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Somalia’s vicious cycle of aid without development

by Abdirazak Fartaag
Monday, October 22, 2012

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The election of Hassan Sheikh Mohamud as president of the first post-transitional government in Somalia has raised the hopes of the Somali people, who have lived without a functioning central government for more than 20 years.

President Mohamud has inherited 20 years of dysfunctional institutions. In the past 12 years, both the Transitional National Government (TNG) and the Transitional Federal Government (TFG) had many opportunities to fix the country’s institutions, but failed to do so, largely because they did not have the political will.

No commitment

Although both the TNG (2000-2003) and the TFG (2004-2012) managed to re-establish a parliamentary system with quasi-active line ministries, constitutional commissions, integrity institutions and a security sector, there was no real commitment to make them work. 

For instance, the police and military were not restructured and retrained and the intelligence service was not re-established. One of the reasons why the security issue was not tackled adequately was because the leaders themselves relied on warlords and clan militia to further their own interests, for instance, to gain territorial access. Clan-based security also impeded the development of a national security force; each clan relied on its clan members, rather than on a national force, for security.

More importantly, the transitional governments did not lay the foundation for effective nation building. They did not revitalise the civil service, even though on paper they had budgetary bodies, including ministries, which in fact were largely “suitcase institutions” that were managed from hotel rooms in Mogadishu and Nairobi. Quite often, government ministries did not even know how much of the budget had been allocated to them. Responsibilities related to the budgeting process and relations with donors were centred in the Office of the President, the Office of the Prime Minister and the Ministry of Finance.

After the fall of Siad Barre in 1991, the entire regulatory, administrative and financial systems of Somalia broke down irretrievably. Because of the lack of robust and reliable government financial systems and procedures, Western donors began supporting the transitional governments set up in 2000 through multilateral organisations, such as the United Nations, rather than bilaterally.

This period saw a plethora of NGOs springing up in Somalia to support the work of the UN and international humanitarian organisations. Unfortunately, in many cases, these NGOs were not accountable to anyone, and a lot of the funding went astray in the hands of local warlords, NGO heads and unscrupulous businesspeople. This led to a vicious cycle of aid without meaningful development. Because they could not access Western donor funds directly, both the TNG and TFG began relying on Arab countries, mainly in the Gulf region, to fund their operations. But because the Arab countries were relatively lax about monitoring how their money was spent, the opportunities for diversion of funds increased substantially.

Corruption thus became institutionalised and deeply entrenched. The socio-economic fabric of Somali society deteriorated. Terrorism and piracy took root. Famines became more frequent and camps for internally displaced people mushroomed in the capital and other major towns.

The challenge for President Mohamud is to break this vicious cycle. He will have to win over donors and investors by creating institutions that can be trusted with funding. He also has to put in place a regulatory and tax regime that can boost the country’s domestic revenues.

One way the system can be fixed is by creating the proposed Joint Financial Management Board, which was put forward at the London and Istanbul conferences on Somalia early this year. The Board, comprising donors and the government, aims to increase transparency and accountability in the collection and efficient use of public revenue. Its creation is vital for the re-establishment of accountable financial institutions that will instil confidence not just among donors, but among future investors in Somalia’s economy.

Abdirazak Fartaag was the head of Somalia’s Public Finance Management Unit in the Office of Prime Minister in from 2009-11.

This article was first published on The East African


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