This is the main reason Malawi wants to be friends with Somaliland

Somaliland’s Parliament Building

If you were presented with a picture of the rather unassuming building of Somaliland’s Parliament for the very first time, you’d be forgiven for thinking that the place was in fact the site of Prakash Patel’s Tandoori Curry Bazaar in downtown Limbe.

Yes, looks are not everything, but the building is reminiscent of a glorified third-rate Bengali restaurant in a dusty part of town than the bonafide parliament building that it actually is. It looks more like one of those places where families go to after a sweaty day in Church, for Sunday dinner – complete with Biryanis, Chicken Kormas and Lamb Vindaloos.

So, what on earth is Malawi looking for in Somaliland?

Shouldn’t we instead be cosying up to the Singapores and South Koreas of this world? The glitzy success stories whose ‘breadcrumbs’ can catapult our tiny economy into the 21st century….no?

I mean, if we are serious about implementing a tried and tested formula of economic development which other countries have been using to develop their economies for decades then surely an official trip to New Delhi or Jakarta sounds more like it?

There’s been quite a bit of speculation as to the real reasons why Malawi is interested in Somaliland, and I won’t tire you by rehearsing those reasons here.

The adminstration of Somaliland has put out what to me sounds like regurgitated diplomat-speak.  A cut-and-paste statement that is too generic to be meaningful or taken seriously. The government of Malawi too hasn’t provided a convincing reason for its interest in Somaliland. In any case if the issue was truly about Somaliland seeking support from Malawi for it’s national recognition on the world stage, then surely it should have been officials from Somaliland visiting Malawi, and not the other way round. As the Chichewa proverb goes, phiri siliyendera nyani koma nyani ndi amene amayendera phiri (A mountain doesn’t follow the monkey, it’s the monkey that follows the mountain)

What’s surprised me from the commentary about the visit in Malawian publications is to see almost no one pick out the most probable reason why Eisenhower Mkaka (Malawi’s Foreign Minister) visited Hargeisa – the capital city of Somaliland, which I’m quite sure most Malawians hadn’t previously heard of before Mkaka’s visit.

I think the real reason Lazarus Chakwera’s government is looking to befriend Somaliland is to do with Oil. Yes, it’s all about Petroleum. Why this is the most likely reason is because in recent years, there’s been quite a lot of talk about investment into Somaliland. Only last year, the London headquartered Genel Energy announced it had increased his stake in the SL10B13 block in Somaliland to 100% , after acquiring a 25% state that had been previously held by East African Resources Group. That block alone is said to comprise several interests each containing at least 200 million barrels of crude oil, with some analysts estimating that there’s at least 1 Billion barrels of oil underneath that one block. That means Somaliland as a whole could have significant petroleum reserves, possibly of the size comparable to those found in several of the neighbouring countries.

And that’s a big deal.

Further, when friends are hard to come by as has been the experience of Somaliland (which is still regarded as an autonomous region within Somalia, and hasn’t been officially recognised by any country) any sort of trade can make a significant difference. As other marginalized states (including sanction-laden states such as Venezuela & Iran) will tell you, any takers of your output including oil in circumstances where other countries are afraid of the consequences of trading with you can be a lifesaver.

In addition, Somaliland in 2016 signed a 30 year contract with the United Arab Emirates’s DP World, the third largest port operator in the world, to manage and expand its Berbera Port. Last year, a US$400 million road project connecting Ethiopias border town of Togochale to Berbera was launched, a route which some analysts say will be an alternative transit point for imports and exports out of Ethiopia. There’s been several other significant and notable investments…

But if the oil quantities are as significant as some think, its only a matter of time before a refinery is constructed. Already in the south Ethiopia is looking at building it’s first oil refinery. This follows the shelving of a Blackstone Group LP-backed fuel pipeline project 2 years ago. Thus, given the frosty nature of diplomatic relations between Somalia and Ethiopia, it’s not inconceivable for Petroleum from Somaliland being refined in Ethiopia in the near future, before being sent back to be shipped from Berbera to destinations across the world.

Malawi needs oil at as cheap a price as can be found. Thus if you can sign contracts with ‘friends’ who are relatively new to the oil game to sell you oil at ‘friendly prices’ (as opposed to Market rates) in exchange for support regarding the friend’s sovereignty, then theoretically everyone stands to benefit. Malawi gets its relatively cheap oil at prices it can afford without having to deal with the baggage of the likes of Nigeria, Somaliland gets some Forex, and a measure of the international recognition it very much craves, there’s a boost to intra-African trade. Everyone’s a winner!