The government elected in Somaliland in June considers that official recognition by the international community, the administration's key objective, should become more likely when the yes vote is confirmed in the referendum on independence in Southern Sudan. An end to the long-held principle that Africa's post-colonial borders should remain inviolable should in theory open the door for full de jure recognition of Somaliland's independence, a de facto reality since 1991. 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. Furthermore, secession by South Sudan may, in time, result in the new state being the first to recognise Somaliland, but this is unlikely within the forecast period. However, most foreign governments will continue supporting the beleaguered TFG, which opposes Somaliland's full secession, as would any likely successor to the TFG. Moreover, the AU's position is clear: that Somalia should remain a single state.

Unless Somaliland's sovereignty is recognised, access to international development finance will remain limited. However, the increase in aid signalled by the US in September, to counterbalance fears of growing Islamist influence in the south, will be welcome: job creation, particularly for the younger generation, and the development of a drinking-water system in Hargeisa are expected to be high priorities of this enhanced development assistance. Other bright spots in the region's economic outlook are 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.