The core argument of this chapter is that state failures in Somalia are central to the terrorist challenge in Somaliland and Puntland, and this is deepened by the active presence of extremist groups committed to installing the Islamist alternative to governance and political leadership within Somalia and beyond. It links the relative successes recorded in counterterrorism in breakaway Somaliland to the effective mobilisation of the local population as critical partners by the Government in Hargeisa. Drawing from the trends and dynamics in the Horn of Africa, it predicts that the threats of terrorism in Somaliland and Puntland will persist in the near future in view of the spread of extremist narratives by the Al Qaeda and Islamic States cells in East Africa and adjoining neighbours. It therefore calls for the intensification national, regional, and international efforts to exorcise the spectre of terrorism in Somaliland and Puntland.