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Country Risk Report - Somalia

Maplecroft’s latest Country Risk Report for Somalia provides in-depth analysis of the risks facing companies investing in one of the world’s most challenging operating environments. It provides a comprehensive breakdown of the challenges posed by current political dynamics, the security climate, legal and regulatory developments, the human rights landscape and risks stemming from natural hazards. 

While the inauguration of the federal government in September 2012 marks a significant turning point in the country’s political history, following more than two decades of civil war, the new administration faces major security and logistical challenges in asserting its authority outside of the capital Mogadishu. In the autonomous region of Somaliland, comparatively more advanced institutional capacity and rule of law provides a more stable investment environment. However, the multiplicity of rival administrations and growing demands for regional autonomy across Somalia generates major legal uncertainty for investors. Meanwhile, corruption risks will remain pronounced for the foreseeable future, presenting potential legal and reputational repercussions for companies.

Despite a significant improvement in security over the past two years, Somalia presents one of the world’s most dangerous operating environments. Al-Shabaab, an Islamist terrorist group with links to al-Qaeda, has lost control of most major cities but retains the ability to launch guerrilla attacks and bombings, with southern areas particularly at risk. Government institutions, politicians and the security forces represent key targets for the group, although expatriates and foreign companies are also vulnerable. Despite human rights being included in the new August 2012 constitution, the federal government remains preoccupied with immediate security threats, and serious violations – including war crimes – remain unpunished, contributing to an environment of impunity.

Somalia’s low socioeconomic resilience and inadequate capacity for disaster response exacerbates the potential impact of natural hazards on business continuity. Flooding, particularly in south-central Somalia, is likely to undermine the efficient distribution of goods and services.

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Jason McGeown, Head of Communications
Tel: +44 (0)1225 420000
press@maplecroft.com

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