Between the fall of Siad Barre's government in January 1991 and the establishment of the Transitional National Government in 2006 (succeeded by the Transitional Federal Government), there was no central government in Somalia. Large areas of the country such as Puntland and Galmudug were internationally unrecognized and administered as autonomous regions of Somalia, while forces in the northwest declared the Republic of Somaliland. The remaining areas, including the capital Mogadishu, were divided into smaller territories ruled by competing faction leaders. During this period, Somalia has been cited as a real-world example of a stateless society and a country with no formal legal system.
The Transitional Federal Government, formed in 2004, was recognized as the central government of Somalia. Before December 2006, the TFG controlled only the town of Baidoa, the sixth largest city. The intervention of Ethiopian government forces following the rise of the Islamic Courts Union, culminating in the latter's defeat in the Battle of Baidoa, allowed the TFG to expand its control under the protection of Ethiopian troops. The TFG was at the time not able to effectively collect taxes, had no notable finances or real power base, and struggled to exert control over Mogadishu following an attempted move in late December 2006. However, the TFG later succeeded in capturing most of Somalia from insurgents, but struggled to cement its control and establish law and order.
Benjamin Powell argued that statelessness led to more order and less chaos than had the previous state, and economist Alex Tabarrok claimed that Somalia in its stateless period provided a "unique test of the theory of anarchy", in some aspects resembling that espoused by anarcho-capitalists such as David D. Friedman and Murray Rothbard. However, this is disputed by anarchists and anarcho-capitalists, who contend it is not anarchy, but merely chaos, perhaps resulting from unequal distribution of power and meddling by neighbors and developed nations like the United States. The Somali experience since the collapse of the state, and especially the failure of international intervention, has offered a clear challenge to elements of conventional economic, political and social order theory and the very premises under which Western diplomacy and development agencies operate. According to anthropologist Peter D. Little, it challenges "assumptions about the role of states in maintaining order and services".Little, P. (2003). Somalia: Economy without state. Oxford:International African Institute in association with James Currey.
The rule of law
Following the downfall of the Siad Barre government, there was effectively no formal centralized government law in Somalia. While some urban areas such as Mogadishu had private police forces, many Somalis simply returned to the traditional clan-based legal structures for local governance and dispute resolution. Michael Maren's book The Road to Hell (1997) noted how the clan structure baffled many Americans, Canadians and Europeans who were in Somalia for government aid, military or charitable organizations, and who tended to assume society was organized top down from high-ranking government leaders and struggled to understand a more bottom-up system based on high trust for immediate and extended families and less trust for government authorities.Maren, Michael (1997, 2002). The Road to Hell: The Ravaging Effects of Foreign Aid and International Charity. The Free Press, ISBN Somalis were described in The New York Times as "legendary individualists", and also have been thought of as particularly receptive to anarchist forms of social organization. Social scientists have identified the pastoralist way of life that a great many Somalis lead as in tension with formal statist legal systems.Mazrui, A. (1997). "Crisis in Somalia: From tyranny to anarchy." In Adam, H. & Ford, R. (Eds.), Mending rips in the sky: Options for Somali communities in the 21st century (pp. 5–11). Lawrenceville, New Jersey: The Red Sea Press, Inc. Political loyalties are based on clan and region rather than political party, which, according to the UN Office for the Coordination of Humanitarian Affairs makes the sustainability of a centralised political system "difficult".
Anthropologist Spencer MacCallum has identified the rule of law during the period as that of the Xeer, a customary law indigenous to Somalia. The law permits practices such as safe travel, trade, and marriage, which survives "to a significant degree" throughout Somalia, particularly in rural Somalia where it is "virtually unaffected". MacCallum credits the Xeer with "Somalia's success without a central government, since it provides an authentic rule of law to support trade and economic development." In the Xeer, law and crime are defined in terms of property rights; consequently the criminal justice system is compensatory rather than the punitive system of the majority of states, and the Xeer is "unequivocal in its opposition" to any form of taxation. Powell et al. (2006) find that the existence of the common law dispute resolution system in Somalia makes possible basic economic order. MacCallum compares the Xeer to the common law in 6th century Scotland, and notes that there is no monopoly of either police nor judicial services, a condition of polycentric law. However, a weakness of such a system is that it proves ineffective at handling disputes and enforcing resolutions that cross clan boundaries. For example, in a dispute involving telecommunications company Aerolite, the plaintiff from the weaker clan was unable to collect the "unfairly" small settlement they had been awarded.
Organized crime
Piracy One of the most notable forms of organized crime during this period was piracy. The collapse of the central government and the absence of a functioning coast guard led to an increase in piracy off the coast of Somalia. Pirates targeted commercial vessels, holding them for ransom and generating significant revenue. In 2008 alone, Somali pirates were responsible for approximately 100 attacks, with ransoms ranging from $500,000 to $3.5 million per vessel. The total ransom income for that year was estimated at $120 million.Anyu, J. Ndumbe and Samuel Moki. "Africa: The Piracy Hot Spot and Its Implications for Global Security." Mediterranean Quarterly, vol. 20 no. 3, 2009, p. 95-121. Project MUSE, https://muse.jhu.edu/article/317555.
The economic impact of piracy extended beyond the immediate ransoms. Global shipping companies faced increased insurance premiums and rerouted their vessels to avoid Somali waters, leading to higher operational costs. The World Bank estimated that Somali piracy added approximately $18 billion annually to global shipping costs due to increased insurance premiums and rerouting.
Other forms In addition to piracy, charcoal trafficking became a significant source of revenue for criminal networks. With the collapse of the banana industry and reduced access to European markets, the Somali charcoal trade flourished in the 1990s. Charcoal was produced by cutting down and burning acacia trees, then transported to ports in southern Somalia for export to the Gulf Cooperation Council states. This trade not only provided financial support to armed groups but also contributed to environmental degradation.Mahajan, Nidhi. "Dhow Itineraries: The Making of a Shadow Economy in the Western Indian Ocean." Comparative Studies of South Asia, Africa and the Middle East, vol. 39 no. 3, 2019, p. 407-419. Project MUSE, https://muse.jhu.edu/article/742021.
Social conditions The international aid group Médecins Sans Frontières stated that the level of daily violence during this period was "catastrophic". While the homicide rate was significantly higher than in the US or in Europe, it was actually lower than in most of the African countries. A statistic from 2000 indicated that only 21% of the population had access to safe drinking water at that time, and Somalia had one of the highest child mortality rates in the world with 10% of children dying at birth and 25% of those surviving birth dying before age five. Additionally, "adult literacy is estimated to have declined from the already low level of 24% in 1989 to 17.1% in 2001."World Bank Advisory Committee for Somalia Country Re-Engagement Note (pdf) (2003), retrieved 4 November 2005 A more recent 2003 study reported that the literacy rate was 19%. The impact on human development in Somalia of governmental collapse and ensuing civil war was profound, leading to the breakdown of political institutions, the destruction of social and economic infrastructure and massive internal and external migrations.
According to a study by the libertarian think tank the Independent Institute: In 2005, Somalia ranked in the top 50 percent in six of our 13 measures, and ranked near the bottom in only three: infant mortality, immunization rates, and access to improved water sources. This compares favorably with circumstances in 1990, when Somalia last had a government and was ranked in the bottom 50 percent for all seven of the measures for which we had that year's data: death rate, infant mortality, life expectancy, main telephone lines, tuberculosis, and immunization for measles and DTP."
The libertarian think tank the Mises Institute also repeatedly praised Somalia, as has the Libertarian think tank the Cato Institute.
Prior to the fall of the Somali government in the early 1990s, Somalia's life expectancy was approximately equal to neighboring Ethiopia. As of 2014, after a quarter of a century of minimal government, life expectancy in Somalia was 9 years behind Ethiopia. However, both of them improved drastically. During the year of 2025, Somalia had a life expectancy of 61.70 years, and is expected to rise to 63.70 years for 2026.
Social organization
In the absence of functioning governmental institutions and regulations, they were supplanted by the private sector and clan law. Commentators identify evidence of areas where the private sector adapted to the stateless environment. A 2004 World Bank study of the Somali economy concluded that "it may be easier than is commonly thought for basic systems of finance and some infrastructure services to function where government is extremely weak or absent." The New York Times referred to post-state Mogadishu as "the ultimate example of deregulation," noting that "[g]utsy entrepreneurs, including some women, opened their own hospitals, schools… telephone companies, power plants and ports".
Communications
In the absence of government service provision and regulation, private businessmen stepped in to provide telecommunications and mail services. In 2007 parts of Somalia had some of the best voice telecommunications in Africa, with 10 or more competing companies ready to wire home or office and provide crystal-clear service, including international long distance, for about $10 a month. According to the CIA World Factbook, private telephone companies "offer service in most major cities" via Wireless technology, charging "the lowest international rates on the continent", Installation time for a land-line was just three days, while in neighboring Kenya waiting lists were many years long. On the other hand, just 0.7% of the population of Somalia had access to internet in 2006, a sixth of Kenya's internet penetration at the time,Christian Fuchs, Eva Horak, Africa and the Digital Divide http://fuchs.uti.at/wp-content/uploads/divide.pdf and in 2007 mobile phone penetration rates in Somalia were amongst the lowest in Africa.
The Economist argued the lack of telecommunication regulation in Somalia represented "a vivid illustration of the way in which governments…can often be more of a hindrance than a help" to private entrepreneurs.