This article aims at examining the notion of loss in understanding state formation by looking at local politics in urban markets of Mogadishu. In response to the violence of the early 1990s and the withdrawal of the municipality from marketplaces, market traders organized daily governance by creating market committees. Based on ethnographic material collected over a year and half of fieldwork in two marketplaces of Mogadishu, I identify two typical models of political authorities to illustrate the dynamics of state formation. By analyzing the affective engagement with the state to deal with dilemma in the mundane practice of everyday life, I illustrate traders created market committees to maintain and safeguard the state in the marketplace, engaging with the obligation to protect, mediate and the ambivalence of recognition. In doing so, this article gives important insights into state formation dynamics by revealing the paradoxical effects of daily encounters between traders and municipal representatives and their respective imaginaries of the state.