Photo credit: ctsnow, http://commons.wikimedia.org/wiki/File:Convoy_trip_in_Mogadishu.jpg
Earlier this month, I was struck by an article that I read in the New York Times about recent developments in Somalia. The insurgent group al-Shabaab's decision to withdraw from the capital has created a rare opportunity for Mogadishu to stage a comeback. NYT journalist Jeffrey Gettleman describesthe gradual transition to a more stable order:
Outside, on Mogadishu’s streets, the thwat-thwat-thwat hammering sound that rings out in the mornings is not the clatter of machine guns but the sound of actual hammers. Construction is going on everywhere — new hospitals, new homes, new shops, a six-story hotel and even sports bars (albeit serving cappuccino and fruit juice instead of beer). Painters are painting again, and Somali singers just held their first concert in more than two decades at the National Theater, which used to be a weapons depot and then a national toilet. Up next: a televised, countrywide talent show, essentially “Somali Idol.”
Mogadishu, Somalia’s capital, which had been reduced to rubble during 21 years of civil war, becoming a byword for anarchy, is making a remarkable comeback. The Shabab, the fearsome insurgents who once controlled much of the country, withdrew from the city in August and have been besieged on multiple sides by troops from the African Union, Kenya, Ethiopia and an array of local militias.
Now, one superpower is left in the capital — the African Union, with 10,000 troops (soon to be 17,000), tanks, artillery and armored personnel carriers that constantly chug up and down the street — and the city is enjoying its longest epoch of relative peace since 1991: eight months and counting.
While these developments are encouraging, there seems to be a consensus that (a) recent gains are fragile and reversible, and (b) the Transitional Federal Government (TFG) needs to seize this unique moment in history -- by accelerating its domestic reform efforts -- if it is to have any hope of building a legitimate state. In particular, there is a growing sense that the TFG needs to bring some transparency and discipline to its management of public finances.
A new book by Dr. Ali Issa Abdi entitledSomalia: Crisis in Economic and Financial Managementaddresses this issue at length. Dr. Issa Abdi, a former IMF official and the current Managing Director of the Horn Economic and Social Policy Institute (HESPI), argues convincingly that state building requires sound public financial management, and in a highly aid-dependent country like Somalia, sound public financial management and aid transparency go hand in hand.
By almost all accounts, the TFG has done an exceptionally poor job of managing aid monies, in spite of the fact that approximately 95% of its operating revenue comes from external sources. A February 2012 reportfrom International Crisis Group notes that "there is no reliable database covering all development funds." And a recent audit conducted by the Public Financial Management Unit in the Office of the Prime Minister has revealed that as much as 85% of the central government's revenue is never even recorded. The apparent lack of financial accountability does not inspire donor confidence. U.S. State Department cables made available through Wikileaks (hereand here) suggest that donors have become very frustrated after transferring cash to the TFG and never receiving a proper accounting for their funds.
Of course, aid transparency is a two-way street. Donor agencies have for years run their Somalia operations out of Nairobi or Hargeisa because of security concerns, making it difficult for the TFG authorities in Mogadishu to pressure donors for detailed information about where, when, and how their aid money is being spent.
But the perfect need not be the enemy of the good. There are specific measures that the government of Harvard-trained Prime Minister, Abdiweli Mohamed Ali, can take to improve the transparency of foreign assistance flows. The recent experience of Liberia suggests that relatively simple measures -- shoring up anti-corruption and audit institutions, creating a centralized aid management unit, and insisting upon a common reporting mechanism for all development projects -- can transform even exceptionally fragile states into "good enough" development partners.
Prime Minister Ali can even look within Somalia's own borders for sources of inspiration. The semi-autonomous government of Somaliland has recently taken steps to strengthen their public financial management systems and introduce basic rules of engagement for donor agencies and NGOs that wish to offer assistance. For example, they have introduced an Aid Information Management System and published an aid effectiveness report. The semi-autonomous government of Puntland is moving in a similar direction.
We will continue to monitor the TFG's public financial management reform efforts with interest, and we invite readers with knowledge of recent developments in Somalia to contribute to an open discussion on The First Tranche.