Good Institutions and Good Policies are the Bedrock of Puntland’s Development

[General Duke]

Somalia: Good Institutions and Good Policies are the Bedrock of Puntland’s Development

7 Sep 7, 2010 - 10:54:00 AM

 

by Abdiweli M. Ali, Ph.D.

 

It is very likely that the transition of Puntland state from civil war, and the collapse of the state structure to democracy will coincide with severe economic hardships. What is worth noting here is the attitude of Puntlanders themselves towards their homeland. The false perception of Puntland as an inhabitable, isolated desert was perpetuated by the policy of neglect and indifference of its politicians and intellectuals. Therefore, I will gear my discussion towards the goal of improving the economic and social living standards of the people of Puntland.

 

Although many factors outside Puntland’s control will affect its future outcome, I will emphasize those institutions and economic policies, which I think are under the purview of the government and which, I think, will contribute to the consolidation of the transition to good economic performance. Chief among these are: political freedom and civil liberty, economic freedom, political credibility, stable economic policies, transparent political system, decentralization of power and accountable state institutions.

[General Duke]

Institutions

 

Let me start with the importance of institutions and stress the fundamental role that institutions play in a country’s economic development and its social change. Differences in institutions and economic policies will produce different outcomes. The institutional setting in which economic policies are undertaken are of crucial importance and the quality of these institutions can be a primary source of the difference between economic development and economic stagnation. One of the biggest damages that Siad Barre regime did was to undermine state and legal institutions and build a state based on personality cult. No country in the world with poor institutions such as an unreliable legal system, corrupt government, and insecure property rights succeeded economically. Many people in Puntland lost their property in the South. It is therefore imperative that the government of Puntland establish institutions that discourage banditry, and encourage law and order. Good institutions include the supremacy of the rule of law, protection of private property, efficient bureaucracy and effective judiciary.

Freedom

 

The most important thing that a government can give to its people is to restore their God-given freedom. Although most of the people would emphasize political freedom and civil liberty, I give more weight to economic freedom. The fundamental concepts of political freedom and civil liberties include freedom to organize political parties; freedom of the press and religion; and the freedom of assembly and demonstrations. However, freedom should be defined more broadly and include economic dimensions as well as the freedom to own and dispose of private property, the freedom to exchange and trade, and so on. The government of Puntland should allow the citizens of Puntland a real voice in public policy and should protect individual political rights and civil liberties.

[General Duke]

Economic Policy

 

Another important thing that will affect the success of any government is the quality of the government’s economic policies. I will address the effect of fiscal, monetary and trade policies in Puntland’s transition to democracy. Fiscal, monetary and trade policies will affect the economic environment in which economic activity takes place. One of the fiscal factors that have been considered to have a major impact on economic growth is the size of the government. It is therefore necessary to reduce government bureaucracy. This will minimize the habit of the people depending the government for the things that they can do for themselves. The government should cut the size of the unnecessary expenditure for the 7000 police force that can’t guarantee a safe passage between Bossasso and Qardo. They need a small but efficient government. If you create a government big enough to give you everything you need, it would be a government big enough to take everything you have. The Puntland administration should not fall into the trap that the size of your bureaucracy is a reflection of your power. If your seven thousands police force can’t defend Las Anod or bring southern Galkayo under the Puntland administration, what is the point of paying them?

 

The government should also open the Puntland economy and fully engage in international trade. It should work hard to seek markets for its livestock and the other natural resources to eliminate the foreign exchange bottleneck of depending on few Arab sheikhs for your livelihood. In terms of monetary policy, the most important thing that it can do is to protect the value of the people’s money. I do not want the government to be disadvantaged by not printing money and not receiving signiorage but overdoing it will create unforeseen economic consequences. Excessive money supply is the most significant factor of economic instability.

Credibility and Transparency

 

The government of Puntland should be credible and transparent. You can provide credibility not by decree but by enforcing the law of the land and abiding by it. In other words, you earn credibility when a government enforces the rule of law and is bound by it. You have to earn credibility; the biggest obstacle to political credibility is a presidency with excessive discretionary powers. The president and the members of his administration should be frugal with their discretionary powers.

 

The government should also be transparent, and to be transparent, it should allow the full freedom of the press and the mass media. Transparency allows the government to sustain its political future. It will allow the government to build a power-base not on the basis of clients and individuals but on the basis of grass-root support. Freedom and good economic policies coupled with transparency and political credibility will guarantee a political success and acceptance from the masses.

[General Duke]

Decentralization

 

The government should also decentralize the political power. In addition to horizontal separation of powers, the power of the Puntland state should also be vertically divided. The idea of decentralization is to establish different hierarchical levels and to distribute the power of the state in a way that creates mutual dependence. By sharing the legislative and enforcement powers with lower levels of government, decentralization will also reduce the pressure on the government to deliver and will allow it to deflect criticism. By decentralizing, the people in Garowe are not only sharing the power with lower level groups but also the responsibility and the blame that comes with it. It makes no sense that the director of Galkayo hospital or the Banderbeila District Commissioner are appointed from Garowe. Their blunder will be the government’s responsibility.

 

A Cautionary Note

 

The formation of Puntland should have created substantive outcomes for the people of Puntland. It should have offered all the relevant forces real opportunities to improve their material and moral well-being. The biggest enemy of Puntland as a political entity is a performance failure. If it can’t deliver, it might not be worth having it.

[General Duke]

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