6/26/2022
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Economic and Financial Reform – an opportunity for the new government

By Abdi Ali
Thursday May 26, 2022

Why Somalia needs a central “Office for Financial and Economic Reform” that is accountable for delivering change within government and can push through reforms at speed.

Within the last four years, how much did the Somali government spend on consultants, advising on reform programmes? How many financial and economic reform programmes were successfully delivered in the last four years, and what was their impact on Somalia’s economy – in terms of job creation, financial management or economic development? More importantly, who was ultimately responsible for the implementation of the government’s reform agenda?  

We know the answer to the first question, thanks to Somalia’s budget. No one would be able to give the answers to the second and third questions. One thing is certain though: there has never been anyone within government that was ultimately accountable for the government’s reform agenda. Indeed, if that were the case, Somalia would not be where it is today.   

Over the last four years, the Somali government spent a staggering over $100 million on “Consultancy and Professional Fees”, all of which relating to advisory services. Over half of this sum was signed off by the Ministry of Finance (MoF) alone, ostensibly to be used for the various economic and financial reform projects the MoF was coordinating on behalf of International Development Institutions (IDIs).

With these colossal sums of money being spent on expensive consultants, we might well ask whether there is anything to show for it. For proof on whether the $100 million was well-spent or not, just look at the implementation of two of Somalia’s most important, and longest running, reform milestones – currency reform and public financial management (PFM). Both reforms have either floundered over the years or never took off the ground, wasting millions of dollars in the process. Somalia still does not have a viable national currency and Ministers use their personal Gmail accounts to conduct government business. PFM is currently listed as a HIPC Completion Point Trigger milestone for the debt relief, nearly a decade after the initiative first started. No one knows when, if indeed ever, Somalia will have a viable national currency.    

Where things are going wrong

The successful implementation of financial and economic initiatives, that are critical for Somalia’s development, are hampered by two things: (i) the lack of Somali ownership of the reforms, and (ii) the lack of a delivery body within the government that can act a centre of expertise and is ultimately accountable for successful delivery of reform programmes.

Start with the first problem. From the start, the Somali government has no input into how the overall reform programme should be delivered and what the intended outcomes should be. All of this is largely left to IDIs to articulate – to be drafted by someone sitting at a distance from the realities on the ground. There is also very little understanding of how different reform programmes interact, impacting multiple functions within government. This means there is no identification beforehand of the key activities needed for the programme’s success or assessment of the realism of what is being proposed. Without a coherent grasp of what needs to be delivered, how long it would take and why, it often becomes impossible to measure success, including whether agreed outcomes pass value-for-money tests.

The second issue points to the lack of delivery body within the government that is dedicated to providing robust governance and assurance over the quality of key reform projects, and seeing them through to conclusion. As reforms take a long time to deliver and cut across government departments, there is an obvious execution capability risk; various interdependencies emerge and political priorities get in the way, to name a few. While so, given this obvious execution risk, there is no support available to government Ministries and agencies that are implementing reforms and no systematic way of dealing with foreseeable risks and issues. A Minister whose department is supposed to implement reforms would be looking over their shoulder, worried about the political revolving door, rather than focusing on the job at hand. Risk of corruption means project funding becomes a magnet and an all-too-consuming priority for the Minister. What really matters – delivering the right outcomes for the country – is pushed aside.      

Related to this issue is how to support organisational readiness and change with Somali skills. Most of the reform projects come in with an IDI’s add-on of expensive consultants, explained away as the best way to fill in important skills gaps. However, there is often no Somali strategy that outlines how best to develop local skills to help deliver the transformation needed – something that can be done at a fraction of the cost of external consultants. When these consultants leave, important knowledge is lost and succession planning becomes almost impossible.

Office for Financial and Economic Reform

An Office for Financial and Economic Reform (OFeR) would (i) create an effective and accountable central stewardship that provides clear leadership and oversight, ensuring Somalis own and are accountable for reform programmes; (ii) become a centre of expertise in the development and delivery of critical government priority reform items; and (iii) review and challenge whether reforms achieve desired outcomes for Somalia.

OFeR can only be successful if it has relevant political sponsorship. The office needs to be at the centre of the new government’s transformation agenda, and be led by a credible expert who brings expertise and leadership to the role. OFeR’s role would be to set out objectives, budgets and delivery timelines and priorities; develop workstreams aligned to core financial and economic objectives; and be accountable for pushing through reforms across the machinery of government.   

The leadership of OFeR needs to have a dotted line to the president through a seat at the National Economic Council, as well as a non-ministerial seat at the cabinet. This is to ensure it can pull the right political levers when roadblocks emerge. The office would need to have a clear structure, roles and responsibilities which are endorsed by the political sponsors.  As the transparency for using Somali money would also be key, OFeR would be able to publish programme spending plans; progress updates on reforms; clear workstreams aligned to specific reform initiatives; metrics on how individual government departments are doing in implementing reforms; coordinate audit reviews; assess project costs, risks and benefits.

The OFeR would also reduce implementation risks considerably by supporting the training and development of Somali resources. This will help with the transitioning of reform programmes seamlessly from projects into mature business-as-usual processes, using local expertise.

Finally, OFeR would make success and failure more visible and transparent through timely information, allowing the political sponsors to hold others to account, supporting effective decision-making. It would mean there is delivery accountability across the reform value-chain through which ministers and other civil servants can be held responsible should they fail to deliver on outcomes.

When $100 million is wasted, the cost falls back on Somalis. It means $100 million less for investment in hospitals, schools, security and indeed Somalia’s future. It is galling indeed.

The new government has an opportunity. Delivering the right outcomes should be the priority.

 Abdi Ali
[email protected]



 





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