The Somaliland government's main objective will remain the formal recognition of the region as a sovereign state by the international community. Recognition of South Sudan's independence may help this cause in the medium term. The orderly handover of the presidency to Ahmed Mohamed Mohamoud Silanyo in July, one of the few peaceful transfers of power from an incumbent to an opposition candidate in Africa's post-independence history, will boost the province's claim to independence. However, most foreign governments will continue to support the beleaguered TFG, which opposes Somaliland's full secession, as would any likely successor to the TFG. Moreover, the African Union's position is clear: Somalia should remain a single state.

Thus, in the forecast period the government will have to content itself with increasing de facto recognition in the form of aid inflows. However, the expected rise in international assistance carries risks. Politically, an increase in aid could upset the delicate balance of power between a weak central authority and local chiefs. Meanwhile, the economy could struggle to absorb large injections of foreign funds without this fuelling inflation and undermining local entrepreneurship. Bright spots in the region's economic outlook include the Kuwaiti-sponsored renovation of the airports at Berbera and Hargeisa, and the large investment by a French-owned firm, Bolloré Africa Logistics, in Berbera port, which will continue to be the government's main source of revenue throughout the forecast period.