AfDB Fragile States Facility Enables Somalia Prepare First Budget in 20 years

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"The African Development Bank needs to be relevant to all its Regional Member Countries (RMCs), and that includes fragile states. These are states in need of our expertise and support. We must continue to uphold the vision and boldness the Deputies had when they founded this initiative. We must use all available instruments to respond to the needs of these states, including public support,"* President Donald Kaberuka.   

In line with its commitment to the needs of all its regional member countries, the African Development Bank (AfDB) Group’s Fragile States Facility (FSF) has provided Somalia with a UA 2.50-million (USD 3.8 million) budget support grant.

The grant falls under the Bank’s pillar III programme, which targets support to economic and sector operations, capacity building and technical assistance in countries classified under the Bank’s Fragile States.  

The resources, which represent the Bank’s contribution to a broad public finance management and sector reform program in Somalia, have already enabled the country to prepare a national budget for the first time in 20 years. So far, UA 1.3 million (USD 2.0 million) of this amount has successfully been used for capacity building and technical assistance to financial integrity institutions project in the country.   

The objective of the FSF support is to establish a sound foundation for a transparent and accountable public finance management (PFM) system and an operational financial sector in Somalia.  This includes the development of legislation, financial management policies and procedures as well as staff training. The project also covers the improvement of several other aspects of PFM such as:  budgeting, accounting, financial reporting, procurement, and internal and external audit. Support to the financial sector includes updating the Central Bank and Financial Institutions Acts, and training of middle and senior staff, including accounting officers and departmental directors of the key finance integrity institutions as well as other selected government officials.

These efforts will strengthen the PFM system and help to improve service delivery in key sectors. The training sessions for Budget Unit officials were conducted during the third quarter of 2010. They were aimed at building a sound public finance management, through participants’ intensive exposure to key issues in budget formulation, execution and timely reporting and monitoring. The sessions’ participants helped to produce Somalia’s 2011 budget documents and supporting information, including the 2011 budget framework and budget accounts.

The FSF was established to finance the Bank’s Fragile States Strategy (FSS), which also includes other two major pillars: 

  • Providing operational support in excess of the performance-based allocation (PBA) for infrastructure rehabilitation and reconstruction and
  • Arrears clearance.  

Somalia was already under AfDB sanctions due to unpaid arrears before the civil war which led to the collapse of the State in 1991. The country has been severely fragilized by continuous military conflicts, internal divisions, prolonged civil war and the absence of a central government. Somalia’s economy has virtually collapsed, and in the absence of government services, the private sector has stepped in to provide telecommunication and other utilities. The growth of the private sector under such difficult institutional and security conditions has been described as “truly remarkable”.