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During the late 19th and early 20th centuries, the town came under the authority of the Sultanate of Hobyo established by Sultan Yusuf Ali Kenadid. Initially, Kenadid's goal was to seize control of the neighboring Majeerteen Sultanate (Migiurtinia), which was then ruled by his cousin Boqor (King) Osman Mahamuud. However, he was unsuccessful in this endeavor, and was eventually forced into exile in Yemen. A decade later, in the 1870s, Kenadid returned from the Arabian Peninsula with a band of Hadhrami musketeers and a group of devoted lieutenants. With their assistance, he managed to overpower the local Hawiye clans and establish the kingdom of Hobyo.
In 1888, Sultan Kenadid entered into a treaty with Italy, making his kingdom a protectorate known as Italian Somaliland. His rival Boqor Osman would sign a similar agreement vis-a-vis his own Sultanate the following year. Both rulers had entered into the protectorate treaties to advance their own expansionist goals. Kenadid sought to use Italy's support in his ongoing power struggle with Boqor Osman over the Majeerteen Sultanate, as well as in a separate dispute with the Sultan of Zanzibar over an area to the north of Warsheikh. In signing the agreements, the rulers also hoped to exploit the rival objectives of the European imperial powers so as to more effectively assure the continued independence of their territories.
Hobyo has a population of around 11,800 inhabitants. The broader Hobyo District has a total population of 67,249 residents. The city is primarily inhabited by people from the Somali ethnic group, with the Habar Gidir well-represented.
- Haji Bashir Ismail Yusuf – first President of the Somali National Assembly
- Yasin Osman Kenadid – writer and intellectual
- Yusuf Ali Kenadid – founder of the Sultanate of Hobyo
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