The bullet-scarred hospital is basic but operational, the school is simple but has laughing children. Small successes for most nations; a major achievement in war-torn Somalia.

However, heavily armed gunmen loyal to at least three potentially rival forces also patrol the dusty tracks of this war-ravaged southern Somali town, which Al-Qaeda allied Shebab guerrillas continue to attack.

"It is stable, but there is no peace," said surgeon Omar Bile in his crude operating theatre, newly rebuilt by diaspora funding after being badly damaged in fighting last year between Shebab fighters and local gunmen.

Impoverished Dhobley, just five kilometres (three miles) from the Kenyan border, is a microcosm of both the massive potential that peace can bring to this devastated region, as well as the enormous challenges in achieving that.

Top Somali and international leaders meet Thursday at a conference in London aimed at reviving peace efforts. But in a nation that has defied multiple efforts to quell violence over more than two decades of wars, progress is slow.

"Every night we hear shooting," Bile said.

He had operated on several civilians with gunshot wounds, as well as those injured in Kenyan airstrikes aimed at Shehab insurgents, he added.

Kenyan troops patrol the small town, alongside two separate Somali militia groups. The country's soldiers crossed into southern Somalia in October to attack Shebab bases.

"Some of the shooting is by the militia, but the Shehab are still around and attacking," Bile added, his head wrapped in surgical dressing for want of a proper medical cap.

Regional armies and pro-government forces continue to claw territory away from hardline Shebab fighters in southern and central Somalia.

African Union troops are fighting them in the capital Mogadishu, while Kenyan troops have pushed in from the far south of the country.

Ethiopian troops and tanks have pushed in from the south and west fighting alongside anti-Shebab militia forces, seizing the rebel bastion of Baidoa on Wednesday.

But ensuring that it is peace follows the departure of the extremists remains a massive challenge. Shebab fighters have in the past melted away in face of all-out assault by regular troops, only to return to attack as a guerrilla force.

Multiple militia forces are bound for now by opposition to the Shebab, but if the extremists can be crushed, many fear rivalries between different factions will erupt.

In Dhobley, like elsewhere in Somalia, local warlords with a chequered history, mixed loyalties and often dubious at best observance of human rights have emerged as leaders in areas from where the Shebab have pulled out.

"We are not fighting for ourselves, but for peace," said Ahmed Madobe, a powerful Islamist warlord who broke from Shebab colleagues to form his own army, the Ras Kamboni militia, which partly controls the town.

"Any Somali can join us, we are for the liberation of our people," Madobe added.

In the complex world of shifting Somali alliances, he is now backed by former enemies Kenya and the transitional government he once vowed to crush.

The weak Western-backed transitional government controls only the Somali capital Mogadishu with the support of some 10,000 African Union troops, and its direct grip here is almost non-existent.

Madobe's troops, dressed in plain green uniforms, shelter under trees out of fierce sun, automatic rifles resting on their laps.

So also do soldiers in camouflaged patterned uniforms -- the forces of Mohamed Abdi Mohamed, also known as Gandi, an academic who spent years in France and was once backed by Kenya to establish a southern Somali state called Azania.

"We are not fighting but things are not always easy between us and Ras Kamboni... there are tensions," said Abdulkadir Ali, a fighter with Azania forces.

For now at least the gunmen are calm, with their commanders in an uneasy and loose alliance, but locals in Dhobley warn that tensions are brewing.

"There are problems coming, because the leaders must come to an agreement over power arrangements here," said Abdullahi Mutawakal, an elder, adding that militia forces had themselves already begun to fracture into separate factions.

"It must be a political deal, because people are too tired of war," he added.

In the courtyard of the small town's freshly painted primary school, children in neat uniforms play in a courtyard, while others chant lessons on a blackboard with their teacher.

"Things have improved greatly recently," said Abdulkadir Mohamed, who returned to Dhobley four months ago from Kenya, where he had fled to during earlier heavy fighting. "There are still attacks, but we pray these decrease, not grow worse."