Assessment of the Capacity to Attract Foreign Direct Investment in the Oil and Gas Industry (A Case Study of Somaliland)

This research evaluates Somaliland's capacity to attract foreign investment, with a focus on the oil and gas sector.Attracting such investment requires a conducive and enabling environment.The primary objective is to identify key factors that facilitate foreign investment and highlight gaps that may hinder investment flows.The main incentives for oil and gas companies fall into two broad categories: below-ground factors (such as the presence of oil and gas reserves) and above-ground factors, which include socio-political stability, a comprehensive legal and regulatory framework, economic conditions, and the degree of freedom and transparency in the host country.Despite its potential, Somaliland faces significant challenges.Key obstacles include weak infrastructure, limited energy access, high electricity costs, overlapping regulatory frameworks, a constrained banking system, and the absence of international recognition.The study employs a qualitative content analysis, drawing on secondary data from public sources, archived documents from investment promotion agencies, and official government reports.The findings highlight critical areas for improvement: strengthening institutional collaboration, developing supportive oil and gas regulatory bodies, upgrading infrastructure (roads, ports, and energy systems), and engaging in strategic lobbying efforts.Addressing these challenges could significantly enhance Somaliland's appeal to foreign investors in the oil and gas sector and contribute to its economic growth.