Report: Somalia Has Not Accounted For Majority of Revenue

[Mario B]

A World Bank report says the Somali government has not accounted for most of the revenues and donations it received in 2009 and 2010.

 

The report, released this week, says World Bank auditors found that Somalia's Transitional Federal Government (TFG) received far more money than it has said.

 

The report's author, Joakim Gundel, said auditors found the government had collected at least $94 million in revenues in 2009. But the government reported only $11 million in revenues.

 

In 2010, auditors found the government collected $70 million in revenues, while the government reported just $22 million.

 

“There is a discrepancy in what comes in and there’s a lack of accounting of how money has been spent," said Gundel. "So that opens naturally a big question mark for sure."

 

Gundel said discrepancies appear to back assertions made one year ago by a Somali government whistleflower.

 

The former chief of Somalia's public finance unit, Abdirizak Fartaag, said an audit found strong evidence of mismanagement and misappropriation of funds.

 

The World Bank report said not all revenues and donated funds are deposited in the central bank, and it is not clear where they go.

 

“What we did observe is that in relationship to the bilateral funds, donations often they are given directly to individual government members and do not exactly specify exactly who and how," said Fartaag. "But such donations appear to have happened. But we did find and did make observations that this money is not fully deposted in the central bank, sometimes it’s only partly.

 

The report found the United Nations-backed government has no real accounting system nor does it publicly disclose financial statements. It also said the weak transitonal government lacks transparency, making it difficult for auditors to fully assess the country's finances.

 

Gundel said the unaccounted for money could significantly bolsters Somalia's security without relying on foreign donations.

 

The weak transitional government has received significant foreign aid and donations to help it address persistent conflict, instability, poverty, food shortages and an insurgency by al-Shabab militants.

 

Under a U.N.-brokered roadmap, Somalia is to form a post-transition government. The plan calls for the adoption of a new constitution by July 1 and parliamentary elections to be held on August 20.

 

Somalia has not had a stable central government in more than 20 years, since warlords overthrew President Mohamed Siad Barre.

 

VOA

[Mario B]

We need a National Audit Office and Director of Audit, ASAP!

[Carafaat]

$11 million in revenues

Even Somaliland has a revenue of 110 million, 10 times this amount. how the hell is this possible?:mad:

[Mario B]

Somalia needs to create it's institutions, we can't have governance without them. I think the new Joint Financial Management Board will improve our situation come August.

[Mario B]

Sudden interest in Somalia points to suspect Western corporate interests

 

 

By RASNA WARAH

 

Sunday, March 04, 2012

 

In her book The Shock Doctrine, Canadian author Naomi Klein argues that Western governments often use humanitarian relief and reconstruction as an excuse and an opportunity to force poor or strife-torn countries to adopt neoliberal economic models that ultimately serve the interests of Western corporations.

 

Citing examples from Chile, Sri Lanka, South Africa, Russia, Argentina, among other countries, she shows how political and economic turmoil has been used as an entry point by Western countries to introduce economic reforms that would ordinarily be unpopular with local populations.

 

In Iraq, for instance, after the ouster of Saddam Hussein, US companies made a fortune providing security and other services to Iraqis, all in the name of promoting democracy and good governance.

 

In Chile, the US government actively undermined the presidency of Salvador Allende, a left-leaning democrat, and supported the coup that brought Augusto Pinochet to power.

 

Pinochet, in turn, unleashed neoliberal reforms that were in line with US interests.

 

In Sri Lanka, after the devastating tsunami of 2004, land previously occupied by fishing villages was taken over by big hoteliers.

 

Capitalism

 

Klein refers to these events as “disaster capitalism” — “orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities.”

 

While I would not go so far as claiming that the London Conference on Somalia hosted by the UK government last month was yet another business opportunity for Western governments and companies, the timing of the conference is certainly suspect.

 

Facing massive unemployment and recession at home, Western countries may be looking at Somalia as an opportunity to expand markets and revive local industries.

 

It is possible that Western countries have woken up to the fact that Somalia represents an untapped source of natural resources and a destination for Western goods.

 

Somalis are in need of virtually every service, and have huge infrastructure shortfalls, which could be filled by Western companies.

 

Also, the country’s resources have remained under-exploited for 20 years, and its leaders could be persuaded to give rights and concessions to Western companies in exchange for aid.

 

Indeed, two days after the London conference, the Guardian newspaper reported that Britain was seeking oil-drilling rights in Somalia.

 

The Canadian company Africa Oil has apparently already begun oil exploration in Puntland.

 

Is aid the carrot that is being used to obtain these rights? It’s possible.

 

In London, Somali Prime Minister Abdiweli Mohammed Ali told the Observer that in the future, a share of natural resources would be offered in return for help with reconstruction.

 

“There’s room for everybody when this country gets back on its feet and is ready for investment,” he said.

 

And who exactly is in charge?

 

Questions are also being raised about who will drive the reconstruction project.

 

BBC journalist Mary Harper, the author of the newly-published book Getting Somalia Wrong?, told this writer that despite the impressive groundwork done by Britain in engaging with, listening to and learning from Somalis, the final communiqué emanating from the London conference appeared “rather thin and vague on many key issues.”

 

For instance, the question of who exactly will be in the charge of the country once the tenure of the Transitional Federal Government (TFG) expires in August this year is not spelt out clearly.

 

The conference endorsed the establishment of a Constituent Assembly to replace the TFG, but its task seems to be focused purely on governance issues, such as the preparation of a constitution, the establishment of institutions and preparations for elections.

 

But this Assembly will not manage donor funds. Nor will it manage or collect taxes from ports and airports.

 

The task of managing Somalia’s economy appears to rest with the newly-established Joint Financial Management Board, comprising representatives from Britain, France, the European Union, the World Bank and the Transitional Federal Government (TFG) (and later any future government), which aims to “increase transparency and accountability in the collection and efficient use of public revenues, as well as international development aid, and which will help strengthen Somali public financial management institutions.”

 

The Board’s stated objectives are to minimise corruption, maximise the use of funds in the public interest and improve accountability and transparency on where and how Somali revenues and donor funds are spent.

 

At face value, this appears to be a step in the right direction given the corruption and financial incompetence within the TFG, United Nations agencies and humanitarian organisations.

 

Lack of trust in the TFG’s and the UN’s ability to deliver development to Somalia and use funds appropriately was probably what prompted the establishment of the Board.

 

Somalia is desperately in need of a financial facility that can monitor how donor and domestic funds are used.

 

However, Canada-based Abdirizak Mohamed, editor of Hiraan Online, is worried that the Board is yet another nail in the coffin of Somalia’s sovereignty.

 

“We may have lost our sovereignty when we allowed African troops into Somalia and when the UN Security Council expanded the mandate of Amisom a day before the start of the London conference. But now with this new Management Board, comprising European donors and the World Bank, we have lost our independence to manage our resources.”

 

The presence of the World Bank in the Board also raised questions about the philanthropic intentions of Western donors.

 

Is Somalia going to be revived through loans from the Bank, and if so, will Somalia be in debt before it is on its feet?

 

The other issue that is not clear is whether the oversight function of the Joint Financial Management Board will supersede agreements that prevent donors from monitoring UN agencies.

 

The European Community has signed a Financial and Administrative Framework Agreement (FAFA) that does not allow it to do external audits of UN projects that it funds.

 

The UN is expected to manage EC contributions in accordance with its own rules and regulations, which allows for a lot of pilfering and mismanagement.

 

Will the FAFA agreement be overlooked in Somalia?

 

Non-traditional donors

 

The glaring absence of non-traditional donors, such as Turkey — which has made significant and tangible contributions to the reconstruction of cities such as Mogadishu in recent months — from the Board suggests that perhaps the real intention of the London conference was to diminish Turkey’s influence in Somalia and impose a West-friendly regime to ensure that Western companies and corporations benefit the most from the reconstruction project.

 

Since the Board will not only decide how money is used but where, it could decide to undertake projects that are most beneficial to countries represented on the Board (i.e. Britain, France and the European Union), rather than allow for more open and competitive bidding for projects.

 

Some analysts feel that the London conference was hastily convened to influence a conference on Somalia being organised by the Turkish government in June, which might have come up with alternative solutions that may not have pleased Western governments.

 

Many Somalis have welcomed Turkey’s aid to Somalia, partly because Turkey is seen as a “neutral” partner, and as a secular Muslim nation, is culturally more acceptable to Somalia’s largely Muslim population.

 

Neoliberal model

 

The dominance of traditional Western donors in the Joint Financial Management Board also suggests that the development paradigm being pushed in Somalia will be aligned to the Western neoliberal model that calls for increased liberalisation, deregulation, privatisation and cutbacks.

 

However, this model cannot work in Somalia where regulation is actually needed to stabilise and revive the economy and where state institutions are either non-existent or too weak to regulate markets and the economy.

 

The London conference, while purporting to come up with a “Marshall Plan” for Somalia, also failed to recognise that a Marshall-like plan can only work in countries (like post-War Germany) that already have well-established institutions and industries that can be revived through an injection of funds. Somalia has neither.

 

While businesses such as mobile phone companies are thriving in Somalia, they are not regulated or taxed, though an informal system of taxation has developed whereby “taxes” are paid to faction leaders, local administrations, Islamist groups, port militias and armed men at roadblocks.

 

The lack of an established tax regime in the country and the absence of regulatory bodies means that industries operate informally, even when they are highly profitable.

 

While Somalis are known for their entrepreneurial culture and their ability to take risks, the injection of donor funds (most likely followed by the recruitment of Western companies to deliver services and infrastructure) could cause a sudden volatility in the economy, and fuel resentment of foreign-owned businesses...

 

 

Rasna Warah is a columnist with the Daily Nation.

(rasna.warah@gmail.com)

[ElPunto]

When they say collected - does that mean from internal sources ie taxation etc or does it include moneys given as donations? If it is only internal sources - I don't see what business it is for them to comment when almost all developing countries have the same problem. What the focus should be is on helping them develop institutions to manage the money and account for it.

 

This talk about loans from the World Bank and IMF is a non-starter. There are many hurdles to qualify for these loans - at this point it's nonsense to even mention them.

[Mario B]

^ It's both, internal revenue and donations from Arab countries and the like. But for the sake of good governance we should have an audit system. Transparent accounting will give us credibility. As for IMF and World Bank loans, we should forget it. Either donor nations give us budgetary support or like Turkey come and do the projects themselves. In the meantime, we have the 4billion Dollars loan we need to repay, maybe that's the reason why the World Bank has come out like this in public, to remind us that they haven't gone away a bit of Forget Me Not.

[Somali philosopher]

i would like to see a report on how much the world bank cheats third world countries.

[ugaas Ali]

^^^ Good luck with that one!

[Mario B]

^^ The developed world spend $50 Billion a year on aid in Africa, in return they take from the continent nearly $350 Billion in interest payments, capital flight and profit, each year.:eek:

 

Of the $4trillion of debt that the World bank and IMF is owed by the developing world, nearly 50% is owed by Africans.