Several KIs reported the ingenuity of those who fled Hargeisa, often women
and children who walked by night to Ethiopia and who found sources of income when they reached the refugee
camps. One CAP still living in Hargeisa travelled around Ethiopia “bringing flour, sugar and oil to the refugee
camps” while another made “biscuits and sandwiches to sell to the refugee people in the camps”.
Before the war there was not that much involvement [from women in the IE]. It started in the refugee
camps when women started to manage the rations. They used the refugee portions to make money –
improved the taste, and sold to the nomads. The nomads also became dependent on refugee hand-outs
(KI12, NGO worker).

26
5.3.3 Long-term effects

Increase in urban IE
In the period when initial trauma of conflict has subsided and international aid may have left, economic recovery
and development can begin and the IE tends to grow exponentially. It is key in providing jobs to the surviving and
returning urban population, as well as economic migrants looking for opportunities in the post-conflict context
(Beall and Schutte, 2006). In Hargeisa, established IE workers reported large increases in the IE over the period of
conflict. This can be attributed to the ease and speed with which businesses and operating spaces can be set-up
and run, particularly as government functions took a while to be re-established after the conflict.
It existed but was a quarter the size, and had no government support. It stared to increase in 2003-2004.
There were other markets like Waheen and Gobanimo which started under a fig tree in 1991. These were
needed due to the expansion of the city. It was not legal, but people needed Gobanimo so it got sanctioned
(KI1, IE market trader).
Here they don’t harass them [IE workers] because people know there is no employment (KI5, Senior
government official).
The growth of the urban IE can also be attributed to the Table 5.1: Origin of goods
increase in cross-border trade following conflict, Country of origin % of IE workers who sell
something that continues today. Of the 168 current IE goods
workers interviewed only 31% sold goods from Hargeisa Hargeisa 31
with other areas including Dubai, Ethiopia, Thailand and Wider Somaliland 39
Dubai 22
China which suggests extensive cross-border supply chains
Ethiopia 20
(Table 5.1). Other External 21

Sectoral change within urban IE

While the urban IE generally increases during and after periods of conflict, there are businesses within it that
change more than others. Furthermore, the growth of these separate sectors can have different implications for
development (Mallett and Slater, 2012). The CAP interviewed reported a number of different sectors that had
been subject to significant change during and after conflict including the transport, fuel and water sectors. There
were two sectors, however, that appeared to have grown most significantly in the deregulated conflict-affected
environment: qat and charcoal. While these industries have provided livelihoods for the urban poor and
contributed to the growth of the urban IE in Hargeisa, each has its own wider development implications.
The deregulation of qat over the period of conflict allowed for its development as a large import commodity with
Hargeisa (Hansen, 2010). The qat industry is a major employer, particularly of women and is estimated to employ
some 20,000 people (KI7, Senior Government Advisor). However, there are issues with qat from a developmental
viewpoint and it has been condemned for lowering human productivity, draining household income and increasing
domestic abuse (Hansen, 2009). KIs reported the impact that qat has on family relationships and household
income:
A man wakes up at 11:00am, eats lunch, gets high and begins fighting with his family, leading to domestic
violence. Women are overburdened, we look after the babies, we are a wife and mother, a breadwinner,
and [also] serve our communities (KI15, NGO worker).
Furthermore, there is no restriction on the amount of qat entering the country and although it does provide an
income for government there is relatively little tax on it, resulting in millions of dollars leaving Somaliland. While
these problems have resulted in many people in Hargeisa calling for a ban or greater regulation of qat, the volume
of IE workers in the sector creates issues of alternative employment provision.
There is a huge flight of hard currency to Ethiopia - $420m and only $21m is received in revenue [through
the sale of qat]. [Qat] affects labour productivity and mental health. However, there are about 20,000
people employed in Qat, mostly women. And we cannot simply stop it. The pattern of consumption needs
to be changed, for example, qat could be sold for a shorter period, and its 1-3pm in Djibouti, [as] the
problem is chewing in the morning. [We also need to change] the tax, raise awareness [of its harmful
effects] and create alternative employment for sellers who have no alternative (KI7, Senior government
advisor).
Other sources suggest that the estimated revenue might be even higher, for example that expenditure on qat
imported from Ethiopia is $524m a year – about 30% of GDP (Jeffrey 2015).
27
Another sector that opened up in the period was the charcoal industry. Women commonly trade non-food items
such as firewood and charcoal which is an important sector in Hargeisa (UNDP, 2014). While it provides
employment to many vulnerable people, the charcoal industry also overexploits limited natural resources around
Hargeisa and there are major concerns about deforestation in the sparse semi-arid environment, resulting in many
calling for greater regulation:
We have to discourage charcoal use, and stop the cutting of trees (KI16, Senior government official).

5.4 Contribution of the informal economy to development

This section focuses on the contribution that the urban IE has had, and can continue to have, on development
outcomes in the city of Hargeisa.

5.4.1 Economic growth

The importance of economic growth in conflict dissipation in post-conflict settings is continuously highlighted
(Collier and Hoeffler, 2004, Fearon and Laitin, 2003). If combined with higher post conflict incomes for urban
populations, economic growth can significantly reduce the risk of further war (Collier, 2008). However, there has
been conflicting opinions on whether small informal businesses can contribute effectively to economic growth in
the post-conflict setting (Adam, 2008, Kremer et al., 2010).
In Hargeisa, the IE has enabled individual households to build resilience and survive in the conflict-affected city,
however, KI reports of small businesses accumulating capital and creating jobs for others signals the ability of the
IE to contribute to wider economic growth beyond the household.
Trade is dominated by small traders, shopkeepers and street traders as you will see. There are no Tesco’s,
M&Ss, no chains, only very small shops. There are some big business people, people who started with a
couple of items, but now straddle the formal and informal sector (KI2, Senior government official).
One of the biggest fuel sellers started selling a tin of fuel. Now he is a millionaire (KI18, NGO worker).
While there is ability for the IE to contribute to economic growth, the accumulation of capital and promotion of
employment opportunity is not reflective of every IE business as demonstrated in Chapter 4. Out of 168 current
IE workers in Hargeisa, almost 50% work alone. The opportunities for growth and the ability of the IE to contribute
effectively to GDP and other development indicators are questioned further by KIs.
As long as they can provide food and send their children to school it’s enough for them, but they need to
grow. The big question for Somaliland is how long will we remain like this? Where are the opportunities
to grow? (KI12, NGO worker).
A key problem is that the IE is not documented – much of it is underground. The national GDP is estimated
at $1.6bn – we think it could be more (KI4, Senior government official).
Furthermore, as demonstrated earlier in the chapter, there are problematic development issues related to some
sectors within the IE. While the qat and charcoal industry, for instance, are an important source of jobs and
livelihoods, the growth of these sectors are not desirable long-term and raise questions about when and how
government and other local actors intervene.
Regardless of the problematic areas of the IE, its scale, (it is the largest provider of urban jobs in Hargeisa) and its
ability to contribute to development means that it should be a primary focus for economic and social planning,
and not ambivalently tolerated (UN-HABITAT, 2008). Governmental regulation to support and enhance the urban
IE, in accordance with the findings in Chapter 5 must be strengthened. Furthermore, emphasis on the quality of
economic growth rather than the rate will ensure sustainable poverty-reduction by generating sufficient
employment and even distribution of resources for vulnerable workers in the IE (CPAN, 2013).

5.4.2 Conflict prevention

It is not merely negative or uneven economic growth which risks development but the continuation of violent
conflict and the link between employment generation and conflict reduction is well established in development
policies (Collier and Hoeffler, 2004).
In Hargeisa, the role of the IE during and after conflict has been vital to conflict prevention and peace-building. As
demonstrated earlier in the chapter, the IE provided jobs in the cities and refugee camps for many vulnerable
groups, albeit not always in desirable sectors, which stopped engagement with direct conflict. It replaced services
28
that were disrupted, such as water electricity, and food which ensured initial stability. The replacement of services,
infrastructure and goods through informal activity carried on during the post-conflict phase.
There was no electricity or running water [after conflict]. We used oil lamps, but within a year everything
had changed – we got water and electricity. It was all the private sector. The transformation has been the
result of the business community, it was all local initiative (KI12, NGO worker).
Over the course of the conflict the IE also contributed to changing gender norms, which created opportunity for
women to work. The ability to provide vulnerable groups such as women and those with limited formal education
with jobs has been beneficial for the maintenance of peace and gradual development of the country. Indeed, the
IE is key to ensuring the most vulnerable do not become targets for extremism, as KI interviews reveal:
Business in general is pro-peace. There is no business small or large who will like conflict. Normally people
with no economic stake are involved in conflict. Business people are champions of peace and resist conflict
(KI2, Senior government official).
When there are no prospects for you, you are attracted by extremists; you need to target the bottom of
society. The IE has to become a major component of development. We need to develop a national policy
– the IE contributes to peace building, contributes to the younger generation and contributes to the
national economy (KI5, Senior government official).
It is not just employment generation but the way in which the IE is run in Hargeisa that enables and encourages
peace. Trust, mutual association and community sharing, closely linked to the IE, creates reciprocation and also
prevents the outbreak of further conflict.
All the informal owners show their interest to keep peace, so there is trust, it’s not like Karachi! If we see
anyone attempting to threaten, we will tell them to stop and that we will punish them (KI1, Market trader).
Of course, there are negative aspects to the IE in peace and in conflict, and undesirable economies such as conflict
economies built on looting, and the qat industry, both of which pose severe development questions for
Somaliland. However, the importance of the IE to post-conflict resolution cannot be underestimated. As a result,
it is vitally important that the IE is properly regulated, and IE workers, particularly vulnerable groups, supported
both by central and local government and other urban actors. If not, there is the risk of disenfranchisement and
marginalisation which can encourage conflict, as witnessed at the outset of the Arab Spring.

29
1

5.5 Key findings

The effects of conflict are felt at all levels of society. In Hargeisa, conflict effects included loss of
family and friends, loss of livelihoods, displacement, imprisonment and ill-health and injury. Massive
damage was inflicted on the city during the civil war, and goods and services such as water, food,
electricity and transport were all disrupted.
Women are particularly vulnerable in conflict-affected situations and may have experienced unique
effects of gender-based violence and the reversal of gender roles which sees women become
household breadwinners and engaged in informal political processes. In post-conflict Hargeisa, the
opportunities for women in the job market following the destruction of traditional gender roles has
been maintained. However, the role in informal peace-building discussions after conflict has not
transferred to political influence in the post-conflict sphere.
Conflict has had numerous short-term, medium-term and long-term impacts on the urban IE in
Hargeisa:
• The short-term effect of the conflict was the total destruction of livelihoods and 41 out of 47
CAP had witnessed the destruction of their businesses during conflict. Displacement decimated
the customer base in the city and IE workers fled leaving their businesses behind. Lack of
security encouraged the looting of businesses and the disruption to transportation services
posed practical challenges for the supply of goods. The destruction of physical infrastructure
due to the bombing decreased the availability of safe and adequate business spaces.

• In the medium-term the IE responded positively, performing a vital source of livelihoods to

people from Hargeisa – those who fled to neighbouring countries, fought in the war, or stayed
in the city. Conflict economies erupted as men took up arms to fight in the conflict while others
looted businesses accumulating assets in the chaos. More positively, replacement economies
also emerged which substituted services, utilities and goods destroyed during conflict. Finally,
refugee economies, providing vulnerable people, mainly women, opportunities for income
generation, also developed.
• In the longer-term, the IE increased dramatically as weakened controls enabled the speedy
establishment and operation of new businesses. Specific sectors were particularly successful
and grew more than others and this period witnessed the burgeoning of the qat and charcoal
industries. Though both sectors are major IE employers in Hargeisa today, they pose severe
development issues. Qat, has been condemned for lowering human productivity, draining
household income and increasing the incidence of domestic violence and mental health
problems. Meanwhile, the charcoal industry leads to deforestation in the environs of Hargeisa.
The IE has huge potential to contribute to ongoing development and peace-building processes in the
city of Hargeisa.
• Economic Growth has been cited as a major requirement for long term peace in conflict-
affected cities. In Hargeisa, the IE enabled individuals to sustain household livelihoods, and
some businesses were able to accumulate capital and employ others, deepening their
contribution to economic growth (although others remained small-scale). Some sectors that
have increased pose severe development challenges, for example the increasing use of
imported qat. However, the scale of the IE and the fact that it provides the majority of urban
employment demands that it be a primary focus for economic and social planning.
• Conflict-Prevention and employment generation have also been linked in development
literature and there is evidence that an effective IE can reduce the likelihood of further
violence. In Hargeisa the IE provided jobs to many over the course of conflict, most notably
enabling women to enter the job market, and replaced services that were disrupted.
Importantly, it provided opportunities for vulnerable groups, including women, refugees and

30
2

people with limited formal education to sustain livelihoods which strengthened the peace-
keeping agenda. The characteristics of the IE, which is largely based on trust and reciprocation
also encouraged and enabled peace. It is important, then, that the IE is recognised as a legitimate
component of the city’s economy, and that vulnerable IE workers supported, to ensure that there
is limited risk of disenfranchisement and further conflict.

31


The use of qat remains widespread

32
6. Conclusions and Recommendations
6.1 Introduction
This chapter summarises the key findings from the report. It then sets out a series of recommendations and lessons
relating to the IE in the conflict-affected city of Hargeisa.

6.2 Key Findings

In many cities in sub-Saharan Africa urban policy marginalises the urban IE and IE workers are often victimised and
harassed (Lyons et al., 2012). In contrast, in Hargeisa there is very little police harassment; with less than 7% of
the 168 current IE workers interviewed stating they had experienced problems with local authority. Furthermore,
there are high levels of trust and reciprocation amongst IE workers and society, and a deregulated environment
which all enables and encourage the growth of the IE.
While Hargeisa is generally a positive environment for the IE sector, 69% of current IE workers admitted facing
challenges. The main challenges were:
• Lack of literacy, numeracy and business skills: Only 38% of IE workers are educated beyond primary
school and lack of literacy and business knowledge means that there is a lack of capacity for business
growth.
• Difficulties with infrastructure and operating spaces: 55% of IE workers interviewed operated from the
street without any designated trading space, or amenities such as water, electricity and waste
management provision. This not only generates conflict between traders and other users of public space,
but causes congestion in the city which causes health and safety concerns. Even when market spaces are
provided by the municipality, they are often underused as they are inappropriately located or inadequate
to meet the needs of IE workers. However, working environments are generally safe, although less so for
women.
• Business decrease: 16% of current IE workers had suffered a decrease in business over the last 5 years
threatening household resilience and urban livelihoods, mainly because of increased competition.
• Lack of inclusion in government policy: There is lack recognition of the role of IE work in providing
livelihoods for many households in Hargeisa. The IE remains unrecognised in Somaliland’s National
Development Plan, and there is no enabling regulatory framework. While this means that harassment
levels are low and businesses can generally survive, there is also an absence of protection for IE workers.
• Economic variables and lack of access to finance: The lack of access to finance and credit, and the fact
that only 4% of IE workers receive informal cash transfers from family, means that it is hard for IE workers
to start and maintain livelihoods ventures, particularly in times of economic shock.
Within the contemporary IE particular groups are vulnerable to the challenges above, including older women, and
women with little or no formal education. Indeed, 27% of female current IE workers have experienced a decline
in business over the last 5 years compared with just 7% of men.
These vulnerable groups were more likely to have low income and be involved in precarious business activities,
such as those run from the street, with no access to services, or affected by seasonality. Some 54% of 168 current
workers in businesses in the IE were affected by seasonality, signalling a high number of vulnerable businesses in
the IE. Women are more affected with 66% of women running businesses affected by the seasons compared with
just 34% of men. Similarly, more IE workers who were born in Hargeisa (67%) run businesses from the street
compared with internal migrants (39%). Women and those born in Hargeisa are also more likely to run low-income
businesses compared to other IE workers. They also tend to work alone which increases vulnerability.
The report has identified several key protections that could alleviate the challenges and problems in the
contemporary IE in Hargeisa:
• Policy inclusion to genuinely support and empower IE workers and their businesses. Small-scale enabling
actions could begin to aid IE workers overcome some of the challenges above.

33
 • Support for associations: Enabling workers to organise into associations, trades unions or co-operatives
can be important in providing a platform for IE workers to articulate and negotiate their needs, establish
rights, and address conflicts in the urban context. Savings and credit associations and financial co-
operatives can be important sources of savings and credit. Currently only 7% of IE workers interviewed
were part of a trade union or informal association, and there is no co-operative legislation in the country.
• Increased literacy and business training: Increased literacy and business training could address some of
the difficulties of lack of formal education faced by some members of the IE. A focus on women would
help the most vulnerable groups. However, training sessions should be affordable and timed so that
people can combine training with income earning. Some training is provided by NGOs, but none of the
current IE workers interviewed had engaged with NGOs, and increased training opportunities are needed.
• Improved infrastructure and operating spaces: Despite over 90% of current IE workers paying daily fees
to the municipality, there is virtually no infrastructure or provision for IE businesses and trading space can
be inadequate, congested and dangerous. Better operating spaces would not only protect IE workers and
increase resilience but would encourage business growth and development.
While these measures might support the IE generally, the presence of vulnerable groups and businesses, and the
needs of specific sectors, calls for focussed interventions beyond the broader ones aimed at the entire urban IE.
The effects of conflict are felt at all levels of society. In Hargeisa, conflict effects included loss of family and friends,
loss of livelihoods, displacement, imprisonment and ill-health and injury. Massive damage was inflicted on the city
during the civil war, and goods and services such as water, food, electricity and transport were all disrupted.
Women are particularly vulnerable in conflict-affected situations and may have experienced the effects gender-
based violence and the reversal of gender roles which sees women become household breadwinners and engaged
in informal political processes. In Hargeisa, although the destruction of traditional gender roles provided
opportunities for women in the job market, and gave them a key role in informal peace-building discussions, it has
also caused conflict within families.
Conflict has had numerous short-term, medium-term and long-term impacts on the urban IE in Hargeisa:
• The short-term effect of the conflict was the total destruction of livelihoods and 41 out of 47 CAP had
witnessed the destruction of their businesses during conflict. Displacement decimated the customer base in
the city and IE workers fled leaving their businesses behind. Lack of security encouraged the looting of
businesses and the disruption to transportation services posed practical challenges for the supply of goods.
The destruction of physical infrastructure due to the bombing decreased the availability of safe and adequate
business spaces.
• In the medium-term the IE responded positively, performing a vital source of livelihoods to people from
Hargeisa – those who fled to neighbouring countries, fought in the war, or stayed in the city. Conflict
economies erupted as men took up arms to fight in the conflict while others looted businesses accumulating
assets in the chaos. More positively, replacement economies also emerged which substituted services,
utilities and goods destroyed during conflict. Finally, refugee economies, providing vulnerable people, mainly
women, opportunities for income generation, also developed.
• In the longer-term, the IE increased dramatically as weakened controls enabled the speedy establishment
and operation of new businesses. Specific sectors were particularly successful and grew more than others
and this period witnessed the burgeoning of the qat and charcoal industries. Though both sectors are major
IE employers in Hargeisa today, they pose severe development issues. Qat has been condemned for lowering
human productivity, draining household income and increasing the incidence of domestic violence and
mental health problems. Meanwhile, the charcoal industry leads to deforestation in the environs of Hargeisa.
The IE has huge potential to contribute to ongoing development and peace-building processes in the city of
Hargeisa.
• Economic Growth has been cited as a major requirement for long term peace in conflict-affected cities.
In Hargeisa, the IE enabled individuals to sustain household livelihoods, and some businesses were able
to accumulate capital and employ others, deepening their contribution to economic growth, although
others remained small-scale. Some sectors that have increased pose severe development challenges, for
example the increasing use of imported qat. However, the scale of the IE and the fact that it provides the
majority of urban employment demands that it be a primary focus for economic and social planning.
34

• Conflict-Prevention and employment generation have also been linked in development literature and
there is evidence that an effective IE can reduce the likelihood of further violence. In Hargeisa, the IE
provided jobs to many over the course of conflict, most notably enabling women to enter the job market,
and replaced services that were disrupted. Importantly, it provided opportunities for vulnerable groups,
including women, refugees and people with limited formal education to sustain livelihoods which
strengthened the peace-keeping agenda. The characteristics of the IE, which is largely based on trust and
reciprocation also encouraged and enabled peace. It is important, then, that the IE is recognised a
legitimate component of the city’s economy, and that vulnerable IE workers are supported, to ensure that
there is limited risk of disenfranchisement and further conflict.

6.3 Recommendations
This section sets out the recommendations of the research team under five broad headings: national government
actions; building the capacity of IE workers; municipality actions; meeting the needs of the most vulnerable, and
international lessons from Hargeisa’s experience

Recommendation 1: Increase national legitimacy and recognition

• Recognition: It is essential that Hargeisa’s IE workers are recognised as legitimate economic actors making
significant contributions to the national and city economy.
• National Informal Economy Policy: A cross-government National Informal Economy Policy should be
developed, so that the key social and economic contribution of the IE is reflected in the five-year national
economic development planning and other relevant government strategies.
• National Informal Economy Standing Committee: A high-level National Informal Economy Standing
Committee should be set up, with a membership of about 10 people to include high-level representatives
from: the Ministries Planning and Development (chair); Commerce and Trade; Labour, Employment and
Social Affairs, Hargeisa Municipality, and SONSAF, including 3-4 representatives of umbrella IE workers’
organisations. The Standing Committee should:
o Advise on development of the National Informal Economy Policy;
o Advise on inclusion of the IE in the Five Year National Economic Development Plan;
o Recommend inclusion of the IE in other relevant government strategies;
o Undertake sector-specific analyses of different IE sectors (needs and support);
o Identify ways to extend social protection to IE workers;
o Address negative impacts of the IE (e.g. from the qat or charcoal trade);
o Assess data needs for improving understanding of the IE (e.g. through labour force surveys).
o Address lack of IE access to credit and finance

Recommendation 2: Strengthen voice and participation

• Building grassroots capacity: The voice and participation of IE workers in decisions that affect
businesses and livelihoods should be enhanced through:
o Extending membership and building the capacity of existing worker organisations and
associations;
o Encouraging the establishment of new worker organisations or associations (based on
gender, sector, product or location etc.).
• Forming umbrella associations: Umbrella associations are needed to provide a collective voice with
which government and other urban actors can engage. Their membership should be formed from
grassroots organisations to be supported by SONSAF or other relevant NGOs.
• Funding: Funding is needed to support training and capacity-building for IE worker associations, in
advocacy, and skills development. This would require:
o Establishing a national IE training fund (e.g. government, international, diaspora sources).
This could be administered centrally or by Municipalities. An annual call would request bids
from partnerships of associations and training providers;

35
 o Training needs for members should be identified by associations, and delivered by differed
HE organisations (e.g. Gollis University), or NGOs (SONAF, Havoyoco, Progressio, CCS
Network, NAGAD, or others).
• Cooperatives: National government should pursue the development of cooperative development
policy and law, to provide a framework for newly emerging organisations and associations.

Recommendation 3: Plan locally for the informal economy

• Local economic development: At municipality level, local economic development (LED) strategies
should include enabling policies to support improved productivity and decent work for the IE. In each
municipality, a Local Informal Economy Committee should be set up, chaired by the Mayor, with
representatives from key municipality departments (economy, highways, planning, social support
etc.) and at least 40% membership from IE worker associations, tasked with:
o Developing city, location, and sector-specific policies and proposals for supporting the
economic and livelihoods potential of the IE;
o Identifying and addressing any challenges or problems raised by IE work;
o Identifying projects and programmes to support economic development of the IE e.g.
registration of businesses, strengthening supply chains, improving marketing etc.;
o Identifying infrastructure needs for the IE (see below);
o Recommending ways of improving data gathering on the IE (e.g. through data co-produced
between IE worker associations and the municipality);
o Examining ways to improve access to savings and credit;
o Facilitating and encouraging self-help schemes for micro-insurance.
• Infrastructure: Specific interventions include the provision of better infrastructure and business
spaces for the urban IE to ensure that vulnerable IE workers have access to safe and serviced areas
from which to run their businesses, funded as outlined below. Measures could include:
o Provision of toilets, storage, street drainage, shelter etc. in busy IE trading or employment
areas;
o Recognition that street vending needs to be located near major pedestrian flows (e.g. at bus
stations), but negotiation can often solve problems of congestion. Moving street traders to
designated off-streets markets rarely works because of the lack of passing trade.
• Revenue streams: The IE can be an important source of funding from municipalities, but IE workers
need to see the benefit of paying fees. This can be achieved through:
o Daily fee collection so that people pay regular small amounts. Fee collection is often
successfully sub-contracted to IR worker associations. Mobile money fee payment is also
working in some areas;
o Hypothecation of an agreed percentage of funds raised to be used in local infrastructure or
other improvements;
o Local contributions for specific projects (e.g. in Waheen Market traders provided their own
roofing through local contributions).
• Hargeisa pilot projects: The Municipality should establish 2-3 small-scale pilot projects to
demonstrate good practice in inclusion of the IE in municipal LED and infrastructure planning
programmes. These should be developed through the Local Informal Economy Committee with
extensive IE worker participation. Examples might include:
o Finding ways to reduce congestion AND accommodate jobs in key locations (e.g. around the
bus station);
o Small-scale development projects (e.g. improving drainage and shelter in Gobanimo Market).

Recommendation 4: Support vulnerable informal economy workers

• Business skills and literacy/numeracy: Literacy/numeracy programmes and business training
schemes should be specifically designed for IE workers with little or no formal education, particularly
women, in addition to the general training programmes (Recommendation 2). These should be a

36
 priority for the Ministry for Labour, Employment and Social Affairs and Ministry for Trade and
Investment and could be delivered by HE institution such as Gollis University under lifelong learning
programmes, or NGOs, and donor-funded.
• Extending social protection: Government policy should ensure that all relevant social protections
extended to those in formal work should extend to IE workers.
• Savings and credit: Savings and credit associations are an excellent self-help way of enabling IE
businesses access finance for business growth. A good model is the (VSLA) Village Savings and Loan
Association, which is well-adapted to Islamic contexts. CARE International and several other NGOs
run appropriate training programmes.

Recommendation 5: Lessons for international agendas and humanitarian assistance

• Recognising positive contributions: Hargeisa’s experience of civil war culminating in 1991
demonstrates that IE livelihoods provide opportunities for transformative change, and make a
central contribution in the aftermath of conflict.
o In the short-term the IE provided livelihoods for displaced people, and brought women into
employment;
o In the medium-term the IE provided work for displaced and returning populations. The
contribution included replacement services after local government collapse;
o In the longer-term many businesses established in the aftermath of conflict have expanded
to provide jobs and income.
• Anticipating disruptive effects: It must also be recognised that not all IE activities make positive
contributions. It is important that disruptive impacts are recognised and addressed quite quickly
after a conflict before they become entrenched.
• Focussing multi-lateral aid: Multi-lateral programmes on governance and economic development
should take account of the IE. For example, Somaliland’s Joint Programme for Local Governance
(JPLG), the multi-agency programme led by UN-Habitat, should include a specific IE programme, to
include examining the role of the IE in local economic development, and capacity building for local
government staff on managing the IE.
• Improving humanitarian assistance: Humanitarian assistance programmes need to recognise how
self-help and survivalist livelihoods that emerge after conflict can provide the basis for economic
recovery.

37
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Appendices

Appendix 1: Workshop participants by business type
Type of IE Business Number of Workshop Attendees
Buses 3
Fruit and Vegetables 6
Meat 3
Milk 3
Qat 5
Assorted Products 4
Total 24

Appendix 2: Workshop conflict mapping

Challenge Suggested Resolution

Conflict between vegetable To develop a lasting relationship between the parties. This will be achieved
sellers and producers over through changing behaviour after mutual participation in discussion. Strengthen
costs the association of vegetable sellers which is currently weak and ineffective so
the needs and fears of both parties will be taken into account equally.

Qat sellers being harassed by To get a specified place and time where qat can be sold to reduce tensions.
local police There is also a need to raise awareness of the health implications of qat. This
will be achieved through discussion with the local authority.

Lack of facilities causing To improve the services at the bus stations. This will be done through contact
tension between traders, with local government in order to enhance regulation and legislation. Through
transport workers and other consultation and meetings the needs and fears of the parties can be taken into
users of the street account.

Appendix 3: List of Key Informants (KIs) by occupation

1. IE Market Trader 11. Senior Government Official 21. Senior Government Official
2. Senior Government Official 12. NGO Worker 22. Workshop – Assorted
3. Government Official 13. Senior Government Official
4. Senior Government Official 14. NGO Worker
5. Senior Government Official 15. NGO Worker
6. UN Agency 16. Senior Government Official
7. Senior Government Advisor 17. Senior Government Official
8. UN Agency 18. NGO Worker
9. NGO Worker 19. UN Agency
10. NGO Worker 20. Government Advisor

41