(February 6, 2014) Somaliland – the, unrecognized, self-declared state north of war-torn Somalia – attributes a lack of foreign aid to its success.

By Brady Yauch for Probe International

No foreign aid? No problem.

That’s the message from Somaliland – the, unrecognized, self-declared state that sits north of war-torn Somalia.

Without a seat at the UN, Somaliland is ineligible for foreign aid. “That is a blessing in disguise. Aid never developed anything,” Hussein Abdi Dualeh, Somaliland’s minister of energy and minerals, told Reuters.

“Aid is not a panacea, we’d rather not have it … How many African countries do you know that developed because of a lot of aid? It’s a curse. The ones that get the most aid are the ones with the problems.”

It’s not the first time Somaliland has made the headlines for the right reasons: a functioning democracy, competitive markets and a government that relies on a healthy and open tax system to support itself.

In contrast Somaliland’s southern neighbour, Somalia, has suffered through more than two decades of civil war, is overrun with terrorists and has little to show for the billions of dollars in foreign aid it has received. In 2011 alone, Somalia took in $1.1 billion (US) in foreign aid, according to World Bank data. In 2009 and 2010, Bank auditors could account for only a fraction of the monies it loaned to Somalia. And the country ranks dead last on Transparency International’s corruption index, alongside Afghanistan and North Korea.

Back in Somaliland, Hussein Abdi Dualeh told Reuters, “we’ve been left to our own devices. We are our own people and our own guys. We pull ourselves up by our own boot straps.”

Because his country cannot access international capital markets it also has no debt as a result.

“We owe absolutely nothing to anybody. We would not change hands with Greece today. We have zero debt,” said Hussein Abdi Dualeh, proud of his country’s self-reliance.

Somaliland’s success can be attributed to well functioning local governments that find common cause in setting sound economic policies. But it can also be attributed to its freedom from the foreign aid curse that has been the result of its enforced self-reliance.

Brady Yauch is an economist at Probe International.