Galkayo and the Bosaso trade corridor: goods, companies and road taxes

The short version

Galkayo (Gaalkacyo) in Mudug is split between Puntland in the north and Galmudug in the south. It sits on the main road that carries imported goods from Bosaso port to central and southern Somalia. In 2021 the Rift Valley Institute (RVI) published a study of this route, written by Khalif Abdirahman and based on interviews in Galkayo, Jowhar and Oman in March 2021 (RVI, Contested Commerce, November 2021). The study calls it the Bosaso trade corridor. It runs through Puntland, Galmudug and Hirshabelle, and also feeds parts of Bakool, South West State and Ethiopia's Somali Region (same source).

What moves along the road

• Going south: rice, sugar, wheat flour, pasta and cooking oil are the main goods by quantity. Powdered milk, drinks, building materials, fuel, vehicles, electronics and clothes also come in through Bosaso (RVI 2021, pp. 19–22).
• Going north: goats, sheep, cattle and camels, along with fruit, vegetables, sorghum, maize and beans from Hiiraan (same source, table 1).
• Other routes: cement from Ethiopia and fuel brought back from Ethiopia go straight to their buyers and do not cross Galkayo. Some traders in Tog Wajaale, on the Ethiopia–Somaliland border, buy mobile phones in Mogadishu, where tariffs are lower (same source, p. 21).
• Where the goods end up: the director of one of the largest importers told RVI that Puntland "doesn't buy even 15 per cent of the goods we bring through Bosaso port", and that the rest goes to Ethiopia's Somali Region and south-central Somalia (RVI 2021, p. 28).

The companies

RVI names Tawfiq, Alfadl, Red Sea, Mustaqbal, Mansur and Maruf as the main Puntland-based importers of staple foods. They have branches or partners in Galkayo and Beledweyne (RVI 2021, p. 20). The study's other findings on these firms:

• Tawfiq is the second-largest company in Puntland, with head offices in Bosaso and in Salalah, Oman. It also has offices in Hargeisa, Djibouti, Mogadishu and Kismayo. It was earlier led by Said Abdullahi Deni, who became president of Puntland (RVI 2021, p. 25).
• In 2008 Tawfiq and Omani shareholders built a pasta factory in Salalah. The study says such factories now find it hard to compete with Turkish pasta (same source, p. 20).
• Each large importer holds the sole right to certain brands of powdered milk. Tawfiq imports Amis and Qamar, and Sagal imports Anchor and Bahja (same source, p. 21).
• Firms put their annual profit at 15 to 25 percent. They rely on moving large volumes (same source, p. 25, note 52).
• Hormuud occupies the most visible building in central Galkayo, a few metres from the line between the two states. The study notes that Hormuud is a major shareholder in Golis (same source, p. 25).

Taxes along the road

• Puntland charges the same tariffs at Galkayo as at Bosaso port on imported goods that come in from Galmudug. This makes goods imported through Mogadishu too expensive to sell in Puntland. About 15 checkpoints between Bosaso and Galkayo each charge a district fee, called birqaad ("lifting the barrier"), which together come to about $200 per lorry (RVI 2021, p. 28).
• Galmudug and Hirshabelle charge by the lorry, not by the goods. A standard 36-tonne lorry paid $520 in Galmudug. A 33-tonne lorry paid $500 going south, or $270 if it carried livestock going north. Renting a 33-tonne lorry from Bosaso to Galkayo cost $2,500, of which about $1,200 was tax if it went on into Galmudug (same source, pp. 28–29).
• Revenue. Galmudug says its main checkpoint in south Galkayo raises about $200,000 a month, and another official put it at $300,000 or more. Hirshabelle's checkpoint near Beledweyne raises about $300,000 a month, and Hirshabelle is reported to raise nearly $10,000 a day in all from transport fees. Puntland's revenue officials declined to give figures (same source, p. 26).
• Budgets. Puntland's 2021 budget was $341.9 million and Galmudug's 2020 budget was $17.2 million. Both figures include aid and federal transfers (same source, p. 26, note 58).
• Other checkpoints. The study says al-Shabaab and Islamic State checkpoints also tax lorries on parts of the route. Transport firms and traders negotiate together whenever any authority raises its charges (same source, p. 29).

Ports near Galkayo

In August 2019 the federal government signed an agreement with Mwani Qatar to build a port at Hobyo. By 2021 no building had started, but Galmudug had begun a gravel road to the site (Ship Technology, 20 August 2019; RVI 2021, p. 30). The study also describes Gara'ad port, on the Puntland side, as nearly finished and paid for by Galkayo business people (same source, p. 30).

Background

The study traces the line through Galkayo back to a boundary between areas of the Darod and Hawiye clans. It says both states now treat it like an international border for tax purposes (RVI 2021, p. 31). For the region, see Gaalkacyo (Galkayo) and Mudug. For the ports, see Somalia's seaports. For how the states raise money, see How Somalia's federal member states raise and spend money.