Executive Summary

• Lasanod is a city located on the border between the self-declared and internationally unrecognized Republic of Somaliland, and Somalia’s federal state of Puntland. The city, which is the administrative capital of the Sool region, is contested—sometimes violently— between the two polities, but Lasanod is currently governed by Somaliland.

• Somaliland and Puntland are products of Somalia’s post-1991 state-building project, which has resulted in the proliferation of states and state-like authorities and consequently multiple, ambiguous, negotiated and informal revenue collection practices as goods transit between the different political entities.

• The Somaliland government, which has proclaimed autonomy from the rest of Somalia, levies customs duties on commodities imported from Puntland. Puntland’s official stance is that Somaliland continues to be a part of Somalia. However, in practice it also treats the territories of the former British protectorate controlled by Somaliland as a separate country—imposing import duties on commodities from there.

• Like other places in the Horn of Africa, the contestation in Lasanod, due to its borderland status, has political and economic motivations. The control of this strategic corridor is translated into new forms of revenue collection, political organization and state-building.

• Being in the margins affects the local people in different ways and they face different political, social, and economic constraints which further exacerbate the sense of alienation.

• In recent years, Lasanod has been controlled by Somaliland, which has reinforced its legitimacy from the local population through improved security provision and a number of tax exemptions (cashuur dhaaf) and reductions (cashuur dhimid) on goods imported from Puntland.

• Ambiguous and flexible taxation policies have given rise to a number of ‘practical norms’—informal but routinized practices by which traders and public authorities govern and tax commodity flows between Somaliland and Puntland. These kinds of informal taxes are not unique to Lasanod, but are a recurrent feature of cross border trading in the Horn of Africa.

• In general, opaque taxation practices and uncertainty about the political ties between tax collecting authorities and taxpayers frustrates business communities who engage in tax negotiations and avoidance and are sometimes subjected to coercive tax payments.

• The multiplicity of states and state-like entities, including local authorities, that collect revenues with limited coordination, not only between states but also within states, represents a major challenge for trading cross-border commodities. Economic actors, such as traders and other businesspeople, that operate across Somalia’s self autonomous states, have to satisfy policies of different territories, which has forced them to develop ‘manoeuvring practices’—a flexible and negotiated approach to operating within the rules of multiple political and economic jurisdictions.

• Where traders cannot satisfy the policies of the local administrations, they often opt for informal trade and avoid the main, more secure, and official corridors to an informal network of routes away from where local administrations are concentrated.

• Donor resources often contribute to the complexities of economic and political relations in the contested areas. Local elites sometimes use their capacity to attract donor resources to buy legitimacy from the local people. Local actors, on the other hand use violence as part of the competition for access to international aid.