Coca-Cola Co., the world’s largest soft-drink maker, plans to set-up a bottling plant in the breakaway republic of Somaliland, saying its stability and economic growth provide “conducive” conditions for investment.

Somaliland Beverage Industries, owned by local businessman Ahmed Osman Guelleh, was awarded a license to operate the factory that’s under construction and expected to start operating by the end of September, Ndema Rukandema, Coca-Cola’s franchise general manager for the Horn, Islands and Middle Africa, said yesterday. Coca-Cola has so far invested $10 million to build the facility in Hargeisa, the capital.

Somaliland declared independence from Somalia two decades ago, after the fall of dictator Mohammed Siad Barre. While no country officially recognizes Somaliland’s sovereignty, it has remained largely free of the clan warfare, kidnappings and assassinations that plague Somalia, to the southeast.

Coca-Cola enters an economy that the government says is almost entirely reliant on remittances sent home from citizens living abroad and the proceeds of camel, cattle, sheep and goat exports to the Middle East and North Africa. Output from the plant is meant to substitute sales from Coca-Cola beverages currently imported from the Middle East, Rukandema said.

“Somaliland is a growing economy, made buoyant by the level of trading activity in the country,” Rukandema said in an e-mailed response to questions. “The stability that the country has enjoyed over the last several years is a positive indication of a conducive business environment.”

Coca-Cola’s agreement with United Bottling Co., its partner in Somalia’s capital of Mogadishu where Africa Union troops and government forces are trying to drive out Islamic rebels, is “not in effect,” and production has been halted, he said.

Somalia’s government has been battling Islamist insurgents, including al-Shabaab, since 2007. The rebels control most of southern and central Somalia. The U.S. accuses al-Shabaab of having links to al-Qaeda, which has said it aims to establish a caliphate, or Islamic government, in the Horn of Africa country.

by SARAH MCGREGOR