The collapse of the unified Somali state under General Mohammed Siyad Barre in 1991 after protracted civil war left in its wake widespread dislocation, death and destruction. Yet despite the chaos in southern and central Somalia, the northwest region of Somaliland has achieved the type of progress in governance to which the rest of Somalia can only aspire. This former British protectorate has been defined by a relative peace and calm and the development of an emerging set of state institutions. Somaliland has developed its own structures and systems of governance, drawing on elements of a kin-based system that provided the organising structure for social, economic and political activity during centuries of nomadic pastoralist history.

1. Absence of easily recognisable formal state institutions should not be equated with an absence of institutions altogether. Coexistence and interaction between 'traditional' and 'modern' institutions have been key to balancing internal and external demands for legitimacy in Somaliland and represent significant progress in governance.
2. These unique institutional arrangements have contributed to the effective provision of public goods in key areas, such as those relating to basic security, the investment climate and service delivery at the local level.
3. Lack of significant international aid revenues under the control of the state to date has forced nascent government institutions to rely on sources of financing that include taxation, the Diaspora and loans from the business community, which have helped the state to provide essential public goods.