Somali Compact Progress Report 2014

Transcription

1 Somali Compact Progress Report 2014 The Federal Republic of Somalia

2 TABLE OF CONTENTS Foreword... 2 Introduction... 3 I. Overall Progress and Challenges... 4 II. A New Partnership... 9 III. Peacebuilding and Statebuilding Goals: progress, challenges and way forward PSG 1: Inclusive Politics PSG 2: Security PSG 3: Justice PSG 4: Economic Foundations PSG 5: Revenue and Services IV. Cross-cutting issues V. Humanitarian overview VI. The way forward ANNEX 1: Detailed reporting per PSG PSG 1: Inclusive Politics PSG 2: Security PSG 3: Justice PSG 4: Economic Foundations PSG 5: Revenue and Services ANNEX 2: PSG Milestones ANNEX 3: Partnership principles proposed indicators ANNEX 4: Somalia s Debt Reconstruction: Progress Report (September 2014) ANNEX 5: Financial Governance Committee Progress Update ANNEX 6: Interim roadmap towards the use of country PFM systems ANNEX 7: Overview of SDRF funding windows I. UN Multi Partner Trust Fund II. World Bank Multi Partner Fund III. African Development Bank Multi-Donor Trust Fund for Somalia (AFS) ANNEX 8: Aid flows in Somalia Somaliland Special Arrangement Annual Report

3 Foreword September 2012 heralded a new era for Somalia. After decades of conflict and instability, a federal government was established, built through national dialogue and consensus, and unanimously recognised by the international community. When the Federal Government was formed, Somalia was divided; with no clear path to reconciliation and unification and terrorist groups controlled most of the country. The tasks ahead were daunting, and expectations were high. Somalia faced the significant challenge of simultaneously building frameworks and institutions, whilst needing to immediately deliver tangible benefits to the Somali people- schools, hospitals, roads whilst fighting a war. September 2013 marked the beginning of a new partnership between Somalia and its international partners, with the endorsement of the Somali Compact. The Compact established a partnership based on mutual accountability and shared risk and responsibilities, between the Federal Government, Parliament, regions and people of Somalia, and international partners. The Somali Compact highlights the importance of Somali-owned and -led planning based on joint priorities, reached through dialogue, and sustained through reconciliation. Now, in November 2014, we look back at the past year, to take stock and look forward. The New Deal Progress Report captures the progress made, challenges experienced and the next steps needed to ensure delivery against the five Peace and Statebuilding Goals of the Somali Compact. The Report details the considerable energy and resources in making substantial progress towards ambitious goals. Somalia is at a critical juncture in its efforts to achieve security and stability. We are winning the war but must win the peace. We must not forget the importance of political reconciliation, unity and stability for long-term reform. The key to delivering peace and building sustainable security for the Somali people is the formation of a unified and federal Somalia. As we look toward the next two years, we must urgently deliver on priority legislation, the establishment of commissions, and ensure the public consultations that will enable us to achieve the three intertwined strands of Vision We must ensure improvements that impact the lives of all Somalis. We must defeat al-shabaab, ensure the rollout of stabilisation initiatives that connect the government to citizens, root out corruption, build mechanisms to capture revenue that is then used to provide schools for Somali children, create jobs, and ensure healthcare. Somalia s natural resources must be used for the good of all, and an enabling environment created for the private sector to flourish. We have set the foundations of the new beginning for a sovereign, secure, democratic, united and federal Somalia, at peace with itself and the world, and for the benefit of its people. On these foundations we must now raise the pillars of stability, security, equality and prosperity. 2

4 Introduction The Federal Government of Somalia (Federal Government) and the international community have jointly authored the New Deal Progress Report (the Report). The Report s purpose is to detail progress made in the first year after the endorsement of the New Deal Somali Compact, acknowledge challenges, and set out identified next steps requiring action in The Report builds upon the work done under each of the five Peace and Statebuilding Goals (PSGs) and contains an analysis of aggregated accomplishments. It draws on data and information supplied by a range of sources, including: the five PSG Working Groups (PSG WG); endorsed reports, statements and communiqués such as the Addis Ababa Agreement (August 2013), the London Security Event Communiqué (18 September 2014), the Federal Government s Six Pillar Report (September 2014), and the Communiqué arising from the High Level Meeting on Somalia held on the sidelines of the 69 th United Nations General Assembly (September 2014). A progress report on the implementation of the Somaliland Special Arrangement is also included. The Somali Compact recognised that ultimately, its successful implementation will be measured by the impact on the life of Somali people. Such monitoring is not yet possible, but partners must collectively strive to continue improving joint monitoring, towards measuring progress on the impact on the lives of citizens. The Report has been circulated and consulted with Somali and international stakeholders. The Report informs discussion at the HLPF Copenhagen. The Somali Compact ( ) was endorsed in September 2013 at the Brussels Conference. It was a crucial time for the Somali people as Somalia embarked on the path of reconciliation and reconstruction after years of conflict. The Somali Compact is testament to the new partnership between Somalia and the international community, based on mutual accountability and shared risk between the Federal Government, Parliament, regions and people of Somalia, and the international community. The Somali Compact highlights the importance of establishing joint priorities, reached through dialogue and sustained through reconciliation; which is further elaborated through Vision 2016 that establishes the context for inclusive cooperation between the Federal Government and regions. Progress has been made, but considerable challenges remain. Somalia is at a critical juncture in its efforts to achieve security and stability. Thus, one year after the endorsement of the Somali Compact, it is now time to review this progress, address the challenges, identify possible gaps, and agree on what must be accomplished in the coming two years to ensure a sovereign, secure, democratic, united and federal Somalia at peace with itself and the world, and for the benefit of its people. 3

5 Somalia and its partners have faced the significant dual challenge of simultaneously building frameworks and institutions to lay the foundations for future development, whilst needing to immediately deliver tangible benefits to the Somali people, in an environment of political fragmentation, and fighting a war against terrorist groups. Much effort was devoted to operationalise the governance structures of the Somali Compact. The Somalia Development and Reconstruction Facility (SDRF) launched on 28 October 2013, is the centrepiece of the Somali Compact. It is the mechanism for the Federal Government to oversee and guide the Somali Compact s implementation, in cooperation with development partners. Its governance structures consist of three layers: The High Level Partnership Forum (HLPF), co-chaired by the President of the Federal Republic of Somalia and the United Nations Special representative of the Secretary General (SRSG), is the main platform for dialogue and policy discussion on Somali Compact implementation. The SDRF Steering Committee (SDRF-SC), chaired by the Prime Minister and co-chaired by a New Deal lead donor on a rotating basis, provides oversight and guidance for the implementation of the Somali Compact, including commitments on financing and aid delivery. PSG Working Groups (PSG WG) have been established. The PSG WG are responsible for sectoral planning and programmatic co-ordination at a technical level, as well as to discuss of international assistance coordination. The Aid Coordination Unit (ACU) was established to act as the SDRF secretariat, and is also responsible for information sharing and awareness-raising of the Somali Compact. I. Overall Progress and Challenges The Somali Compact reinforces the dynamism of the Somali people and the linkages between the different layers of Somali society, the Federal Government and its international partners. It is a key political document that: details the mutual commitments between the Federal Government and international partners; defines aid policy and principles, and sets out the framework for short and medium term sectoral reforms. When endorsing the Somali Compact in September 2013, the Federal Government and international partners emphasised the importance of maintaining the momentum towards positive change and reconciliation in the country, reaffirming support for Somalia's sovereignty and territorial integrity. This section provides a summary of the overall progress achieved since the endorsement of the Compact and the main challenges faced. A more detailed analysis per PSG can be found in section V below, as well as in the PSG specific annexes. Outlining a road map to national political settlement was critical. The Executive and Parliament recognised the importance of establishing key institutions and processes that would pave the 4

6 way to long-term peace and stability. In response, Vision 2016 was launched and work commenced to implement the three interwoven strands of reviewing and adopting a revised Federal Constitution, federalism and preparing for national elections in Implementation of the Addis Ababa Agreement of 28 August 2013 started, as well as the agreements to form Interim Regional Administrations (IRAs) in south-west and central regions of Somalia. The Federal Government led discussions for the establishment of district, regional, and IRAs. Key legislation forming the basis for Vision 2016 has been developed and submitted to Parliament, albeit not yet passed, and the Independent Constitution Review and Implementation Commission has been formed. While some progress has been achieved, significant challenges remain both at the national and sub-national level, and gains made are still fragile. National and sub-national institutions must work together to create resilient systems capable of handling future challenges. Security remains critical for political, social and economic progress. Establishing capable, accountable and inclusive Somali security institutions remains vital. This must be done through integration of existing security forces into one cohesive structure that provides protection for all people, in particular women and children. The Somali National Army (SNA), in joint operations with the African Union Mission to Somalia (AMISOM) military forces, has successfully accomplished two joint offensive operations, recovering 80% of southern and central regions of Somalia from al-shabaab. The Federal Government has laid down a vision for an affordable, accountable and professional Army, outlining the immediate requirements of its troops and the path to development of the Somali Armed Forces (SAF). The Somali Police Force (SPF) supported through training and equipment support, has also played a critical role in delivering an improved security environment. The National Security Council (NSC), overseeing policy decisions on security matters, has been formed. Much progress has been made in meeting the requirements of the United Nations (UN) Security Council Resolution 2142 (2014). Weapons and ammunitions management (WAM) progressed with the establishment of a defined institutional framework for WAM oversight. The integration of existing security forces into a cohesive structure is a priority that goes hand in hand with progress on political inclusiveness. The integration of local armed groups into the SNA, and other federal and regional security structures, is a critical part of the political benchmark against which progress should be measured, and should therefore constitute a cornerstone of a mutual accountability framework between the Federal Government and states. There has been progress on the Federal Government s roadmap on the integration of forces and agreement to rapidly develop a concept note and detailed plan setting out integration principles. A strategy for stabilisation, with components related to reconciliation and governance, law enforcement and peace dividends was developed and is being implemented. Each of the Districts recovered has a caretaker administration in place. With international support, funds are being mobilised to implement community projects in most of the recovered locations. Mechanisms for coordination and dialogue between the Federal Government, AMISOM, the UN 5

7 and international partners have been established and are operational, thus fostering a coherent and unified approach to assist district recovery and promote the extension of state authority. Progress against the establishment of independent and accountable justice institutions capable of addressing the justice needs of the people of Somalia has been steadily advancing; however it has been primarily focused at the federal level. The strengthening of the Ministry of Justice and Constitutional Affairs (MoJCA) provides a solid base from which to implement further reforms including most importantly delivery of services across Somalia. A number of priority laws have been reviewed and passed, capacity support was provided to key justice institutions and the provision of legal aid to citizens increased. These provide greater access to justice for the Somali people and lay the basic foundations for the legitimacy of the Federal State Significant progress has been made on public financial management; greater accountability measures and controls have been put in place. Key legislation, including Public Financial Management (PFM), audit policy and a procurement law have been drafted and submitted to Parliament, albeit not passed. The Federal Government has taken important steps to strengthen governance at the Central Bank of Somalia (CBS). A new Governor and Board of Directors were appointed. Steps were also taken to improve business processes, critical for efficient and transparent government expenditure, and a basic accounting and reporting framework was put in place, as well as a biometric payroll system. The Financial Governance Committee (FGC), which is a joint committee between the Federal Government and technical experts from International Finance Institutions (IFI) was established, to provide oversight and greater transparency to financial governance. Further work is required to strengthen transparency and accountability. Key legislation must be passed, reformed procurement processes implemented, and automating payment processes established. As mentioned in a recent review of the FGC, consideration should be given to strengthening the oversight role of the FGC. This should be accompanied by providing the Federal Government with sufficient technical support to enable the implementation of key reforms, in particular strengthening the government vetting process of contracts. The eroding impact of corruption on progress in Somalia is recognised and requires attention. A growing economy will generate both employment and essential revenue to support the delivery of public services, helping build trust in government and encourage social cohesion. While government revenues in 2014 have increased by approximately 19% compared to 2013, largely due to improvements in inland revenue, more than half of the government revenue is still derived from donor budget support (USD 87 million in 2014). More needs to be done to address the technical and political economy barriers to improved revenue collection. Somalia's re-engagement with IFIs will be crucial in achieving these goals. The re-engagement will be based on continued commitment by the Federal Government to sound economic governance, and continued progress in establishing systems to provide transparency and accountability of revenues. In addition, debt relief continues to be a key priority for the Federal Government, with the development of the roadmap underway. 6

8 More than two decades of conflict and state collapse resulted in extreme livelihood vulnerability and associated high poverty levels. Work has commenced to establish the foundations for service delivery, through setting standards, developing targeted plans and projects, building partnerships with non-state and/or private actors, and strengthening the capacity of local authorities. Addressing the lack of service provision in the education and health sectors has begun, with a focus on building the resilience of the most vulnerable communities. Progress has been made in the implementation of the Health Sector Strategic Plan (HSSP). The delivery of the Essential Package of Health Services (EPHS) was scaled up. As a result more than 80,000 pregnant women and 406,000 children under five years of age and their families have access to high quality health, emergency obstetric and neonatal care, nutrition and WASH services The public education sector was revived for the first time in more than two decades, with an additional 78,000 children enrolled over two years. Progress has been made on improving and rehabilitating infrastructure, with roads built, solar streetlights installed in Mogadishu, and buildings and markets rehabilitated. This has begun the process of creating an environment where the private sector can function and grow, contributing to job creation. The development of legislation, regulation and licensing requirements will further contribute to the shift to a more formalised economy. Investment in the traditional productive sectors of agriculture, livestock and fisheries has been made in the past 12 months, including but not limited to investments in productive equipment and infrastructure (primary and secondary canals, river embankment rehabilitation, water pumps, tractors and tools, stores, post-harvest handling and storage equipment). Short-term labour-intensive work, coordinated by Federal Government, line ministries and local authorities, has been provided. National livestock vaccination and treatment campaigns have been successfully conducted. Upon endorsement of the Somali Compact, the importance of strengthening mutual accountability between the international community and Somalia, and between the Federal Government and the Somali people was highlighted. It was agreed that mutually agreed milestones to guide implementation were critical. The need for increased coordination of support to Somalia, to ensure transparency and complementarity and avoid duplication, was recognised. The process of alignments to Somali Compact priorities has begun. The Somali Development and Reconstruction Facility (SDRF) has been established in order to help strengthen delivery through country systems and institutions. International partners have gradually commenced working within its framework. The SDRF coordination and governing structures are operational with the participation of representatives from the Federal Government, Parliament, Civil Society, Federal Member States, emerging IRAs and international partners. In 2014, PSG WG completed the mapping of resources and needs within their different sectors, submitted initial priorities for funding and identified milestones for

9 The new financing architecture proposed in the Somali Compact has been partially delivered through the establishment of two multi-donor trust funds (funding windows), the United Nations Multi-Partner Trust Fund (UN MPTF), and the World Bank Multi Partner Fund (MPF). However, funds committed to the funding windows remain modest, minimising the potential benefits of the financing architecture. Planned contributions to the funding windows account for only 3% and 6% respectively of planned disbursements reported by international partners for 2014 and 2015 respectively. Discussions have advanced on the engagement of sub-federal entities in the implementation of the Compact. Recent meetings of the HLPF and the SDRF-SC counted with the participations of representatives from Puntland, IJA, Benadir and Galmudug. These entities have now dedicated focal points per PSG. Another significant achievement has been the inclusion of specific priorities of states and IRAs in the PSG discussions. Sub-federal entities are at different stages on their planning capacity and processes. Most have a priority plan and further work is required in ensuring their full integration of such plans within the Compact. In certain cases, work has already been conducted in having a prioritisation process for alignment with the priorities and structures of the Compact, as was done in Puntland. At the Brussels Conference, international partners provided political and financial support for the implementation of the priorities set out in the Somali Compact, with accompanying pledges amounting to 1.8 billion. A recent donor mapping exercise outlines the alignment of pledges to PSGs. It also showed that the majority of aid flows are managed by international partners or implementing partners directly, with only approximately 10% of reported aid being managed by government. Data from the government and international partners must be further refined to more effectively guide national development priorities. Focus has been on the development of legislation and policy, and laying the foundations for systems to enable the Federal Government to engage in service delivery. In the coming period it will be vital to ensure that resources continue to be used to support ongoing policy and institutional development activities, but importantly, resources must be earmarked for activities directly addressing on-ground, community level needs. The political and security progress witnessed in Somalia since September 2012 has not translated into significant improvements in the humanitarian situation. For the first time since the 2011 famine, the number of people in need of life-saving assistance has increased, an indication that the modest gains made in the last two years are being reversed. A further 2.1 million people are struggling to meet their minimal food requirements and are on the verge of slipping into acute food insecurity. This brings the total number of people in need of humanitarian assistance to 3.2 million. The Compact implementation has also faced overall challenges. The last year saw a substantive investment in the establishment of the different bodies foreseen to implement the Somali Compact. This investment was necessary, in order to provide the structure to allow the Somali Compact to fulfil its role of bringing political dialogue and technical work together, within the same platform. 8

10 However, the asymmetric knowledge and understanding of the purpose of the process, coupled with very limited capacity to engage in the different bodies; limited awareness raising and information sharing and inconsistency of participation and representation, generated frustrations and high expectations on delivery through the Compact architecture. Additional efforts are needed to ensure engagement at senior level and continuity in representation in the Compact architecture. As discussed during the stakeholder workshop 1, inclusiveness of the process and its architecture and ensuring that prioritised needs at local levels are adequately reflected, remain a challenge. Much progress has been made on the inclusion of sub-federal entities despite logistical difficulties. However, this must be strengthened by developing the necessary technical capacity for their meaningful engagement. In addition, the logistical difficulties of holding meetings exclusively in Mogadishu have been recognised and options are being discussed to rotate locations of meetings. Regular dialogue and sharing of information would contribute to ensuring that locally identified needs are addressed through the Compact mechanisms. Coordination structures at the local level need to be established to facilitate the engagement and participation of sub-federal entities in the Compact implementation. Inclusion of civil society in general, and engagement and communication to citizens about the Somali Compact are areas that require attention in the next period. Substantively, it will be crucial to better address inter-linkages between PSGs (such as the link between service delivery and infrastructure) and issues that require concerted action under different PSGs (such as durable solutions). In addition, data that provides the basis for joint planning and monitoring needs to be improved. A common understanding on how to translate the partnership principles into concrete action still needs to be consolidated. While international partners have provided an unprecedented level of visibility on their levels of aid and their forward spending projections to the Federal Government in 2014, concerns remain regarding the way aid is planned and delivered. Dialogue must continue in order to foster aid delivery with and through Somali institutions. Agreeing on the process to enhance leadership and ownership of Somali institutions in the delivery of assistance and to strengthen mutual accountability needs to be prioritised. II. A New Partnership The Somali Compact outlines nine partnership principles to be used in implementation. It specifies that a framework should be established by the Federal Government and international partners to monitor the implementation of these principles. 1 A 3 days stakeholder workshop was held in Mogadishu in September The workshop counted with the participation of representatives from all regions and IRAs, including IJA, Puntland, Galmudug, Hiran, Middle Shabelle and Benadir. During the workshop, the challenges of substantive engagement of sub-federal entities were discussed and recommendations formulated. 9

11 Monitoring the partnership principles should advance three main objectives: (i) stimulate dialogue about the quality of the partnership between the Federal Government and development partners; (ii) assess adherence to the partnership principles, by both the Federal Government and development partners and (iii) incentivise better partnership and mutual accountability by providing evidence of lessons learned and identifying concrete areas for improvement. Initial indicators for the partnership principles have been agreed (ANNEX 3). On this basis, baselines and targets will be developed for monitoring in the coming years. As foreseen in the Compact, multi-partner trust funds are being established under the SDRF, as their common governance arrangement. They are administered by technical agencies in areas of comparative advantage. Two multi-partner trust funds administered by the UN and the World Bank have been established and are operational, to deliver financing support of the Compact priorities. The UN Multi-Partner Trust Fund covers activities throughout the five PSGs, while the World Bank Multi Partner Fund focuses on PSG 4 and PSG 5. Both funds also support the cross-cutting priority of institutional capacity development. Initial funding priorities have been identified for both funds and endorsed by the SDRF Steering Committee in mid The establishment of a multi partner trust fund to be administered by the African Development Bank, which will focus on supporting large-scale infrastructure initiatives, is progressing. The ACU conducted an aid mapping exercise of current and planned aid flows in Somalia (ANNEX 8). Thirty-five bilateral and multilateral agencies and funds reported indicative aid flows, providing a clearer picture of how aid supports implementation of the Somali Compact. Initial analysis on aid data indicates USD 1.47 billion in planned disbursements for 2014 and As a clear breakdown of pledges and their intended purpose is not readily available for all international partners, it is difficult to track forward spending projections against pledges; disbursements and forward spending projections may include aid not included in the initial pledge, presented in Brussels. The information gathered provides greater insight on the alignment of aid funding to Federal Government priorities. Much work has been done to gather and align ongoing and new projects to the PSGs. The link between funding allocations and prioritisation of needs, however, requires further attention. For example, the justice sector, a key priority for all partners, receives only 2% of overall resources. Going forward, it will be crucial to ensure that resources are aligned to the Somali Compact priorities and that the appropriate channels are established through the SDRF are being utilised for such decisions on alignment. Despite high levels of reported aid, a limited amount has been committed to the SDRF funding windows. Only five international partners reported planned disbursements to SDRF funding windows for : the European Union (EU), Finland, Italy, Sweden and the United Kingdom (UK). Planned disbursements to funding windows account for only 3% of the planned disbursements reported by international partners in 2014, and 6% of planned disbursements in

12 The proportion of funds channelled through the SDRF funding windows should increase. As committed at the Brussels Conference, all partners should build upon the work pioneered by the Norwegian-funded Special Financing Facility (SFF) and Turkey and use national systems. The national funding streams of the SDRF funding windows provide a way to use and strengthen country systems. While there is a readiness amongst international partners to support the use of country systems, discussion continues over the speed at which this can happen, coupled with discussions on enhancing public financial management systems. Use of country systems enables more predictable public spending, increased effectiveness of expenditure, reduced transaction costs, stronger recipient country ownership, greater transparency, and greater accountability. In accordance with the Partnership Principles, partners made a commitment that aid will be provided in line with the Federal Government s budget cycle, gradually channelled through country systems, and will help strengthen PFM systems. Development partners committed that on the basis of agreed benchmarks, the overall share of aid funding channelled through the national budget and using country systems would be increased. According to the aid mapping, the majority of aid flows are currently managed by international partners or implementing agencies directly, that is with little or no engagement of government. At present, only 10-11% of reported aid is managed by the government. Dialogue must continue in order to foster aid delivery with and through Somali institutions with greater government involvement in project implementation. In order to facilitate the increase of development funding channelled through the Federal Government s systems and based on the principle of mutual accountability, the Federal Government and international partners have developed a roadmap outlining both short-term benchmarks and long-term goals (ANNEX 6). The Federal Government is committed to strengthening PFM systems through short-term quick wins, such as developing a more balanced budget and strengthening transparency in the payment process and long-term reforms. Important steps have been taken, including initiating the implementation of a financial management information system, improved expenditure controls and publishing of national financial statements. In turn, development partners can ensure government engagement at the planning stage of programs and that development spending is on plan, on budget and on report, and gradually increase the percentage of funds channelled through country systems. This will allow for greater national ownership and contribute to building government capacity in line with the Partnership Principles and commitments of the Somali Compact. If implemented, these reforms will collectively lay the foundations for Somalia s access to the Highly Indebted Poor Countries (HIPC) debt relief and associated arrears clearance. 11

13 III. Peacebuilding and Statebuilding Goals: progress, challenges and way forward PSG 1: Inclusive Politics Strategic Objective: Achieve a stable and peaceful federal Somalia through inclusive political processes. Though some milestones were met, progress has not been as rapid as hoped. The legal framework required for the implementation of Vision 2016 advanced; the Constitution Review and Implementation Commission law was passed by the Council of Ministers and endorsed by the Parliament; the Boundaries and Federation Commission law was passed by the Council of Ministers and submitted to the Parliament; and the National Independent Electoral Commission law has been drafted and has been submitted to the Council of Ministers for consideration. A draft of the political parties law has been completed and is being reviewed by the Council of Ministers. Cooperation with Puntland and the Interim Jubba Administration (IJA) has intensified with Somali-Somali dialogue resulting in agreements signed in Agreements have been reached for the establishment of the South-West and Central IRAs. Technical committees are in the early stages of establishment and discussions are ongoing for the establishment of an IRA covering the remaining southern and central regions of Somalia. District level administrations are being established. Following the local governance law, interim and permanent administrations are being established several districts and caretaker administrations have been put in place in all recovered districts. Gains made are fragile and will need consolidation to become sustainable. The formalisation of the government system must now extend outward to regional level governments. This process must be overseen by the centre, but be responsive to local demand and mindful of local contexts. Local level efforts of reconciliation inform civic dialogue and evolve into the local governance structures. Time must be allowed for change to take root and due process followed by all agents of change: from the Federal Government through to caretaker administrators, District Peace and Stability Committees, comprising elders, women, youth, civil society, non-governmental organisations (NGOs) and international partners. Accompanying these political and governance processes, reconciliation activities are taking place, ranging from social through to civic dialogues and political reconciliation activities at the district and national levels. Reconciliation conferences have been initiated in Kismayo and Baidoa and there is a commitment to holding one such conference in each newly formed IRA. The political progress in reaching out to regions is commendable. However, other aspects of political stability remain fragile. Making progress against the Somali Compact objectives hinges on the resolution of political challenges, with ongoing close and regular monitoring required. An agreement for reviewing it within six months of the HLPF meeting in Copenhagen has been 12

14 reached. It is paramount that the key legislation for the full implementation of Vision 2016 is passed urgently. This includes the establishment of the Boundaries and Federation Commission and the National Independent Electoral Commission. The revision and subsequent adoption of the Federal Constitution is critical. Progress has been slow, and although the formation of the Independent Constitution Review and Implementation Commission is laudable, the Oversight Committee must be formed as soon as possible so that work can commence in earnest. The Inter-Regional Consultative Forum (IRCF), or its equivalent must be regularly convened to deliberate on priority areas of the constitutional review process, keep Parliament informed and oversee subsequent public consultation. Civic education that explains the constitution review process to citizens must commence so that the Somali people understand their roles and responsibilities in adopting a new Federal Constitution. Establishing the National Independent Electoral Commission will catalyse preparations for holding democratic and inclusive national elections in Key legislation to enable the holding of elections, and that related to the referendum process, citizenship, political parties, voter registration, and the electoral cycle must be drafted and be presented to Parliament. Broader consultations to define electoral systems could commence quickly. A comprehensive communication and civic education strategy, encompassing political participation and outlining the electoral cycle and system, needs to be implemented. PSG 2: Security Strategic Objective: Establish unified, capable, accountable and rights-based Somali federal security institutions providing basic safety and security for its citizens. Progress has been made in strengthening the security sector architecture. The National Security Council has been formed to oversee policy decisions on security matters. A programme to develop a coherent national security architecture, including linkages to security structures at sub-federal level and fiscal viability of security institution structures, has been initiated. The Security Sector Reform (SSR) efforts of the Federal Government have advanced. The coordination mechanisms underpinning the development of federal security institutions and the partner support to those institutions have been reorganised and improved in order to address the greatly expanded requirements of a country-wide approach to SSR. This is supported by a human resources system programme that will offer improved fiduciary oversight and accountability of the payment of security institutions personnel. These improvements have yet to be matched by the introduction of more effective command and control structures and systems within the middle and higher levels of the Somali Armed Forces and Somali Police Force. The capabilities of the security forces also lags behind the needs of the challenging security environment within Somalia, whilst civilian oversight has been slow to develop, and lacks the capacity to provide coordination and management guidance to the security sector. 13

15 During the recent London Security Event, noting the difficulties of simultaneously having to fight a war and undertake reform, it was agreed that the efforts to support the Army should be focused in the immediate term on those troops currently fighting alongside AMISOM. This is essential to the success of the joint offensive targeting al-shabaab and the consolidation of gains in newly recovered areas. A programme to develop a coherent National Security Architecture has been initiated. However, the establishment of important command and support structures has delayed because of the ongoing process of federation and the slow development of policy to provide strategic guidance for the security sector. This is also impacting directly on the integration of local militia forces and the formation of a maritime security coordination mechanism. Increased investment in addressing key national security architecture issues is required, to ensure that the necessary strategic direction is given to the security forces in support of national security priorities. Weapons and Ammunitions management (WAM) progressed, with the establishment of a defined institutional framework for WAM oversight and capacity building. This includes the establishment of a high-level Arms and Ammunition Management Steering Committee of both the Federal Government and international partners that will help coordinate the Federal Government's obligations under the partially lifted arms embargo. The Federal Government also created the Somali Explosives Management Authority (SEMA) responsible for the safe and secure storage and management of ammunition, explosives and weapons. In 2015 greater efforts are required to train personnel to ensure compliance of international small arms control standards, as well as improving public awareness and legislative measures. The professionalisation of the police force has progressed through basic and specialist training, including deployment to recovered areas, provision of equipment, and the refurbishment and reconstruction of police premises allowing the SPF to perform basic functions. To protect civilians and support stabilisation efforts, specialised SPF capabilities to respond to explosive threats within newly recovered areas, have been enhanced. A very high priority has been placed on addressing the many challenges relating to children and armed conflict. A Child Protection Unit was established in the Ministry of Defence to provide dedicated capacity. Several challenges remain, including lack of resources and the need for greater institutional and legislative frameworks within the justice system to ensure children are not charged as perpetrators, or as adults. Security continues to be a top priority, as both development and humanitarian efforts are dependent on a secure environment. Insecurity has hindered economic growth and large-scale development efforts, including road infrastructure across Somalia. In turn, this has weakened the link between the centre and peripheries, which has limited the reach of the government and impacted on the overall political process. Security conditions have also made it difficult for international partners to provide on the ground support and deliver on large-scale development and humanitarian programmes. 14

16 PSG 3: Justice Strategic Objective: Establish independent and accountable justice institutions capable of addressing the justice needs of the people of Somalia, by delivering justice for all. Various initiatives to strengthen the capacity of justice institutions over the past twelve months have been implemented. Specific emphasis was placed on strengthening the capacity of the MJCA through advisory and operational costs support. A Joint Implementation Support Unit in the MJCA was established to coordinate justice sector reform initiatives and has effectively done so through consultations with key justice institutions including the Judiciary, Attorney General s Office, association of lawyers, civil society and regional representatives. Consultations led to the identification of the detailed justice sector priorities and the development of an implementation plan to address them. A Policy and Legislative Drafting Unit was established in the MJCA to support the review, development and alignment of priority laws with the Constitution and international standards. As a result, over the past year the Judicial Services Commission Act was passed, the Anti- Terrorism Law is with Parliament following Cabinet approval and the Judicial Organisational Law and the Law on the Establishment of the Constitutional Court are undergoing public consultations. Reviews have been initiated of the Penal Code, Criminal Procedure Code, Civil Code and Civil Procedure Code to address any conflicts with the Provisional Federal Constitution. The Office of the Attorney General has started functioning as a management body for the Prosecution Service and the drafting of the law defining the role and responsibilities of that Office has been initiated. Capacity building for the staff of the Justice Institutions has commenced with provision of training to prosecutors, judges, and MJCA staff on a number of urgent topics, such as piracy and maritime crimes, crime scene management and gender-based violence. Scholarships programmes for legal studies at Somali academic institutions have been successful over the past year with a focus on the further development of women to enter the justice sector. Emphasis was placed on strengthening the capacities of the Corrections System, through various trainings for the Custodial Corps in Mogadishu, Garowe and Bosasso. Some of the most pressing infrastructural needs for the justice sector are being addressed including the opening of new prisons in Garowe and Bosasso. Planning for the refurbishment, renovation and building of courts, prisons and justice facilities is underway and the Mogadishu central prison is being renovated. Mobilisation of funding to address these needs remains a high priority. Civil society has received support to provide legal aid to Somali citizens. Eight legal aid centres provided free legal aid services to 3,114 clients of which 35% were women. A Traditional Dispute Resolution (TDR) Unit was established in the MJCA. The TDR unit has been researching, in consultation with sub-federal entities, on issues related to the revival and enhancement of the functioning of the traditional justice mechanisms and the position of 15

17 elders, including the creation of linkages with the formal justice system. In Puntland, the Ministry of Justice and Religious Affairs established an Alternative Dispute Resolution Unit, which has undertaken initial training with the judiciary and alternative dispute resolution practitioners. Rule of law and recourse to justice are fundamental to security, stability and development. For sustainable peace, peaceful dispute resolution systems are necessary. Support to institutional and policy development remains a top priority and needs to be accompanied by increasing concrete delivery of justice services to Somali citizens at regional and district levels. The cooperation between federal and sub-federal authorities needs continuous strengthening, to ensure that activities are linked to the overall policies and frameworks. As the Federal government increases its presence in newly recovered areas, it is imperative that it be consolidated, in order to return and entrench the rule of law to the whole of Somalia. Whilst the further deployment of mobile courts to the regions and districts was hampered by the security situation, the Somali justice institutions remain dedicated to expanding the network and geographical reach of these courts in the next year. In Puntland, mobile courts adjudicated 479 cases and this will also be further expanded. Importantly, activities within the justice sector need to be closely coordinated and mutually supportive of activities in the security sector. The lack of national resources to provide justice services to Somali citizens and the high personal security risk to those working in the justice sector remain key challenges. PSG 4: Economic Foundations Strategic Objective: Revitalise and expand the Somali economy with a focus on livelihood enhancement, employment generation, and broad-based inclusive growth. Over the past year, notwithstanding the worsened food security and nutritional situation, promising developments can be seen on moving Somalia from humanitarian crises and relief to long term, sustainable and inclusive economic growth. There were significant efforts to bolster the private sector, promote inclusive engagement of the population in productive activities, including the diaspora, and generate employment, especially for youth. On productive sectors, there was progress in increasing and diversifying production in agriculture, livestock, and fisheries. 60,000 farming households have been supported through voucher-based distribution of agricultural inputs (seeds, fertiliser, irrigation hours) and training on Good Agricultural Practices, allowing for a 50% increase in crop production. More than 100 Farmer Field Schools involving 3,000 farmers have been established across Somalia to transfer knowledge for enhanced production, and also as a basis for organisational development into farmer organisations/cooperatives. Linkages between producers and traders (both domestic and international) have been developed, translating into higher income for farmer organisation members, strengthening food security and drought resilience. 16

18 To increase incomes of pastoralists, 45 community-based animal health workers received training, and two rounds of a national livestock vaccination and treatment campaign were conducted. Veterinary drug awareness campaigns were initiated, to make better quality and accurate prescription of veterinary drugs more available. Additionally, 895 fishermen received support in the form of fishing gear and basic training, with 280 women receiving solar powered refrigerators to store and retail the daily catch. Infrastructure sector needs assessments have been undertaken in Energy, Transport, Water and Sanitation, and ICT. These assessments were carried out in coordination with respective line Ministries and government coordination bodies. The assessments focus on immediate and longterm infrastructure needs, as well as policy and legal frameworks that will improve the enabling environment and increase investment. A national youth employment framework has been developed. The framework is the result of several months of consultations and labour market studies, and identifies the most urgent employment needs of young people across the country. In addition, some 1,800,000-worker days and more than 39,000 short-term jobs were created for the benefit of Somali youth. Hundreds of youth were also provided with skills training and small business grants, to help them start-their own businesses. The Federal Government has taken the lead in developing a Somali Petroleum Regulatory Framework in consultation with development partners. A Joint Programme on Sustainable Charcoal Production and Alternative Livelihoods was developed, and is now undergoing consultations within the Federal Government. Across the sectors, the lack of human and financial capital remains the biggest challenge. Continued funding is needed to sustain productive sectors and youth employment activities in order for them to scale up across the country in areas where needs are the greatest. Institutional capacity is likely to remain weak, impacting on the development of critical productive infrastructure and legal and regulatory frameworks for natural resource management. Concessionary project financing for large-scale productive infrastructure is likely to be limited until Somalia qualifies for HIPC status. Problems of security and access will continue to affect implementation. Providing equitable economic opportunities to women is crucial. The majority of women in Somalia lacks education or marketable skills and mostly occupies low-paid jobs in the informal sectors. Poor education, lack of financial literacy, lack of business skills, and lack of access to finance and other critical business development services, accompanied by a lack of voice in private sector and policy dialogue, create obstacles for women in work. PSG 5: Revenue and Services Strategic Objective: Increase the delivery of equitable, affordable, and sustainable services that promote national peace and reconciliation amongst Somalia s regions and citizens and enhance 17

19 transparent and accountable revenue generation and equitable distribution and sharing of public resources. Somalia s socio-economic indicators remain extremely low. Only one in three Somalis have access to safe water; one in every 10 Somali children die before seeing their first birthday; one in 18 women die in childbirth. These underlying vulnerabilities compound the impact of conflict, drought and floods. An estimated 1.1 million displaced people live in crowded settlements and remain at high risk of acute watery diarrhoea (AWD) and cholera, due to limited access to basic sanitation and hygiene services. Progress has been made in the delivery of basic services through strengthening the institutional framework and improving the Federal Government s ownership and leadership in the development, implementation and oversight of sectoral programmes. Drawing on existing coordination mechanisms, dedicated structures and platforms have been established to facilitate the dialogue between the Federal Government and key stakeholders, and to guide the implementation of activities. Notable progress was made in the delivery of some programmes, especially in the health and education sectors, with a focus on building the resilience of the most vulnerable communities. The delivery of the Essential Package of Health Services (EPHS) was scaled up, benefitting more than 80,000 pregnant women, and 406,000 children under five years of age. Support to emergency nutrition response activities continued, and from January to July 2014 more than 95,000 severely malnourished children were admitted to nutrition centres across Somalia. The public education sector was revived with the enrolment of more than 87,765 children in formal primary education and close to 9,000 new students enrolled in alternative basic education. In addition, 291 permanent classrooms have been constructed and opened in September 2014 and close to 2,300 additional teachers were recruited and trained. The Federal Government has initiated critical reform measures to strengthen its PFM systems, institutions and processes as critical factors to support efficient and equitable service deliveries. A Standard Chart of Accounts was established within the Federal Government and adopted by all ministries and a Treasury Single Account (TSA) is also in place. A PFM professionalisation program started in August in four participating universities. As the reforms are being pursued, updating the PFM legal framework and passing of the PFM Bill, Procurement Bill, Audit Bill, Revenue Bill and Telecommunications Bill will be important measures in Revenue generation in 2014 increased by approximately US$40 million compared to 2013, owing to increased revenue from the airport and port. The transparency and accountability of revenue management was strengthened and revenue figures and expenditure reports are published regularly 2. The increase of inland revenue remains limited, due to the lack of clarity

20 on fiscal federalism, and further compounded by persisting levels of insecurity, impacting on sustainable revenue generation. The Special Financing Facility (SFF) established a payment system for civil servants salaries. The successor arrangement now administered by the World Bank is funding the salaries of around 3,400 civil servants in the non-security sector, enhancing the legitimacy of the Federal Government. Discussions have started regarding the progressive inclusion of sub-federal civil servant salaries into the government payroll. Scaling up the delivery of services in Somalia remains challenging. Further efforts are required to ensure that the development of policies and institutional frameworks are linked to scaling up delivery on the ground and that activities are well coordinated at all levels and across the country. In the disputed areas, responsibilities for service delivery need to be clarified so that the needs of the citizens can be addressed. In the newly recovered areas, addressing the urgent needs of the population remains challenging due to limited access, lack of service providers and lack of resources, as these areas were not included in the annual planning and budgeting processes. The development of a social protection strategy was delayed, due to the lack of a dedicated government counterpart and interlocutor. Responsibilities of different government counterparts on social protection must be clarified and dedicated focal points identified. Linkages with initiatives implemented under other PSGs, most importantly PSG 4, must be strengthened. Areas of immediate focus should include the links between service delivery and infrastructure development, especially in the area of WASH, as well as youth employment and youth education, vocational skills and entrepreneurial development, with a view to addressing the human resource shortfalls. Promoting durable solutions for the displaced require concomitant actions in PSG 4 and 5. Providing economic and livelihood opportunities, along with equal access to basic services, remains crucial for internally displaced people (IDPs) who opt either to locally integrate in the areas of displacement or to return and reintegrate in their areas of origin. The same is valid for refugees in the neighbouring countries who opt to voluntarily return to Somalia. A dedicated focus within social protection to IDPs, refugees and returnees may also be advisable, as they are among the most vulnerable groups in Somalia. Corruption is a challenge for institutions, affecting processes and every citizen. The most destructive implication is the undermining of the fragile trust established between the State and citizens. Government and partners must strengthen their efforts in promoting a culture of zero tolerance to corruption. The government needs to continue creating systems and processes that are impervious to corruption and a culture where corruption is viewed as unacceptable. 19

21 IV. Cross-cutting issues Gender: Progress has been made in the development and establishment of institutional and regulatory frameworks to promote gender equality and women s empowerment. Key progress includes the establishment of the Ministry of Women and Human Rights Development, the adoption of a National Action Plan on Ending Sexual Violence and the completion of a national review of the implementation of the Beijing Declaration and Platform for Action. Gender related challenges remain substantive. The majority of the displaced population is women and the humanitarian situation is exacerbating already severe gender inequalities, with women and girls most disadvantaged across all sectors. Women are further placed at risk of gender-based violence, particularly sexual harassment and rape, when trying to obtain access to food, water, and sanitation due to widespread impunity by armed groups, insecurity and violence. In addition to lack of educational opportunities for girls, early marriages and associated physical and psychological damages continue to erode girl s rights. On the other hand, boys remain the main victims of forced recruitment by armed groups. Going forward, existing capacity gaps and resource needs have to be addressed in order to ensure continuous follow-up and implementation of the actions agreed upon. Capacity development: The role, activities and associated internal structures of institutions have either not yet been fully refined, or are not yet operational. This has resulted in an overlap in functions and lack of coordination, resulting in conflict between departments and agencies. The last 20 years have seen the absence of a credible government; major capacity building efforts have therefore focused on up-skilling and resourcing non-state actors, such as NGOs, civil society representatives, and private firms used as middlemen to deliver services. With the Federal Government in place, this approach needs to shift, efforts must be focused on building government institutions, strengthen implementation, regulatory and oversight capacities. Bringing tangible results to people The four critical strands of the stabilisation strategy (security, reconciliation, basic service delivery and the establishment of government authority) are closely aligned with priorities under the five PSGs. The Somali Compact contains the following milestones for bringing tangible results to citizens (stabilisation): 1. Four stabilisation programmes endorsed and discussion with development partners on alignment behind these programmes 2. Action plans for agreed geographic priority areas finalised 3. Implementation of agreed work plans initiated The Federal Government s priority programmes on youth and DDR have been brought under the PSG framework. In March 2013, the Federal Government placed the lead for stabilisation activities under the Ministry of Interior and Federalism (MoIF). In tandem with the beginning of Operation Eagle, the MoIF presented the Federal Government s strategy on stabilisation to partners. This strategy has a strong focus on the governance and reconciliation elements, with a close link with community projects/peace dividends. 20

22 In addition to the strategy, the Federal Government established a coordination mechanism which brings together all partners involved on the military and civilian side of stabilisation, in order to ensure coherence of action and coordination of resources. All 13 districts recovered under operations Eagle and Indian Ocean have established caretaker administrations. Resources for community projects have been mobilised for all of these districts and activities are ongoing for the deployment of a basic police presence. The main challenges for stabilisation are the access to newly recovered areas and operational challenges facing the community project implementation. The coordination between military and civilian actors and actions has substantially improved between Operation Eagle and Operation Indian Ocean but remains challenging. The negative impact of the military operations on the humanitarian situation in the country is severe; military operations against al-shabaab led to the pre-emptive displacement of more than 80,000 people. As envisaged in the Somali Compact, stabilisation programmes and structures will transition into the overall implementation plans and mechanisms under the PSGs. For example, the subworking group (SWG) on state formation under PSG 1, will be discussing and monitoring the link between state formation and local level governance; DDR is overseen by the respective subworking group in PSG 2. The area specific work plans were not developed nor implemented. Respect for human rights: Respect for human rights is key to the credibility of the Federal Government and maintaining the confidence of the population. The Federal Government s has strengthened commitments to human rights and protection of women and children, such as recent progress towards establishing the Independent Human Rights Commission. It is important that the Independent Human Rights Commission is established as soon as possible. External relations: Relations have been strengthened with neighbouring countries through regular meetings with bilateral and multilateral partners, such as the Inter-Governmental Authority for Development (IGAD). Targeted conferences, such as the London Security Event, were held to strengthen relationship with partners and bring greater focus to Somalia s priorities. Other examples include the Tokyo International Conference on African Development (TICAD), use of country systems discussions in Rome, and high level meetings with the UK, US, EU, IGAD, Ethiopia, Kenya, Uganda and Burundi. Somalia s embassies have been established in more than 30 countries and diplomatic missions and embassies reopened in Somalia, including the UK, Turkey and UAE. Moreover a Regional Counter Terrorism agreement was signed in Ethiopia and several international treaties were ratified, including on Human Rights. 21

23 V. Humanitarian overview Although some modest food security gains were made in the last two years, a mix of drought, soaring food prices, conflict, access constraints and slow funding has led to a serious deterioration of the humanitarian situation in Today, more than 1 million Somalis are unable to meet their basic food requirements. This is up by an alarming 20 per cent since February Two-thirds of those unable to meet their minimum food needs are IDPs, with approximately 80 per cent of them women and children. A further 2.1 million people are struggling to meet their minimal food requirements and are on the verge of slipping into acute food insecurity. This brings the total number of people in need of humanitarian assistance to 3.2 million. While the climatic outlook this year was less dramatic than in 2010, several of the indicators observed during the Gu rainy season in 2014, such as cereal crop production, consumer price index and acute malnutrition levels, indicated similar concerns as in The start of the short Deyr rains (October to November) has eased the drought conditions in many parts of the country. However, food insecurity and water shortages continue to be faced by people in northern Gedo, Bakool, Hiraan, and the coastal areas of the central regions. The primary drivers of food insecurity in these areas are hot and dry conditions during recent seasons, the low supply of locally produced cereals, and disruptions to trade, due to al-shabaab blockade of supply roads. The most severely affected areas include settlements for displaced people in Mogadishu. Conflict and natural disasters also lead to new displacements on a regular basis. More than a million vulnerable Somalis, mainly the internally displaced, have no adequate access to proper shelter and household items. These affected people continue to face evictions, discrimination and gender-based violence and lack adequate protection and durable solutions. This deterioration of the humanitarian situation happens at a moment when the Somalia 2014 humanitarian appeal is funded to only 35 percent. Linkages with development Humanitarian and development are intrinsically related and interdependent; humanitarian assistance addresses the immediate, life-saving needs of citizens, thus laying the ground for development; in turn, development contributes to tackling the root causes of humanitarian crises, by addressing chronic and underlying vulnerabilities. The intersection between these activities is what is referred to as resilience. Ensuring the translation of such linkages in programmatic terms is always challenging, due to different budgetary and planning processes used for humanitarian and development activities. In Somalia, resilience activities have increased in recent years and are funded both under humanitarian and development frameworks. Strategic and operational coordination of 3 According to the findings of 2014 joint food security and nutrition assessment by the Food Security and Nutrition Analysis Unit for Somalia (FSNAU) and the Famine Early Warning Systems Network (FEWS NET). 22

24 resilience activities are deficient and must be strengthened, in order to ensure that they are developed and implemented in a way that resources are optimally used and impact increased. The Federal Government, international partners and humanitarian partners are exploring options for strengthening existing coordination frameworks, to ensure complementarity between humanitarian and development activities. VI. The way forward Political progress must continue, and pick up pace. There is still significant work remaining to complete key tasks and cement emerging activities. Over the next year, the Federal Government will prioritise tasks that are critical to ensuring a smooth and timely realisation of political objectives: a revised and endorsed Constitution, a federal system, and democratic elections. Freeing the remainder of Somalia from terrorist and militant groups is critical, and ensuring that stabilisation activities follow in close succession to liberation will be instrumental in connecting citizens to the government and enabling local governance initiatives take root. Development progress and infrastructure improvement are essential to ensure that security and stabilisation gains result in long-term, tangible benefit for Somalis, across Somalia. The Somali Compact lays a strong foundation for building reliable, transparent, accountable and functioning state institutions, respectful of the fundamental rights, freedoms and equality of its citizens. In this respect, it recognises that the establishment of sub-federal units, in the spirit of the Provisional Federal Constitution, are key milestones for a vibrant and stable Somalia. An inclusive political settlement requires full participation of sub-federal administrations, as well as direct engagement of Somali people in the political process. The review, approval and adoption of the Federal Constitution are critical to an inclusive political settlement. The full participation by sub-federal administrations is essential for the political transformation of Somalia- as set out in the Vision 2016 plan and the Provisional Federal Constitution. Thus, it is imperative that the Boundaries and Federation Commission is established within the current 2014 parliamentary session. The finalisation of remaining IRAs is to be completed by the end of Local governance structures, including the completion of the formation of district governance structures will be linked to efforts undertaken by the IRAs and the national level. Local governance structures, reinforced by supportive processes and systems to manage local-level administrations will be developed. Looking forward to national elections in 2016, the Federal Government acknowledges the need for these structures to establish the mechanisms by which communities will be engaged and involved in selecting local leaders. 23

25 The Federal Government is committed to conducting legitimate and inclusive national elections in The National Independent Electoral Commission will be established by the end of 2014, including passing the necessary enabling legislation. In view of the challenges to preparing for elections in Somalia, an electoral assessment by the UN, in consultation with AMISOM and other partners, will be undertaken to aid the Commission in its work and to commence planning for the elections. Government and Parliament need to focus in the coming months on establishing the key institutions and processes that will pave the way to longer-term peace, stability and reconciliation. National reconciliation will be pursued through implementing a Federal Government-led framework that links and integrates current diverse local level grass root reconciliation initiatives with national level discussions. Security will continue to be a top priority. The Federal Government will continue to rebuild an integrated security force that is professional, capable of maintaining peace and security, able to safeguard the sovereignty and integrity of Somalia and is under civilian oversight. Critical to this will be ensuring that parallel political and fiscal tracks are developed to support vision of an affordable, accountable and professional army. A mutual accountability framework, ensuring that progress can be monitored and evaluated will be developed. Work will progress on integrating regional militias into the Somali security forces, in consultation with regional parties by Arms embargo compliance, fiscal planning and human rights compliance will be prioritised, complemented by a collective effort to better coordinate and target support. As new areas are recovered and operations completed, greater focus and resources will be provided to support the shift from security to stabilisation. Stabilisation efforts at both the local districts, as new caretaker administrations arise, and at the national level will be strengthened and programmes rolled out; including addressing disengaged fighters, providing immediate social services to newly recovered areas, and development of vocational training and occupational activities for youth. The police will be further developed, with an emphasis on professionalisation and spread of the police force to regional areas. The incorporation of community policing initiatives will play a significant role in stabilisation, maintaining the peace and security in newly recovered areas, and ensuring that the Federal Government and international partners are able to provide assistance swiftly and easily. The Federal Government will prioritise delivery, in particular the creation of competent public institutions that prioritise service delivery to the population. Implementation capacity as well as regulatory and oversight structures will be strengthened through targeted capacity building programmes. Decentralised service delivery and key investments will be prioritised extending and increasing access to services. This will include expanding basic health, nutrition, water and sanitation, 24

26 social work, and hygiene services within federal and sub-federal government service delivery frameworks. Access to education will be provided to one million children by Work on the establishment of fair and impartial courts will continue along with the establishment of a detention system respectful of the law and of international standards. Greater access to justice for all Somali people will be achieved through strengthening of justice institutions and the provision of legal aid and traditional dispute resolution mechanisms. The Federal Government is determined to fulfil its responsibilities in combating corruption and will adopt codes of conducts as well as raise awareness and ensure accountability of officials and will establish an independent anti-corruption commission to eradicate corruption in order to build public trust in state institutions. Development initiatives must be underpinned by improved public financial management and improving revenue generation. Under the PFM programme, the Federal Government will continue fiscal reforms to promote budget transparency and strengthen Parliamentary oversight. The newly drafted procurement bill will be implemented with procurement standards and procedures rolled out. The Central Bank reform will continue with regulation and licenses extended to Somali financial institutions, establishment of a transparent national payment system and implementation of anti-money laundering and counter-terrorism financing law and regulations. The capacity of all tiers of government to collect revenue and be accountable for its revenue generation activities will be built. The model of fiscal federalism and revenue-sharing between the Federal Government and sub-federal entities will be defined. In order to move away from reliance on international assistance, the Federal Government and international community, through the SDRF, will jointly oversee the development of an articulated phased approach to increasing the use of country systems based on clear benchmarks of accountability and governance The sustainable development of Somalia is closely linked with infrastructure, and specifically public infrastructure, including water management, energy generation and delivery, roads, ports and public buildings. The Federal Government will prioritise the completion of the infrastructure assessments and will host, in collaboration with the African Development Bank, a major infrastructure investment conference in the first half of

27 ANNEX 1: Detailed reporting per PSG PSG 1: Inclusive Politics Strategic Objective: Achieve a stable and peaceful Somalia through inclusive political processes Priority 1: Advance inclusive political dialogue to clarify and settle relations between the federal government and existing and emerging administrations and initiate processes of social reconciliation to restore trust between communities Achievements: Key achievements include the initiation of state formation processes for the South-West and Central Regions States and advancing reconciliation dialogue for the state formation process in the Interim Juba Administration. On 22 June 2014 and 30 July 2014, political agreement on the formation of the proposed South-West State and Central Regions State were signed in Mogadishu by the representatives of the FGS and political and community leaders in the Bay, Bakool and Lower Shabelle regions and the Galgadud and Mudug regions respectively. These ceremonies were followed by the establishment of Technical Committees on Interim South-West State Administration and the Interim Central States Administration by the FGS with support from international partners. The FGS counterpart is the Ministry of Interior and Federal Affairs. Key partners include UNSOM, UNDP, the Somalia Stability Fund and CSOs. With regards to the South-West State, several rounds of consultations among political actors and community leaders have been conducted by the Technical Committee. A draft constitution was adopted on November 10 and preparations for the election of an Interim Administration are now underway. There have been some consultations on the formation of the Central Regions State under the auspices of the Technical Committee but these have are not as advanced to the same extent as those in Baidoa. This is due in part to slow support to the process, as well continuing boundary disagreements with neighboring Puntland over the Mudug region. Despite this, agreements have been signed between Puntland and the FGS on this matter and previously between the FGS and Galgadud. A strengthening and tangle next steps are still required. The achievement of these outputs has meaningfully contributed to the attainment of the objectives of PSG1 Priority1 federalism and state formation by initiating the process of building Somalia s potential federal member states and promoting political dialogue between communities. Challenges: - Need for nationwide grassroots based social reconciliation - Need for nationwide dialogue on federalism and state formation - State Formation process slowed down in some areas, due to slow support to those processes. - Need for institutional development and capacity building at the district, regional and state level for IJA, ISWA, ICSA and others. - More inclusive grass roots reconciliation on the state formation process in the Interim Juba Administration - Continuing disagreement over the status of Mudug region vis-a-vis ICSA. Recommendations: - MoIFA to mobilize resources and support for the capacitation of the Boundaries and Federation Commission (BFC). - FGS and UN/AMISOM to expedite action on implementing security risk mitigation measures at BFC office to enable work commence in earnest. - FGS, with international support, to initiate nationwide grassroots social reconciliation dialogues. - MoIFA, MoJCA and Federal Parliament to initiate nationwide public consultations and civic education on federalism, state formation, constitutional review and elections. - FGS to encourage more inclusivity and grassroots political dialogue in the district, regional and state level, while 26

28 seeking support from international partners. - FGS to mobilize and provide support for institutional development and capacity-building for IJA, ISWA, ICSA and other emerging states at the district, regional and state level. - Inter-Regional Consultative Forum to be established in the First Quarter of 2015 with assistance from international partners. Priority 2: Finalize and adopt a Federal Constitution by December 2015 Achievements: On May 29, the Council of Ministers approved the nomination of the Commissioners of the Independent Constitutional Review and Implementation Commission (ICRIC). On June 19, the Federal Parliament approved the nominations. Established under Article 134 of the Provisional Constitution, the ICRIC is a body of legal/technical experts that will focus on legal drafting of proposed constitutional amendments under the political supervision and guidance of the parliamentary Provisional Constitution Review and Implementation Oversight Committee (Oversight Committee). The Ministry of Justice and Constitutional Affairs (MoJCA) and the Federal Parliament held a retreat for the ICRIC and the parliamentary Oversight Committee in July MoJCA is promoting the development of a jointly agreed upon Process Framework with clear milestones as well as mechanisms and procedures to review and implement the constitution. The Process Framework will also clarify roles and responsibilities of key actors and promote efficiency and inclusion as well as transparency and accountability. Considerable progress has also been made on enacting priority laws to enable constitutional implementation. In July 2014, the Federal Parliament passed the Judicial Service Commission law. The Council of Ministers sub-committee on priority legislation has completed review of 60 draft laws. 17 have been identified for immediate parliamentary action and 5 are top priorities a. Boundaries and Federation Commission Law b. National Independent Elections Commission Law c. Political Parties Law d. Constitutional Court Law e. Anti-Corruption Commission Law Delay has been occasioned by various issues, including different schedules between the executive branch and the parliament (at the initial stage) as well as political jostling within the Parliament arising from the ongoing state formation processes and other related issues. The FGS counterpart is the Ministry of Justice and Constitutional Affairs. Key partners include UNSOM, UNDP, the Embassy of Sweden and others. The achievements realized and outputs attained have meaningfully contributed to advancing the PSG1 Priority 2 - constitutional review and implementation. Challenges: - Reorganization of parliamentary Oversight Committee yet to be finalized. - MoU between Oversight Committee, ICRIC and MoJCA yet to be finalized. - Work plan for ICRIC has been developed but cannot be finalized until the full reorganization of the Oversight Committee (OC) has been completed. Crucial will also be the supported provided to this process. - Security risk mitigation measures at ICRIC office location yet to be completed - this could result in further delay to constitutional review process. - Political dialogue between FGS and regional leaders/authorities on constitutional review yet to commence. - Planning for public consultations and civic education on constitutional review yet to be finalized. Recommendations: - Federal Parliament to expedite action on completing reorganization of parliamentary Oversight Committee. 27

29 - Further dialogue needed between FP and MoJCA in order to finalize MoU between ICRIC, OC and MoJCA especially with regards to role and responsibilities in the constitutional review process. - Joint technical retreat to be considered for ICRIC and OC to develop common framework and workplans. - FGS and UN/AMISOM to expedite action on implementing security risk mitigation measures at ICRIC office to enable work commence in earnest. - Inter-Regional Consultative Forum should be established in First Quarter of 2015 to enable dialogue on constitutional review between regional and national authorities. - MoJCA, FP and ICRIC should expedite action on developing plans for public consultations and civic education on constitutional review. Priority 3: Prepare for and hold credible elections by 2016 Achievements: An ad hoc parliamentary Elections Committee has been established. The Ministry of Interior and Federal is finalizing the draft bill establishing the National Independent Elections Commission, Political Parties Bill and the Citizenship Bill. The FGS counterparts are the Ministry of Interior and Federal and the Federal Parliament. Progress has been limited. The attainment of PSG1 Priority 3 has not been significantly advanced. But work has now begun in progressing PSG 1 sub-working 3 discussions which is expected to serve as one platform (among others) that will help to advance the electoral process. Challenges: - Draft law for establishment of the National Independent Elections Commission yet to be approved by Parliament - Commissioner nominee/designates for NIEC yet to be identified/selected. - Administrative structures for the NIEC yet to begin to be put in place - Electoral Systems Law yet to be enacted - Preparations for voter registration yet to commence Recommendations: - NIEC Bill to be enacted by December NIEC Commissioners appointed immediately after the NIEC Bill is passed - NIEC capacitated and function in early FGS and UN/AMISOM to expedite action on implementing security risk mitigation measures at the NIEC office to enable work commence in earnest. - Electoral System, Electoral Process and draft constitution adopted by December 2015 PSG 2: Security Strategic Objective: Establish unified, capable, accountable and rights based Somali Federal security institutions providing basic safety and security for its citizens Priority 1: Strengthen the capacity and accountability of state security institutions to recover territory, stabilize and provide basic safety and security. Achievements: National Security Architecture. The National Security Council has been formed to oversee policy decisions on security matters, whilst the recently formed Cabinet Security Committee is structured to implement policy direction through ministerial portfolios. A secretariat function in support of Somalia's national security interests is in its nascent stages of development. This process is in inclusiveness and aims to engage broadly across National 28

30 and federal security structures. It includes linkages to regional interim administration security structures and a longer-term Ministry of Finance led security and justice public expenditure review to establish the affordability of security institution structures. In addition, a human resources system (HRS) programme that will offer improved fiduciary oversight and accountability for the payment of security institutions personnel has been initiated. 10,663 SNA personnel have been registered, including 629 females (6%) and 5051 Police registrations, including 521 females (10%). An electronic payment system is being developed within the HRS, which can be used to complement a cash payment system or provide full electronically delivered and accounted for payments. Arms & Ammunition Management. Progress has been made in meeting the requirements of the UN Security Council Resolution (UNSCR) 2142 (2014) relating to the arms embargo on Somalia, but it is recognised that much work remains to address transparency and reporting in order to meet the requirements set out in UNSCR 2182 that was adopted on 24 October Weapons and Ammunitions Management (WAM) progressed with the establishment of a defined institutional framework for WAM oversight. This includes the establishment of a highlevel Arms and Ammunition Management Steering Committee of both the Federal Government and international community that will coordinate and monitor implementation of the Federal Government's obligations under the partially lifted arms embargo. WAM capacity building has also been delivered through improved organizational capacity and technical competence with regards to the registration, recording, storage, transfer and reporting of weapons and ammunition. The Federal Government also created the Somali Explosives Management Authority (SEMA). The capabilities of this national authority are being developed to undertake responsibilities for explosive management, including the safe and secure storage of ammunition, explosives and weapons. Defence. Defence Sector Reform has achieved much progress, with greatly improved coordination of donor and partner assistance, as well as the mobilisation of resources in support of the Somali Armed Forces through the Defence Working Group (DWG). Training of the SNA in particular has provided more training of forces to be deployed on operations. Training for the next 18 months has been agreed, which will provide improved quality and more in-depth training in Mogadishu and in the Sectors. This will be delivered by the SNA, EUTM, AMISOM, and Bancroft Global Development in Somalia, and by Turkey, Sudan, Uganda and China out of Somalia. AMISOM has delivered the mandated Human Rights Training in the Sectors and to-date 7000 have been trained out of the target 10,900 for joint operations and so this training continues. A policy working group supported the MOD to develop a Draft Defence Strategic Plan, which the FGS is expected to finalise in early It will provide a holistic, coordinated and planned approach to Defence Institution building, and this in-turn will require the DWG to apply a strong focus on reforms embracing policy development, ministerial coordination, force development, human resource management and logistic support. Police. The highest policing priority for international assistance in Somalia has been the southern half of Somalia, including, Mogadishu. The majority of support has been directed to the Somali Police Force (SPF) in Mogadishu, which is currently in a drawn out re-establishment phase where resources are being assembled and deployed to perform basic police functions in a hostile environment. This work has involved a broad mix of multilateral and bilateral assistance, which has focused heavily on training and mentoring of police (basic and specialist training including preparation for return to recovered areas) provision of equipment (motor vehicles, office equipment and information technology) and refurbishment or reconstruction of some police premises. This assistance has extended to the payment of stipends, which has been a critical factor in the FGS being able to field a nascent police force. Challenges: National Security Architecture. One of the challenges to establishing a coherent National Security Architecture is political. In the process of establishing and consolidating institutional structures and as Somalia s constitutional process develops, this will affect and challenge how technical support can be provided. Both the FGS and the IC will therefore have to be realistic about what can be achieved in the short-term. More concerted effort needs to be made to drive institution-building forward, because only by strengthening and consolidating the institutional framework will gains made by the FGS have some chance of reaching a level of sustainability. Within this process, challenges are numerous: it will be vital to reach a clearly articulated definition/concept of national security that is not defined by military/defence objectives alone; it will be necessary to identify and recruit skilled personnel that can serve national security interests and lead institution-building on an everyday basis. Security forces should be guided by national security policy as directed by the relevant executive authorities. The general issues raised are relevant across the FGS, but they are the foundation on which the National Security Architecture will be built. 29

31 Arms & Ammunition Management. The illicit flow of weapons and ammunition supplies to and through Somalia in violation of the arms embargo poses a serious threat to peace and stability in the region. There remains a large body of work to be undertaken for the Federal Government of Somalia to achieve effective compliance with relevant international small arms control standards, and to establish appropriate and robust processes and protocols in accordance with weapons and ammunition management (WAM) best practice. Though Somalia faces significant and multiple challenges in achieving this goal, these are not insurmountable and the Federal Government is well-placed and willing to achieve strong WAM outcomes with the ongoing assistance of the international community. Defence. Even with the limited logistic support mandated by UNSCR 2124, the SNA remains under resourced to undertake operations against Al-Shabaab as recognised at the recent London Security Event in September A working group, under the auspices of the Defence Working Group, has been established to develop a plan to better enable (train, arm and equip) the designated 10,900 SNA for joint operations with AMISOM. However, the FGS lacks an overarching strategic approach to define how the joint operations forces operate within the SNA structure over the long term. This strategic approach should also incorporate the FGS political approach to regional integration of forces. Likewise, the SNA remains very under resourced for training. It is also recognised that coherent command and control arrangements for the SNA to be defined as a professional national force requires greater efforts at both the technical and political levels. Police. The capability of the SPF and other emergent policing entities in Somalia is extremely weak. The SPF has very limited human capacity to perform conventional police duties, whilst field capability, which is defective in all forms of equipment, safe base capability for police and citizens, requires infrastructural support and reach capability in order to address the small size of policing entities and absence or absence of specialist units. Sustainability of solutions to these problems is highly constrained by the long-term budgetary prognosis. In addition, there is a need to address the absence of an established policing ethos so that it is possible to shape the behaviours, conduct and values of police to ensure that all recognise the importance of the rights of Somali citizens. Recommendations: National Security Architecture. In 2015, concerted effort will be made to drive institution-building forward in support of the National Security Architecture. Specifically, this will entail the establishment of a secretariat that will ensure that the FGS can make informed decisions on issues relating to national security. It is important that this function within the National Security Architecture is given support as it will be a step in the direction of a more coherent security sector. Arms & Ammunition Management. In 2015 greater efforts are required to address physical security and stockpile management, including the training of personnel to ensure compliance of international small arms control standards, as well as improving public awareness and legislative measures. These efforts include a national weapons and ammunition registry and accounting system to prevent any diversion of Federal Government weapons and ammunition. The system must include 1) a centralized national registry of weapons and ammunition, 2) local registries for every unit of the defence and security forces, and 3) an accounting system that documents the movement of weapons and ammunition between stores/units using an issue and receipt voucher system and 4) should work closely with SNA logistics headquarters to ensure the development of a transparent and accountable system. In accordance with UNSC Resolution 2142 and 2182, the Federal Government also welcomes assistance to meet its arms embargo reporting requirements to the Sanctions Committee. Defence. The Defence Working Group will report to the PSG2 WG meeting in January 2015 with a draft plan to better enable the designated 10,900 SNA for joint operations with AMISOM. The FGS should develop an overarching strategic approach to define how the joint operations forces operate within the SNA structure over the long term. This strategic approach should also incorporate the FGS political approach to regional integration of forces Having funded the AU with $5.2M, the EU follows up with the AU to complete the construction and fit out of the Jazeera Camp Stage II Project, which is close to two years overdue. Police. A two track police assistance strategy providing support for capability development (training, equipment and infrastructure)and police reform (behaviour, conduct and values) be universally adopted as the basis for police development in Somalia, giving full recognition to the importance of track two in strengthening police and Government legitimacy in the eyes of Somali citizens. 30

32 Children Associated with Armed Conflict. This is a cross-cutting issue that relates to Priorities 1, 2 and 3. Priority 2: Integrate security forces into Federal Institutions Achievements The integration of existing security forces into cohesive structures is recognised as a priority that goes hand-in-hand with political progress, with integration an essential step in the SNA's development, and directly linked to Somalia's state-building goals. Integration of regional forces into the SNA and other federal/regional police security structures is therefore an important benchmark against which progress will be measured in Challenges Integration constitutes a key component of a mutual accountability framework between the Federal Government and states, and whilst there has been some progress at a technical level on the practicalities of integration, political agreement has proven to be illusive in Moreover, there appear to be mixed expectations as to which security institutions the militias will be integrated into - military, rule of law (police or Darwish-type); and Federal or subfederal or both. Recommendations 2015 will require increased efforts to address immediate integration questions, as well as to improve clarity on longer term questions around the future balance of police and military forces at federal and state levels. The FGS will need to consider the future requirements for rule of law forces and military forces for the FGS and for the Regions. Priority 3: Implement National programme for the treatment and handling of disengaged combatants Achievements The implementation of the National Programme for Disengaged Combatants made progress geographically and thematically, as the newly recovered areas expanded due to the joint offensive operation by the SAF and AMISOM. Over the last year, the FGS integrated the Serendi Rehabilitation Center in Mogadishu into the National Program and the FGS and partners established two more transition facilities in Beletweyne and Baidoa to support rehabilitation of low-risk caseloads. Additionally, the preparation of safe houses for female disengaged combatants and their dependents is on-going. The FGS and partners implemented other important components of the National Program, including: AMISOM adopted an SOP for the Handling of All Persons Detained, which underpins their adherence to international norms and standards in their role in the Reception Phase of the program; Human Rights Advisor for the Ministry of National Security and Human Rights monitors to the transitional facilities have been recruited; the Ministry of Justice and Constitutional Affairs developed guidelines to facilitate community acceptance of low-risk caseloads and will soon begin to pilot the process; and the FGS, with the support of UNSOM, has started to draft a comprehensive strategic communications strategy. Challenges Key challenges include how to ensure the effective implementation of the National Programme, following the 45 day amnesty and its subsequent extension by the end of 2014 by the FGS and to ensure sustainable support to existing Facilities and on-going programmes under the National Programme. While the Interim Juba Administration, for instance, requested urgent support for building a transition center in Kismayo, this critical need has not been filled despite several assessment missions by the FGS, UNSOM and partners. The lack of Reception Facilities across the South Central Somalia impedes reception of disengaged combatants from SNA, AMISOM and community in more organized manner. The development of frameworks and resource mobilization for reinsertion and reintegration programmes is also indispensable for the sustainable return and reintegration of disengaged combatants. It is important that the FGS and partners continue pursuing a common approach and standards across all the operational areas geographically and each phases of the National Programme. Recommendations Appropriate SOPs, guidelines standardized policies needs to be developed to underpin the implementation of the 31

33 National Programme and enhance a common approach among partners, while the draft revised National Programme will be finalized. The necessary SOPs, guidelines and polices include Joint SOPs for SNA and AMISOM, development of entry/exit policy for Transition Facilities, and guidelines for downstream social economic reinsertion and reintegration programmes. Adequate resource mobilization also needs to be made and aligned to the priority of the National Programme: Reception Facilities, additional, and existing and additional Transition Facilities and socioeconomic Reinsertion Programme. Priority 4: Develop an effective maritime security strategy within the framework of the Maritime Resource and Security Strategy Achievements With a coastline over 3,300 kilometres, one of the longest on the African continent, the Federal Government is keen to develop its maritime domain, which includes rich seabed and mineral resources, as well as fish stocks to build the livelihoods of the people. Via Presidential Proclamation of 30 June 2014, Somalia submitted to the United Nations its maritime coordinates declaring the Somali Exclusive Economic Zone (EEZ). Further, the Federal Government established the National Maritime Coordination Committee (NMCC), an internal forum under the Chairmanship of the National Security Adviser, to address the gaps in maritime security. The NMCC reports to the National Security Council Secretariat. Challenges Urgent work is required to clarify roles and responsibilities across Ministries in order to build appropriate governmental structures to implement the soon to be published Somalia National Maritime Strategy. A legal framework is also necessary to support development of maritime security forces including the Coast Guard. The effective administration of Somali waters will require cooperation between federal and regional authorities and an increase in maritime capacity, accompanied by mechanisms to determine the governance of activities and resources as well as mutual responsibilities. This should apply to both the sea and adjacent coastal areas. In accordance with UNSC Resolution 2182, the Federal Government needs assistance to prevent the export of charcoal from Somalia and to prevent the import of weapons into Somalia in violation of the arms embargo. Recommendations To protect vital maritime resources, Somalia aspires to build a robust coast guard and law enforcement capability to provide an effective deterrent against the export of charcoal, piracy, illegal fishing, and other transnational crimes. Wider work on maritime security and maritime law enforcement across Somalia is necessary, such as efforts on the interdiction of charcoal and the illicit flow of weapons to combat the destabilizing effects of Al- Shabaab. A clear delineation of the roles and responsibilities of the maritime security forces and related Ministries as well as a legal framework is essential for future donor support. Cross-Cutting Issues Children Associated with Armed Conflict (CAAC): Priorities 2 and 3 have a number of milestones relating to CAAC. A very high priority has been placed within the security environment on addressing the many challenges relating to children and armed conflict. Over the past two decades concerns over the protection and rights of children in Somalia has attracted the continued attention of the United Nations and the international community. Two Action Plans were agreed with the Federal Government in 2012 to support UNSCRs 1539 (2004) and 1612 (2005), to end/prevent the recruitment and use and the killing and maiming of children by the 'Somalia National Armed Forces'. The UN and international community has since been supporting the FGS through an integrated Children and Armed Conflict Working Group (CAAC WG) to provide oversight responsibility and ensure coordination to ensure full implementation of the plans. A Standard Operating Procedure (SOP) was signed by the MoD and MoNS in February 2014 to govern the reception and handover of children separated from armed groups and forces for their reintegration. A (mobile) screening team was setup in April 2014 to screen and certify SNA units child-free and a draft policy and operational guidelines has been developed for adoption, which will also be activated as part of oversight vetting mechanisms to monitor the integration of armed groups and militia into SNA/SPF and separate children. In May 2014, a Child Protection Unit (CPU) was established to serve as a pivotal structure and provide dedicated capacity within MoD and SAF. The delivery of training on child protection has also been part of comprehensive efforts to create awareness and educate SAF personnel. Currently a total of 500 children (375 boys 32

34 and 125 girls) formerly associated with armed forces/groups and those with vulnerability are enrolled for reintegration services. These CAAC programmes encompass formal education, vocational and livelihood skills training, psychosocial support, tracing and family reunification and placement into foster care families. But severe challenges remain, including for example, the lack of (financial) resources to develop capacity of the SNA CPU unit to operate in an effective manner, and the lack implementation mechanisms within the justice system to ensure children are not charged as perpetrators together with adults, but are rather provided with needed care for long term reintegration. Respect of human rights: HRDDP compliance and understanding of its importance within Somalia's security institutions has received strong support from the UN, AMISOM and the international community. Training programmes have been developed and delivered to both the Somali Armed Forces and Somali Police Force, with a high priority placed on those units identified to undertake joint operations with AMISOM under UNSCR This is supported by registration of security institution personnel under the Human Resources System programme, allowing biometric data to be recorded to allow a transparent and auditable system to be used in support of HRDDP compliance PSG 3: Justice Strategic Objective: Establish independent, accountable and efficient justice institutions capable of addressing the justice needs of the people of Somalia by delivering justice for all Priority 1: Key priority laws in the legal framework, including the reorganization of the judiciary, are aligned with the Constitution and international standards Achievements: There is an ambitious schedule of laws to be reviewed, developed and aligned with the Constitution and international standards. A Policy and Legislative Drafting Unit has been established in Ministry of Justice and Constitutional Affairs with this support implemented through the UN, with funding from EU and DFID. The Unit has commenced operations with initial trainings, legal drafting manual prepared and procedural guidelines developed. The Ministry has identified priority laws and undertaken the related reviews and public consultations. In particular the Judicial Services Commission Act and the Anti-Terrorism Law were passed, and the Judicial Organisational Law and Establishment of the Constitutional Court is now subject to public consultations. The bill to establish Anti- Corruption Commission, the Prisons Law and Regulations, Human Rights Commission Act, and Citizenship Law are all currently being reviewed. In addition a review has been undertaken of the four codes (Penal Code, Criminal Procedure Code, Civil Code and Civil Procedure Code) to address any conflicts with Provisional Federal Constitution. The first step to reach the milestone of a Justice Service Commission established and functioning was achieved with the adoption of the Judicial Services Commission Act on 30 June 2014, which establishes the mechanisms for vetting, licensing and appointing judicial personnel and ensuring accountability and oversight in the justice sector. The next step is the appointment of the nine members of the Commission, and support to the establishment and functioning of the Commission has been included in the proposed future programme for PSG 3. Challenges: The list of priority legislation and the broader Legislative Programme according to the Government work plan presented by the Prime Minister and approved by Parliament is ambitious including approximately 70 pieces of legislation to be enacted. The skills of legislative drafting are generally considered to be very complex, highly technical and time consuming to achieve, and whilst a promising start has now been made, there is a need for significant further support in this areas. In addition the process of genuine and informed public consultations on any proposed laws is essential however with the amount of legislation to be undertaken this will need to be carefully managed. Recommendations: The proposed programme for support to PSG 3 includes a comprehensive package of activities to support the 33

35 development of legal policy and drafting institutional capacity; and also to support the establishment and functioning of the Constitutional Court and Judicial Service Commission. Priority 2: Justice institutions start to address the key grievances and injustices of Somalis Achievements Over the past twelve months there have been various initiatives to strengthen the capacity of justice institutions. The Ministry of Justice and Constitutional Affairs has been supported through technical, advisory and operational costs support. This has included support from the UN, funded by DFID and EU, for a Joint Implementation Support Unit to support the justice reform processes. This unit has coordinated extensive consultations with key justice institutions including Judiciary, Attorney General s Office, Bar Association, civil society and regional representatives. There have been a range of capacity development initiatives undertaken over the past twelve months. For example, the UN, funded by DFID, have undertaking various trainings for 70 Custodial Corp including prison managers training to participants from Mogadishu and Garowe and mentoring programmes also undertaken in Garowe and Bosasso. There have been significant achievements for infrastructure. Through UN support and funded by Norway and Denmark, a new prison was opened in Garowe and in Bosasso two new prison blocks constructed, combined with the provision of ongoing support for operational costs, training programmes for prison offices and educational and vocational training for inmates. Through UN support and funded by DFID, rehabilitation works have been undertaken for the Mogadishu Prison and Gardho Prison. The designs for the Mogadishu Major Crimes Complex have been finalized. It is important that the justice institutions are equipped with adequate physical infrastructure, equipment and logistical resources in order to professionally perform their duties. The Ministry of Justice and Constitutional Affairs has developed a concept note for Rule of Law Infrastructure Strategy for the Regions which will be consulted further with regional representatives and international partners. The UN, with funding from EU and DFID, in conjunction with the Ministry and the Somali Police Force are conducting a range of infrastructure assessments of rule of law facilities, to identify their condition and the extent of work required to reinstate them to modern day standards. These assessments will further inform the Rule of Law Infrastructure Strategy and be used as a basis for resource mobilization under the new programme. Security for justice actors and justice institutions has been addressed and lead by Somali stakeholders. Through the UN, with funding from EU and DFID, a comprehensive security assessment was undertaken and strategy developed in relation to threats against justice actors. Security assessments were also undertaken of the Benadir Regional Court Complex and the Garowe Court Complex. Resulting from these assessments an action plan was developed which includes trainings undertaken of the Custodial Corps, Security Infrastructure procurement processes for Mogadishu commenced, security equipment purchases underway, and a judicial security workshop conducted. In relation to the judicial security workshop options were examined for further development of the protection force concept for judicial staff including possible measures for immediate implementation and further actions agreed to be implemented over the coming months. Challenges In relation to infrastructure the importance of an overall rule of law sector approach is acknowledged as well as the need to ensure the right balance between infrastructure and other important components of justice reform. The Ministry is mindful of the need to carefully balance the current needs to immediately address and deliver services to the Somali people (for instance through mobile courts and support to traditional dispute resolution); whilst also adopting a strategic vision to building the foundations for longer term more sustainable justice services through the formal system in the regions. The high cost of the initial building of the facilities is a challenge and the risk this diverts limited Donor resources away from other key priorities will also need to be carefully considered; likewise the need for the Ministry to establish robust funding streams to cover the recurrent costs and maintenance / upkeep of buildings will need to be developed. This has been a particular challenge for Garowe Prison where the Puntland Custodial Corps have found it difficult to cover operational costs. Whilst the designs and initial funding for the Mogadishu Major Crimes Complex are ready, identification of a suitable plot of land remains outstanding. Recommendations: The Ministry will finalize the Rule of Law Infrastructure Strategy, in close consultation with all key stakeholders and 34

36 based on best practice and mindful of the Somali context and also recurrent costs, and look to international partners for support. Priority 3: More Somalis have access to fair and affordable justice Achievements: The Ministry of Justice and Constitutional Affairs is focused on delivery of increased access to affordable or free legal services for all Somalis. In the past twelve months this has been achieved through raising legal awareness, outreach of justice services with mobile courts, provision of free legal aid, support to scholarships for law students and strengthening the traditional dispute resolution system. Raising legal awareness of rights and justice system processes is an important foundation. Legal awareness campaigns have been operating throughout Somalia funded by a range of donors (such as EU, DFID, Norway and Denmark) and through the UN, implemented by local non-government organizations and reaching over 6,057 people (5,027 women and 1,030 men) in the past year. The delivery of justice outside the main centres has been a strong focus with legal aid services and outreach of mobile courts providing support to peace building through mechanisms where disputes can be resolved without resorting to violence. Support to government institutions to deliver these services helps delegitimize violence by private actors by promoting the usage of the state structures such as courts and police and instilling confidence in such structures. Planning for the mobile courts from Mogadishu has commenced and mobile courts were undertaken throughout Puntland, with 479 cases being adjudicated. Through the UN; with funding from EU, DFID, Denmark and Norway; eight legal aid centres have been supported which includes support to 20 lawyers (8 women and 12 men), 90 paralegals (59 women and 31 men), and 27 interns (14 women and 13 men). From these providers, legal aid services were provided to 3,114 clients (1,080 women and 2,034 men) with half of cases being related to criminal cases and half civil cases. In Puntland a Legal Aid Policy has been developed and socialization of the policy has been undertaken. Support for scholarships for legal studies has been implemented by the United Nations with funding from the EU and DFID. Over the past twelve months in institutions such as Mogadishu University and Puntland State University 113 scholarships have been provided for legal academic studies, comprised of 49 women and 64 men. The provision of scholarships significantly facilitates the professionalizing of the justice sector, supports the foundations for future leaders, and the focus on ensuring scholarships for women will also increase the capacity of the justice system to address women s rights given women are often more comfortable discussing these issues with women lawyers. The Ministry has established a Traditional Dispute Resolution (TDR) Unit with technical support provided through the International Organisation for Migration (IOM) with funding from the United States Government. Over the past year the TDR unit has been researching and consulting in the regions on issues related to the revival and enhancement of the functioning of the traditional justice system and the position of elders, including the creation of linkages with the formal justice system. This has been undertaken with a view to increase the accountability of the traditional dispute resolution system and legitimacy of its decisions in line with the Provisional Constitution and international human rights standards, as well as to enable the system to handle low-risk disengaged fighters and minor dispute caseloads. In Puntland the Ministry of Justice and Religious Affairs has established an Alternative Dispute Resolution Unit with a policies, training manuals and pilot activities and trainings undertaken with the judiciary (13 trained, 1 women and 12 men) and alternative dispute resolution practitioners (90 trained, 11 women and 89 men). Challenges: Currently the bulk of legal aid services are delivered by non-governmental organizations with funding support from our international partners. Such support is most welcomed however a focus in the coming years will be the development of a model for delivery of such services by the government. Whilst the expansion of the mobile courts activities is considered a key to justice outreach a review of the mobile courts function has identified two key challenges. First, the low levels of successful enforcement of judgments and second, linked to this the absence of police stations in some districts. To address these challenges the Judiciary will dialogue further with the police and the mobile court teams will work more closely with the elders; however for expansion of the mobile courts to the regions, the Ministry of Justice and Constitutional Affairs will ensure an overarching framework and operational guide is developed to ensure effectiveness of the mobile court services. 35

37 Recommendations: The Compact Partnership Principles identify that services delivered by NGOs on behalf of the government will fall under a government-led framework agreement, and will increasingly be contracted by the government as it builds its capacity. The development of such a government-led framework would be beneficial for PSG 3 to be able to then consider the feasibility of utilization of such a framework for service delivery for services such as legal aid services in the regions to support local visibility of the role of government and further enhance state citizen confidence building. Cross-Cutting Issues Gender: The strategic priorities under PSG 3 all seek to address the contributing factors perpetuating gender inequality. The Ministry of Justice and Constitutional Affairs has been proactively promoting and ensuring equal opportunity for the participation of women in all dialogues and engagement in workshops, including related to PSG 3, to enhance the role that women can play in peace and state building, promotion of stability and social cohesion. In programmes of support implemented by the UN; through funding from EU, DFID, Norway and Denmark; equal opportunity for women is ensured in trainings, award of scholarships, engagement in workshops, and the recruitments for advisory support or graduate positions. Importantly, and as can be seen from the above report, the tracking of women s participation is recorded and reviews of how to enhance were undertaken throughout In order to achieve maximum impact through these programmes of support a comprehensive strategic sector approach has been undertaken in relation to sexual and gender based violence (SGBV) and entails: police trained on managing SGBV cases and GBV protection, women and children s desks to be established in prosecutors offices, Judiciary trained on SGBV cases, support to and training of mobile courts that deal with SGBV cases, support and specific training undertaken for legal aid providers including those addressing the needs of the internally displaced persons (IDPs), and addressing such issues in legal awareness campaigns. The Ministry of Justice and Constitutional Affairs participated in the June 2014 dialogues for the National Action Plan for Ending Sexual Violence in Conflict, led by the Ministry of Human Rights and Women Development in partnership with UK Government, UN and World Bank. This National Action Plan was founded on the May 2013 Joint Communique of the FGS and UN on the Prevention of Sexual Violence. The components related to PSG 3 Justice, under the National Action Plan, are included in future proposed programmes for support. In addition to this there are various activities being developed to address SGBV. A challenge will be to ensure that initiatives related to addressing SGBV are carefully coordinated, with resources allocated appropriately. Under PSG 3 the proposal is that the support to addressing SGBV related to the rule of law is incorporated as part of the overall rule of law programme to ensure coherence and a strategic sector approach. Capacity development: Over the past twelve months the overarching theme of capacity development has informed all activities implemented in support of the PSG 3 strategic objective. A particular focus has been strengthening the capacity of the Ministry of Justice and Constitutional Affairs using the two-track approach that responds to immediate needs whilst ensuring that improvements are sustainable. There has been the injection of Somali advisors (eight in total) to fill urgent capacity needs through programmes supported by the UN and IOM through funding from EU, DFID, Norway, Denmark and Sweden. The Ministry has also implemented strategies to support human resource and institutional development with the development and initial implementation of a strategic work plan for capacity development and training needs assessment. This has also included the adoption of a graduate trainee programme (10 Somali graduates comprised of five women and 5 men) implemented by the UN and supported through funding from EU and DFID which aims to facilitate knowledge transfer from the advisors and provided a trained talented pool for potential entry into the civil service. To support PSG 3 Justice, IOM with funds from Sweden and introducing an institutional capacity development diaspora programme into the Justice Sector with the current programme informed by evaluations and lessons learned over the past years of operating such diaspora programmes in Somalia. One of the key lessons has been to make a deeper, not wider impact by supporting less institutions with teams of experts; and for PSG 3 this includes Ministry of Justice and Constitutional Affairs and Office of Attorney General where nine experts (three already in 36

38 place, six to be recruited) in total will be provided. Further, in relation to lessons learned and as required under the Compact Partnership Principles, the UN programmes of support to PSG 3 are guided by the principles for effective use and development of national capacity in post-conflict contexts. The lack of a common approach to salaries for advisory support remains a challenge. As identified in the Compact Partnership Principles, PSG 3 encourages the development of the guidelines for the use and payment of technical assistance both for international and national technical advisor as soon as possible. PGS 3 also notes the development of a UNDP and WB Institutional Capacity Development Programme that includes components for support to change management and administration, communications and policy management. To ensure that the knowledge from this support to core government functions can be transferred across to other Ministries, it is recommended that this programme incorporate a mechanism to facilitate knowledge sharing, and to link to the programme being developed for rule of law to access and harness such knowledge for the rule of law sector to avoid any duplications. Respect of human rights: A human rights based approach has been adopted in addressing all the priorities across the Compact in areas such as legislation drafting and review, in the justice institutions and in the initiatives providing access to fair and affordable justice. In protecting the rights of the most vulnerable groups such as IDPs theun is working the government authorities and district councils to address child protection concerns and support child protection interventions in pilot districts. UN worked with the FGS (Ministry of Interior and Federalism) in the drafting of a policy framework on international displacement and this policy now awaits adoption by the FGS Cabinet, an important human rights issue. The National Strategic Plan for Justice Reform includes the establishment of the Independent Human Rights Commission as a very critical priority and this has been included in programme for future support. The Human Rights Commission Act to establish the Human Rights Commission (article 41 of the Constitution) has been drafted and consulted, and the draft bill has been submitted to the Council of Ministers. Also to note that this year the Puntland government has reestablished the Office of Human Rights Defender. Other challenges: That development initiatives under the Compact are to be Somali-owned and Somali led needs to be further promoted by the overall international community. In the PSG 3 Working Group this was committed to early by all those involved, rigorously adhered to and strong mutual trust developed. The genuine partnership developed through the respect of the Somali leadership role has generated a solid platform from which we can move ahead. But while there is a need for renewed commitment for the underlying principles of the Compact mechanisms of dialogue and aid co-ordination, at the same time there is a need to look to lighten up all the processes, which have somewhat slowed down the progress of the development of the flagship programmes. The operation of actors outside the PSG Working Group process has the potential to undermine the benefits of coherency, coordination and transparency. Bringing into the fold the non UN entities working with the FGS to the PSG Working Group structures to enhance coordination and to ensure resource are aligned to and sequenced with the actual priorities identified by the PSG. PSG 3 Working Group has lead the way in genuine and robust consultations on priorities for the rule of law sector and undertaken this is a most inclusive fashion. However this has of course been very time consuming and at times the processes required for some of the mechanisms, such as the SDRF, have either being somewhat unclear or developed on the run. It is appreciated that this is a new process and we are all in support to move ahead, but greater clarity and more streamlined processes need to be considered. In addition the funding support for the administration of and support to the PSG 3 Working Group processes needs to be quickly realized. A potential future challenge could be the perceived lack of commitment by the Donors to consider channeling aid through the preferred instruments of the government, and in particular funding through the national window. The Ministry of Justice and Constitutional Affairs has already commenced an institutional strengthening initiative that is proposed to continue under future programming, to ensure readiness to implement activities and manage funds from the Trust Fund(s) national windows. In addition the future programming includes identification of activities that could potentially be funded through the national window. There needs to be a clear commitment from Donors of the mechanisms that will be used (for instance formal capacity assessment tools) to facilitate funding through the national window and also recommended that all programmes for approval by the SDRF include identification and 37

39 commitment to utilization of the national window. PSG 3 enjoys the partnerships developed with the international community and the support being provided to the sector. However the Donor mapping exercise indicated relatively low levels of support being provided to this critical strategic priority in comparison to other sectors. With the new programme being developed Donors are encouraged to provide full support to enable the delivery of justice for all. PSG 4: Economic Foundations Strategic Objective: Revitalize and expand the Somali economy with a focus on livelihood enhancement, employment generation, and broad-based inclusive growth Priority 1: Enhance the productivity of high priority sectors and related value chains, including through the rehabilitation and expansion of critical infrastructure for transport, market access, trade, and energy. Achievements - Modest growth in agriculture, fisheries and livestock sectors, concurrent with the establishment of New Deal funding and coordination mechanisms. - Annual work plans for relevant FGS Line ministries completed, including priority projects. - World Bank funding pipeline approved for large-scale programmes on private sector development and the development of the petroleum, power and ICT sectors. - Flagship infrastructure projects identified by FGS line ministries. - Inter-Ministerial Steering Committee established and functioning for Water, Sanitation and Hygiene (WASH); similar committees for Puntland and Somaliland in development. - AfDB Infrastructure Needs Assessment underway and partially completed. - World Bank project for support to the ICT sector approved. Further projects on urban development, the power sector and water for agro-pastoralist livelihoods in preparation. Challenges - Security and access. - Consistent participation by Somali counterparts in sub-working group meetings. - Limited government capacity. - In agriculture: Low institutional capacity, land disputes, poor infrastructure, lack of access to quality inputs and training, illegal taxation and lack of access to finance. - In fisheries: Competition for port access and related infrastructure (e.g. cold storage), the absence of a pan- Somali agreement on access, management, licensing and exploitation of off-shore fish stocks. - In livestock: Low human and technical capacity for increasing value-added production and the certification of livestock exports, inadequate infrastructure and provisions for vaccination, treatment and disease surveillance. - In infrastructure: Lack of resources and capacity, both financial and human, in to adequately address key rehabilitation and development priorities. - In infrastructure: Diversion of scarce resources into emergency projects, as opposed to longer-term development priorities. Recommendations - Expedite measures to build the capacity of relevant FGS line ministries, support the development of appropriate regulatory frameworks and encourage investment in key infrastructure. - Expedite measures for crowding-in funding / resource mobilisation for key infrastructure projects. - Support the establishment of agricultural financial and credit facilities, cooperatives and producer associations. - Develop a road map for sustainable fisheries and a compliant certification system for livestock exports. Priority 2: Expand opportunities for youth employment through job creation and skills development. Achievements - A concept note on a FGS-UN Joint Programme on Youth Employment was developed, and endorsed by SDRF. A full-fledged programme document to be finalized by the end of November

40 - A labour market study was completed in July 2014, and other employment assessments are to be completed before end UN agencies (FAO, ILO, UNDP and UN-Habitat) contributed more than 1.8 million worker-days and almost 40,000 short-term jobs from ongoing projects in Challenges - Youth employment is a cross-cutting issue, but there is insufficient coordination with ongoing interventions and with the work of the other sub working groups within PSG 4 and within the other PSGs. - Difficulty of meeting on a regular basis with full participation of partners in Mogadishu. This includes limited participation from the regions, though channels of communication are established and the group is working to strengthen them. Recommendations - Expedite the finalization of the FGS-UN Joint Programme on Youth Employment and commence implementation in early Consider a national campaign for young Somalis to participate in a high profile, cash-for-work job creation programme to rehabilitate crucial infrastructure - Greater Involvement of the private sector better on competitiveness, trade and private sector development issues and proposals. - Design and implement a mechanism for regular, formal exchange of information across the PSGs. - Increase the quality of dialogue between government and development partners. Priority 3: Promote the sustainable development and management of natural resources by developing legal and regulatory frameworks and building capacity in key Natural Resources Management (NRM) institutions. Achievements - Flagship project to develop a regulatory framework for petroleum commenced with the Ministry of Petroleum and the World Bank. - Joint (government UN) Programme on Sustainable Charcoal Production and Alternative Livelihoods (PROSCAL) currently being finalised - National Environment Policy drafted to set the basis for legal and regulatory frameworks for sustainable environmental and natural resource management - Community-based climate change adaptation and disaster risks reduction initiative prepared with the support of Global Environment Facility - Formulation of National Biodiversity Strategy and Action Plan (NBSAP) underway Challenges - Security and access - Lack of national capacities to implement Somalia s commitment under the multi-lateral environmental agreements - Policy and regulatory frameworks non-existent for sustainable management of natural resources - Livelihoods options for majority of population are heavily dependent on natural resources putting extreme pressure on the natural capital - Information on on-going projects and their level of funding towards natural resources management in Somalia is incomplete. Recommendations - Prioritise strategic interventions to create enabling environment for sustainable management of natural resources - Take immediate action to address the root causes of environmental degradation, such as, extensive charcoal production - Diversify livelihoods options to reduce pressure on natural resources - Undertake more work to verify that the projects that are labelled under Natural Resources Management genuinely belong to this category Cross-Cutting Issues Gender: 39

41 - Women are particularly affected by the conflict in Somalia and its subsequent consequences displacement, insecurity and poverty. - The majority of women occupy low-paid jobs in the informal sectors. The main obstacles for women in the workplace are: poor education, lack of financial literacy and business skills, lack of access to finance and other critical business development services, lack of voice in private sector and policy dialogue. - While the law and Shari'a provide women with the right to own and dispose of property independently, women may often be obstructed from practicing such rights because of various legal, cultural and social barriers. - The PSG4 Action Plan will outline concrete measures that the working group and sub-working groups will adopt to proactively support the economic empowerment of Somali women. Capacity Development: - Weak institutional capacity of FGS is a structural constraint that must be urgently and effectively addressed. - The PSG4 working group and sub-working groups need secretariat support. - Strong sense of unity between the government lead and donor co-leads, and personal commitments and dedication to the process is critical to move the process forward. External relations - As PSG WGs begin outreach and to involve stakeholders, including from the regions, the need for a limited budget to cover the costs of conference facilities, as well as travel and accommodation for non-mogadishu based Somali stakeholders will increase. - Continued and constructive consultations between the government lead and the donor co-leads, on one hand, and with other stakeholders (directly or indirectly) involved in the process should be maintained and reinforced. - Provision of direct support to line ministries and assisting them to accomplish their tasks, instead of circulating instructions by ACU may further cultivate a sense of collective responsibility. PSG 5: Revenue and Services Strategic Objective: Increase the delivery of equitable, affordable, and sustainable services that promote national peace and reconciliation amongst Somalia s regions and citizens and enhance transparent and accountable revenue generation and equitable distribution and sharing of public resources Priority 1: Increase the provision of equitable, accessible, and affordable social services by creating a regulatory environment that promotes decentralized delivery and prioritizes key investments that extend and increase access to services Achievements Education: The first phase of Go-to-School programme has been implemented across the country. The public education sector was revived in South Central Somalia for the first time in over two decades with the enrolment of an additional 68,999 new children in formal primary education and 8,631 new students enrolled in alternative basic education. In addition, 220 permanent classrooms have been constructed and opened in September 2014 and up to 1,300 additional teachers have been recruited, trained and are supported through the Global Partnership for Education (GPE) programme. The first phase of the government plans to re-establish the Somali National University has been completed. Three new building with 17 classes have now been constructed along 22 offices and a library. To date 375 students have been enrolled. In Somaliland and Puntland, approximately 18,766 additional children have been enrolled in formal primary education, 966 teachers have been trained and are supported through the GPE programme and a further 484 teachers are supported through the education partners. 71 permanent classrooms have been constructed. In addition, the institutional capacity of the Federal Ministry of Education was strengthened through the recruitment of 40

42 11 technical advisors and 7 local technical officers. Moreover, the regional education officers have been recruited and their offices are in the process of being established. Health: The Health sub group had program summaries endorsed by PSG 5 and then by the SDRF-SC on 31/08, focusing on the expansion of Essential Package of Health Services (EPHS) to non-covered regions, on developing governance and leadership capacity, and on human resources management for health. Significant progress has been made in the achievement of HSSP objectives across all the building blocks of the health system in Somalia. A number of key health and nutrition sector policies were developed and are at various stages of approval by the Somali Health Authorities. Capacity of the Somali Health Authorities was augmented with dedicated technical support through placement of embedded and external technical advisors for reproductive Health, M&E, Health Systems Analysis and HMIS. The delivery of the Essential Package of Health Services (EPHS) was scaled up through partnerships between Somali Health Authorities, UN agencies, Health Consortium, and implementing NGO partners. As a result of the roll-out of EPHS, at least pregnant women, and children under five years of age and their families in these regions have access to high quality health, emergency obstetric and neonatal care, nutrition and WASH services aimed at reducing maternal and child under-nutrition, morbidity and mortality. Maternity and Immunization services including cold chain capacity have been strengthened and larger number of children is being reached through mobile health teams. From January to July 2014 over severely malnourished children were admitted to nutrition centers across Somalia. Social Protection: Thanks to a UN-commissioned external evaluation, some good insights on the sector in Somalia were shared with the group, in particular regarding past and ongoing programs, with their strengths and weaknesses. The comprehensive Social Protection Framework, as established by the ERP, has been drafted and is currently being validated through consultation with different stakeholder. However, although the meetings have been attended by the relevant line Ministries and Institutions (MoWSA, MoWHRP, MoCHE, Disaster Management Unit, etc), the group still lacks a focal Ministry and Donor, covered for the time being by PSG 5 co-leads (MoPIC and Italy). An Action Plan had been drafted and circulated for inputs from the group, although for the time being the content is purely narrative, and no budgeting appears yet. Work on the development of a social work undergraduate course has been initiated in both SCZ and Somaliland. Challenges The on-going conflict, security and access constraints impacted the delivery of services, particularly in the central and southern part of the country. Blockage of supply roads impeded distribution of health, nutrition, and WASH supplies to newly accessible areas, leaving airlifting as the only option for supply delivery. Education: Non-formal education and youth education have remained severely underfunded. Given the pivotal role of the youth in peace-building, service delivery and country s economic growth, there s immediate need for funding support to youth education and training programmes. Non-formal education programmes are crucial at this moment in time to reach the most marginalized including the large pastoralist population and girls.. In addition, there is a severe gap in access to public higher education institutions for low-income families. Health: Government s ability to regulate and monitor the delivery of health services has been strained due to limited trained management and supervisory level public sector workers at the regional and district levels. Social Protection: There is currently no universal agreement on the definition of social protection in Somalia. There is currently no lead ministry assigned for social protection which delays drafting of a social protection policy and workplan Recommendations Education: In the implementation of the Go-to-School programme, commitment from international partners is required to support outcomes 2 (marginalized, out-of-school children realize their right to education through innovative and diverse delivery of basic education) and 3 (unemployed and vulnerable youth are empowered through access to alternative education programmes and gainful employment). Health: In relation to the New Deal process, in particular for Health where new program summaries were endorsed, it 41

43 is mandatory to proceed in detailing the new initiatives hand in hand with a constructive dialogue with funds administrators and implementers, in order to plan something realistic, feasible and of mutual interest. In general, there needs to greater attention by all stakeholders and primarily the Ministry of Heath on monitoring of results including supportive supervision to regional and district levels. Social Protection: Agree upon a context-specific clear definition of social protection for Somalia; develop a National Social Protection Policy; identify the lead ministry for social protection with both budget authority and the ability to coordinate government and donor SP activities. Map roles and responsibility of line ministries engaged in SP Priority 2: Enhance transparent and accountable revenue generation Achievements The revenue stream of work has not been yet addressed, however there are be sub-components for tax policy, revenue mobilization and tax administration under currently prepared programs which will start implementation in the coming months. According to the Federal Government's financial report, in 2013 there was more domestic revenue than planned, but donor funding under-performed. Training has been conducted for Budget Officers from the Federal Government and Puntland to improve their revenue forecasting skills to underpin the revenue estimates to improve budget credibility. Challenges - The enabling policy and regulatory framework to enhance revenue generation are inadequate; for example, Inland Revenue Bill is pending, - Insecurity of revenue collectors Recommendations - Revenue mobilization strategy needs to be adopted by Council of Ministers. Enabling Acts need to be passed in order to train staff on the required business processes to be operationalized - Concessions of key public assets should be done in a competitive manner to yield maximum benefit for the public Priority 3 : Strengthen PFM to enable the different levels of governments to better manage financial resources in a transparent and accountable manner in support of national priorities Achievements - Reform: PFM Bill, Procurement Bill and Audit Bill endorsed by Cabinet and submitted to Parliament for passage. - Education and training: o Training of Trainers conducted for lecturers from 4 Somali Universities in August Examination on the first course on financial accounting will be done in November 2014 as part of the adapted Chartered Institute of Public Finance and Accountancy (CIPFA) International Public Financial Management (IPFM) qualification. A procurement stream will be included by collaborating with the International Training Centre of the International Labour Organization (ITC-ILO) o The education and training program will produce a cohort of suitably qualified PFM practitioners with the necessary knowledge, skills and attitudes to manage public funds in an efficient and accountable manner - Somalia Financial Management Information System (SFMIS): o The interim SFMIS is operational in the Ministry of Finance (MoF) as a centralized system for recording and reporting on the overall budget execution. Upgraded the Standard Chart of Accounts (SCoA) from two segments (organization and economic) to a multi-dimensional structure The MoF is recording transactions in the SFMIS to produce in-year budget performance reports and posting same on its website as part of its commitment to transparency in the use of public funds o A Treasury Single Account (TSA) is in place through which reported revenue collections are lodged. - External Assistance Fiduciary Section (EAFS): o Deliberate effort made as part of the New Deal 'FOCUS' and 'TRUST' principles to use and strengthen rather 42

44 Challenges than bypass country systems. An External Assistance Fiduciary Section (EAFS) has been established in the Accountant General s Department, with support from the project to ensure harmonization, donor coordination, reduce duplication, fragmentation and proliferation of donor-specific financial management arrangements. - There was slow take-off of project activities supporting PFM reform, mainly due to heightened insecurity and delays in completing selection of logistics/security firm. - Need for intensive training for key groups of civil servants Recommendations - Beyond advisers, line function managers need to be more engaged in the PFM dialogue to be in a better position to benefit from skills/knowledge transfer to ensure sustainability of the reforms. - Training on use of SFMIS to be reinforced in MoF and extended to line ministries. Cross-Cutting Issues Gender Gender is a cross-cutting issue and its placement only under Social Protection SWG will limit the focus and dilute its significance in other areas of service delivery, as well as PSGs. Efforts are being made across PSG 5 to apply an equity approach that focuses on improved delivery of services to, and empowering girls and women as one of the most deprived groups in Somali society. Capacity development This cross cutting issue is of particular interest for the PSG 5, and relevant sectors have stressed, at different levels, the importance of liaising with capacity strengthening processes. Within sectors themselves, concerted efforts have been made to strengthen systems, this includes development of management information system, human resource, finance systems, plus policy development and planning, including mainstreaming of gender issues within policies and planning. The PFM Reform Project aims to establish institutional capacity for the management of public funds. This multi-year project is designed to provide a structured approach to PFM institutional capacity strengthening. Bringing tangible results to people The Norwegian government financed a start-up recurrent cost operation called the Special Financing Facility (SFF) operational since August Ensuring a seamless transition of salary payments, the SDRF Executive Steering Committee endorsed the Somalia Recurrent Cost and Reform Facility, under the World Bank Multi Partner Fund, in August Phase I of the project will deliver an estimated US$16.0 million or 29% of the deficit in the 2014 budget. RCRF Phase II, currently under design/preparation, will support recurrent costs in the 2015 FGS budget and may also include a modest allocation for eligible regional government recurrent costs (i.e. where most existing health and education frontline workers are employed). MoH and MoE need to coordinate with National and Regional Civil Service Commissions to see where it is possible to bring staff onto the official paylist Any other challenges? Cross cutting issues within PSG 5 and with other PSGs need to be addressed, particularly: - WASH: While the hygiene and sanitation component of WASH is addressed through PSG 5, issues of access to safe water, especially water infrastructure are managed under PSG 4. Through the health programme, behavioral change communication and demand creation can be covered. 43

45 - YOUTH: Recognizing the role of the youth in rebuilding of Somalia and their potential to act as agents of change and peace, there will be a particular focus on youth engagement and providing them with meaningful options to get involved as service providers in their communities while also addressing the pressing human resource needs in the social sector. This requires joint planning and close coordination between PSG 4 (youth employment sub group) and PSG 5 (education sub group). - INFRASTRUCTURES: strict links between proper service delivery (PSG 5) and infrastructural development (PSG 4) - DURABLE SOLUTIONS FOR THE DISPLACED: recognizing that the main components of a durable solutions strategy for the two million Somalis displaced internally and in the neighbouring countries include both access to basic services as well as economic and livelihood opportunities, it was proposed to establish a sub-working group between PSG 5 and PSG 4 The issue of INGOs inclusion in the process needs to be addressed, particularly for PSG 5 where they are key implementers. 44

46 ANNEX 2: PSG Milestones 2015 PSG 1: Inclusive Politics Strategic Objective: Achieve a stable and peaceful Somalia through inclusive political processes Priority 1: Advance inclusive political dialogue to clarify and settle relations between the federal government and existing and emerging administrations and initiate processes of social reconciliation to restore trust between communities 1. Truth and reconciliation commission established, capacitated and functional. 2. Boundaries and Federation Commission established, capacitated and functional 3. Social reconciliation and civic dialogue programmes in support of peacebuilding and establishment of local administrations developed and initiated 4. Inclusive consultations on the establishment of Federal Member States in South and Central Regions underway, with Interim State Administrations established 5. Inter-regional dialogue on the formation of federal states initiated through the Inter-Regional Consultative Forum (IRCF) 6. Inclusive and broad-based dialogue on federalism in Somalia initiated through the IRCF and the constitutional development process Priority 2: Finalise and adopt a Federal Constitution by December Oversight Committee established with operational work plan and strategy and capacitated and functional *revised milestone ICRIC capacity building and functionality reflected 2. Substantial review on the key priority areas of the constitutions conducted and public consultations held in line with the work plan of the Oversight Committee (OC) and ICRIC and results analysed 3. Civic education programmes designed and conducted 4. The Inter-Regional Consultative Forum (IRCF), or its equivalent is regularly convened to deliberate on priority areas of the constitutional review process 5. The OC and ICRIC through OC engage in regular dialogue with Parliament, which informs the progress on the constitutional review process per parliamentary session. 6. Draft constitution submitted to Parliament and vote held Priority 3: Prepare for and hold credible elections by Key laws drafted, submitted and voted on (National Independent Electoral Commission, Political Party law, Citizenship and Voter Registration) 2. National Independent Electoral Commission with operational work plan and strategy 3. Define electoral process 4. Define electoral system 5. Comprehensive communication and civic education strategy on political participation and reconciliation developed 45

47 PSG 2: Security Strategic Objective: Establish unified, capable, accountable and rights based Somali Federal security institutions providing basic safety and security for its citizens Priority 1: Strengthen the capacity and accountability of state security institutions to recover territory, stabilise and provide basic safety and security 1. Mechanisms to pay, train, equip and sustain the police and military established 2. Improved command, control and communication of security organisations in support of recovered areas established, as directed by the district and regional committees 3. Legal and institutional frameworks reviewed and updated for oversight, fiduciary and operational accountability, to ensure regulated, effective and disciplined security institutions 4. State and IRAs milestones (TBC) Priority 2: Integrate security forces into Federal Institutions 1. Dialogue, outreach and communication process with clans/militias established 2. Procedures for screening (including separation of children), vetting, induction, registration and enlistment established and initiated for those reconciled with the Federal Government 3. Children s programme activated for the reception and handover of children separated from armed forces and groups 4. State and IRAs milestones (TBC) Priority 3: Implement National programme for the treatment and handling of disengaged combatants 1. Transitional facilities/centres as defined by the National programme established 2. Appropriate system to try high profile disengaged fighters established 3. Programme that guarantees minimum protection for children, as defined by the Geneva Convention and international standards, and implements the action plans to end the recruitment and use and the killing and maiming of Children in Armed Conflict 4. State and IRAs milestones (TBC) Priority 4: Develop an effective maritime security strategy within the framework of the Maritime Resource and Security Strategy 1. Somali 'Maritime Security and Resource Strategy' ratified 2. FGS maritime coordination mechanism established to oversee development and delivery of federal maritime strategy PSG 3: Justice Strategic Objective: Establish independent, accountable and efficient justice institutions capable of addressing the justice needs of the people of Somalia by delivering justice for all Priority 1: Key priority laws in the legal framework, including on the reorganisation of the judiciary, are aligned with the Constitution and international standards 1. PDLU actively reviews priority legislation through relevant consultation 2. Constitutional Court and the Judicial Service Commission established and functioning 3. Legislative agenda is established with the assistance provided by the MoJC 46

48 Priority 2: Justice institutions start to address the key grievances and injustices of Somalis 1. Differentiated training programmes delivered to justice actors and Judicial Training Institute established with regional coverage 2. Justice and corrections actors are increasingly recruited based on merit and receive regular salaries 3. Resourced and secured regional courts established with the extension of the mobile courts, attorney generals offices, prisons and Bar/Lawyers Association offices in member States and regional administrations 4. A state protection force responsible for judicial personnel security is established and trained Priority 3: More Somalis have access to fair and affordable justice 1. Widespread consultation on a Federal policy/law on access to justice and legal aid conducted 2. Access to Justice/legal aid policy (or law) adopted at federal and/or state level 3. Continued legal awareness campaigns on access to justice matters conducted 4. Bar/Lawyers Association which includes Somali women lawyers, human rights experts and paralegals established or strengthened in priority regions and providing increased legal aid services PSG 4: Economic Foundations Strategic Objective: Revitalise and expand the Somali economy with a focus on livelihood enhancement, employment generation, and broad-based inclusive growth Priority 1: Enhance the productivity of high priority sectors and related value chains, including through the rehabilitation and expansion of critical infrastructure for transport, markets access, trade, and energy Fisheries sector: 1. A National Fisheries Authority established and functioning with mandate to manage, conserve and administer the highly migratory pelagic stocks within the Somali EEZ, with an agreed and clear Revenue Sharing agreement with the different regions in place Sustainably introduce 1000 new fishermen into the industry providing a livelihood package (training and fishing gears and shared boats), targeting under or unutilised fishing resources. 500 in 2015 and 500 in Agriculture sector: 3. Middle and Lower Shabelle Flood Control and water management infrastructure/system rehabilitated and functioning. Specs/design/feasibility study and in 2015 and rehabilitation work and local management structure in 2016 and beyond. 4. Re-establish of Agriculture research centres that existed before 1991 in selected locations covering Regional priority locations. Prioritisation and design and ground break in 2015, completion and functioning (including staff/equipment) in 2016 and beyond. 5. Increased and diversified agriculture crop production through provision of improved inputs and training in Good Agriculture practices, post- harvest, grading...etc. 6. Regulation on the importation of seeds and pesticides adopted. 47

49 Livestock sector: 7. Nationally linked complying with international standards - 3 Quarantine, disease control and certification centres established and functioning in Kismayo, Mogadishu and Bosasso. Agreement on policy and design in Establishment of centres and staffing equipment in 2016 and beyond. 8. National livestock vaccination and treatment campaign conducted in both 2015 and Regulation on the introduction of new none-indigenous livestock species adopted. Value Chains 10. A national level strategy for addressing bottle-necks in priority sectors - and related value chains - with long-term potential for growth, productivity and employment developed. Infrastructure 11. A consolidated pipeline of priority infrastructure projects agreed by national stakeholders 12. Detailed design and engineering work finalised for the rehabilitation and/or construction of existing Ministries, and at least one rehabilitation and/or new construction completed 13. Rapid rehabilitation of at least one critical infrastructure project that has been identified by each State, Interim Administration, Administration and Emerging State 14. At least one national flagship programme in each sub-sector (i.e. Transport, Energy, Water & Sanitation and ICT) under implementation Priority 2: Expand opportunities for youth employment through job creation and skills development. 1. Value chain development: Key interventions identified and implemented for at least three value chains in selected sectors to improve their long-term potential for growth, productivity and employment. 2. Skills development: At least 10,000 young Somalis received marketable skills to enhance their employability (in 2015). 3. Job creation: At least 30,000 short-term jobs created through cash-for-work projects to rehabilitate productive infrastructure in target locations (in 2015). 4. Capacity development: Capacity of relevant line ministries and national, regional and district level institutions strengthened to design and implement policies and programmes related to youth employment. Priority 3: Promote the sustainable development and management of natural resources by developing legal and regulatory frameworks and building capacity in key Natural Resources Management (NRM) institutions. 1. Country specific regulatory frameworks for extractive / productive resources endorsed by the Federal Government 2. Formulation and enactment of rules for reduction of charcoal production, consumption and exports 3. Development and endorsement of national multi-sectoral water management regulatory framework 4. Capacity development of federal and state-level institutions and communities for sustainable natural resources management in line with the national policies and global environmental conventions 48

50 PSG 5: Revenue and Services Strategic Objective: Increase the delivery of equitable, affordable, and sustainable services that promote national peace and reconciliation amongst Somalia s regions and citizens and enhance transparent and accountable revenue generation and equitable distribution and sharing of public resources Priority 1: Increase the provision of equitable, accessible, and affordable social services by creating a regulatory environment that promotes decentralised delivery and prioritises key investments that extend and increase access to services ,000 children (50% girls) enrolled in school and adequately equipped across regions (including 100,000 in Puntland) 2. Establish training opportunities for conflict-affected, illiterate youth - with a special focus on newly liberated regions and Banadir - including disadvantaged youth 3. 7,500 teachers trained with nationally validated curriculum using a child centred methodology (including 1,500 Puntland) 4. Standardised national examination system and certification implemented across all regions 5. Key legislation passed for basic and higher education policies including sub sector policies 6. Capacity of MoE, MoHEC and regional and district departments strengthened through recruitment and training of X staff on key areas such as planning, financial management, HR management, monitoring and reporting 7. Expansion of the EPHS to non-covered regions (Bay, Hiran, Sool, Lower Shabelle and Middle Shabelle), including comprehensive emergency obstetric and neonatal care hospitals managers from MoH and Regional Management Health Offices trained in policy analysis, strategic planning, HRH, health economics & financing, legislation and regulation, aid effectiveness (including administration costs) 9. Improve the quality of regional health services by constructing/rehabilitating, equipping and staffing five regional health offices (operational costs covered) mid-level health workers trained and deployed using Human Resources for Health policy 11. Draft social protection policy, institutional framework (roles and responsibilities) and workplan; creation of social workforce to deliver SP services; establishment of social work degree programs Priority 2: Enhance transparent and accountable revenue generation 1. Revenue generation strategy developed and adopted by the Council of Ministers Tax assessors and collectors trained based on clear guidelines 2. Household health expenditure and utilisation survey (HHEUS) - to provide information for national health account and financing strategy Priority 3: Strengthen PFM to enable the different levels of government to better manage financial resources in a transparent and accountable manner, in support of national priorities. 1. Roll out FMIS to 4 pilot sites within central government (Auditor General's Department, Ministries of Health, Agriculture, and Education) 2. Standard Chart of Accounts and TSA established for Puntland 3. TSA operationalised within central government 4. X civil servants achieve certificates in PFM Education and Training Programme (including X in Puntland) 49

51 5. Procurement stream included in Education and Training Program Capacity Development (covers ) Strategic Objective: Strengthen basic sectoral and core government functions in support of the establishment of a responsive, inclusive and accountable public sector Priority 1: Improve capacity of central Government institutions to coordinate and lead structural reform and policy harmonisation process 1. Systemic review of roles and responsibilities of different government institutions completed and government organisation act approved 2. Basic review of organisational structures completed in at least 5 selected priority government institutions and ministry-based organisational plan developed and implemented in phases 3. Basic standards on policy development, planning and M&E approved by government, and related strategy for strengthening these functions in line ministries developed 4. Coordination structure to coordinate and support the improvement of public sector management capacity across government established and operational Priority 2: Strengthen core public sector and civil service management functions in key domains 1. A basic human resource data management system established 2. Civil service Management framework developed & approved by Cabinet 3. Civil service classification and revised pay and grading structure developed and approved by Cabinet 4. Severance, retirement and pension policies and implementation plans developed and approved by Cabinet Priority 3: Strengthen cross Cutting and Sectoral Public Sector Capacities through dedicated support 1. A capacity injection programme under implementation for priority institutions 2. A civil service training and development program developed and under implementation 50

52 ANNEX 3: Partnership principles proposed indicators The proposed list includes indicators drawn from internationally agreed aid effectiveness indicators (e.g. Paris Declaration / Busan Global Partnership / New Deal Trust indicators). Busan indicators are designated with an asterisk (*) in the tables below. Other country-specific indicators are based directly on outlined targets established in the Partnership Principles themselves. PP1: Development is Somali-owned and Somali-led Within the framework of the Compact and on the basis of the ERP, as well as existing sector strategies and plans, the government will finalise a costed and integrated plan with support from the international community. This plan will be designed to meet the requirements of an Interim- Poverty Reduction Strategy Paper by January Government will continue consultations and dialogue with Somali people, regions and Federal Members States on the implementation of the Compact and the finalisation of the costed and integrated plan. Government will identify and develop a limited number of top priority flagship programs. These will support the implementation of key Compact priorities, increasingly financed through the SDRF. The number, areas and sequencing of flagship programs will be identified by December Component Proposed indicator Description Planning and prioritisation Consultations and dialogue Qualitative assessment only no indicator Qualitative assessment only no indicator Extent to which the government has identified and established a clear, costed and focused set of priority actions or priority programs in line with the Compact. Quality and regularity of consultation and dialogue between government and the Somali people, regions and Federal Member States. Quality and regularity of consultation and dialogue between the FGS and development partners. PP2: Aid is aligned with overall Government priorities and sector policies and plans Development partners align their current and future support with the priorities articulated under the Compact framework and according to guidelines on alignment prepared by the government in consultation with development partners by January Development partners will articulate how their country strategies are aligned with government priorities identified in the Compact and sector policies and plans. Component Proposed indicator Description Strategic Alignment Programmatic Alignment Use of Compact results framework Strategic alignment of development partners country assistance strategies with the Compact Proportion of aid funds aligned with Compact priorities and flagship programs Proportion of development partners using the Compact results framework* Extent to which development partners use the objectives and priorities from the Somali Compact as reference to deliver their own programs (based on desk review) Identification of limited set of priority flagship programs by government in consultation with development partners. Extent to which development partners country programs are aligned with the government s priorities and flagship programs. (based on sector analysis by PSG WG) The extent to which development partners use the Compact results monitoring framework to assess the progress of their strategy and programs. PP3: Aid operations are designed and delivered in partnership with government institutions New aid operations will be designed in partnership with the responsible government institutions. Services delivered by NGOs or the private sector on behalf of the government will fall under a government-led framework agreement, and will increasingly be contracted by the government as it builds its capacity. Development partners will give visibility to government s role in development programs and refrain from over- 51

53 branding their activities. Development partners will avoid parallel Project Implementation Units (PIUs). Any new PIUs will be set up in line with guidelines to be developed by government in consultation with the development partners by March Component Proposed indicator Description Joint design, implementation and review Limited branding Service delivery contracting arrangements Parallel delivery arrangements Perception of key government stakeholders on the level of involvement in project design Proportion of major new activities reviewed by PSG Working Groups Visibility of development partner branding Qualitative assessment only no indicator Number of parallel project implementation units (PIUs) Extent to which development partners engage and create space for government involvement in project design. Extent to which government agencies undertake joint implementation with development partners. Extent to which development partners use the PSG working groups as fora to discuss and review new projects and programs. Regularity of reporting by Program Steering Committees to PSG working groups. Whether development partners adequately limit their own branding, to give greater visibility to the government s role in development programs Extent to which services delivered by NGOs or the private sector on behalf of the government are delivered under a government-led framework or in partnership with government Extent to which development partners strengthen government capacity by avoiding parallel implementation or delivery arrangements PP4 - Aid is provided in line with the government budget cycle and helps to strengthen government Public Financial Management (PFM) systems By 2016, 66% of external financing will be recorded in the government s budget documentation using the government s chart of accounts (consistent with the Paris Declaration). Government and development partners will move towards joint fiduciary risk and diagnostic work on PFM and other country systems. This will provide the basis for dialogue between government and development partners on the use of country systems. On the basis of agreed benchmarks, development partners will seek to increase the overall share of aid funding that is channelled through the national budget and uses country systems. Component Proposed indicator Description On-budget aid Use of PFM and procurement systems Proportion of aid recorded in the annual budgets approved by Parliament* Proportion of external financing included in the revenue and appropriations approved by Parliament Placeholders for indicators methodology and definitions to be agreed by technical working group on use of country systems Quality of national PFM and procurement systems * Proportion of aid using country PFM and procurement systems * Assesses the quality of government PFM and procurement systems on the basis of an agreed methodology such as CPIA or PEFA Extent to which development cooperation disbursements for the government sector use government PFM and procurement systems on the basis of agreed criteria what constitutes use of country systems (covering financial reporting, auditing and procurement) PP5 - Aid is channelled through preferred instruments of the government To support the transition towards the increased use of the SDRF as a preferred channel, performance indicators and benchmarks regarding SDRF delivery and the implementation of the PFM Reform Action Plan will be jointly 52

54 developed. These indicators will be monitored and discussed within the SDRF governance structure. Development partners will reduce the number of parallel funding channels per PSG and gradually increase the amount of aid channelled through priority funds under the SDRF as mutually agreed benchmarks are met. Development partners commit to align all aid modalities to Compact priorities and principles. The SDRF will also provide a platform for policy dialogue, regardless of the funding channel used by development partners hence enabling their alignment with sector policies and plans. Component Proposed indicator Description On treasury aid Use of funding windows Proportion of aid disbursed into the main revenue funds of government and managed through government systems Proportion of aid channelled through SDRF funding windows or other pooled funds Extent to which development partner disbursements use national budget execution procedures and are processes through the established country treasury system. Extent to which development partners are channelling aid through SDRF funding windows Proportion of aid channelled through other pooled funding mechanisms PP6 - Aid supports institutional capacity development Government will develop a framework for cross-government capacity development to strengthen core government functions with clear priorities identified, by December Government and development partners will develop guiding principles ( a code of conduct ) for the provision of external support to capacity development, monitor its implementation and discuss progress at regular high-level dialogue meetings. Development partners and government will ensure sector programs include capacity development and institution building components and follow guiding principles on capacity development. Government and development partners will agree on guidelines for the use of technical assistance, including international technical assistance as well as national technical advisors (NTA), specifically formulating guidelines for salary-top ups for government employees and remuneration and salaries for NTAs by December Component Proposed indicator Description Capacity development support Salary harmonisation Approach to capacity development Proportion of aid targeting capacity development Proportion of externally-funded national technical advisors and staff in government compliant with harmonised pay-scale Compliance with code of conduct (Qualitative assessment only no indicator) Proportion of reported aid that targets capacity development as a primary or secondary objective. Extent to which government institutions capacity improves post program completion. Extent to which development partners and government respect agreed salary scales for national technical advisors and line staff in government. Extent to which development partners and government comply with the agreed code of conduct for capacity development PP7 - Aid is provided in a coherent and coordinated way and fragmentation is avoided Government will clarify the mandates, roles and responsibilities of government institutions in relation to aid management activities, establish aid coordination mechanisms by December 2013, and ensure strong leadership of these in line with the coordination architecture outlined below. Development partners will support, use and respond to aid coordination as described in the Compact and will identify a lead donor for co-chairing sector working groups. The roles and responsibilities for lead donors will be defined in Terms of Reference. Development partners will work with government to agree on a strategy for PSG/sector-based division of labour with criteria and a timeline to avoid fragmentation and reduce the number of sectors in which a donor is active by mid To reduce fragmentation, development partners will make greater use of delegated co-operation and channel aid 53

55 through the SDRF. Component Proposed indicator Description Sector fragmentation Aid coordination Division of labour Number of projects per sector Perception of key stakeholders on effectiveness of aid coordination mechanisms Adherence to code of conduct Qualitative assessment only no indicator PP8 - Aid is transparent and predictable Extent to which programmatic support is fragmented or focused within sectors Whether the SDRF is providing clear guidance and leadership for aid coordination in Somalia Whether the PSG WGs function as forums for strategic discussion and review of project alignment with priorities Donor code of conduct established by government in consultation with development partners. Extent to which donor code of conduct is adhered to. Whether development partner engagement is focused in key areas, avoiding duplication and demonstrating division of labour across partners. Aid channelled through priority funds under the SDRF uses a common format for financial and progress reporting, making it easy to aggregate information. Over time, this common reporting format will also be applied to bilateral programs and instruments outside the SDRF. Government will strengthen its Development Assistance Database (DAD) which will be the premier source of information on development assistance to Somalia. This system should be simplified to enable greater use by all partners. All development partners working in Somalia will regularly report their development assistance information, fostering the use and gathering of sex and age disaggregated data, in this system. Development partners will also agree with government the scope of other flows to be reported. Development partners will implement their Accra, Busan and New Deal commitments to provide rolling 3-5 year forward expenditure and/or implementation plans. These will include at least indicative resource allocations that the FGS can integrate into its medium-term planning and macro-economic framework. Component Proposed indicator Description Transparency Predictability Limited preferencing Proportion of development partners providing timely and comprehensive information on aid resources Annual: Proportion of funding disbursed within the fiscal year within which it was scheduled by development partners* Medium-term: proportion of funding covered by indicative forward spending plans* Average length of funding agreements under SDRF funding windows Proportion of earmarked/ preferenced contributions to SDRF funding windows PP9 - Aid is provided in a conflict sensitive manner The extent to which development partners provide timely and comprehensive data of a high quality on their resources to the government on a regular basis (based on agreed criteria for data quality). The gap between funding scheduled by development partners and funding effectively disbursed as reported by development partners. Measures whether government has as its disposal comprehensive and credible forward information on development cooperation funding. Predictability of activities financed through the SDRF funding windows measured by length of financing agreements The extent to which development partners preference or earmark contributions to SDRF funding windows (reported by fund administrators) Government and development partners will cooperate in ensuring that their interventions are designed in a conflictsensitive manner, through the use of context analysis and regular monitoring, to reduce the risk that aid unintentionally contributes to the escalation or sustainably of violence. Particular attention must be paid not to increase economic and political inequalities. Development partners and government agree to develop a proposal for a grievance redress/ombudsman 54

56 mechanism which allows complaints related to aid operations to be filed and heard. Component Proposed indicator Description Conflict sensitive approach Conflict resolution Proportion of development activities informed by conflict analysis Proportion of development activities that monitor their impact on conflict Proportion of funding targeting conflict resolution Cross-cutting component Mutual accountability Component Proposed indicator Description Mutual accountability Mutual accountability is strengthened through inclusive reviews* Extent to which reported activities are informed by conflict analysis, measured by the proportion of development activities tagged with the conflict analysis marker Extent to which development partners monitor the potential impact of their activities on conflict, as measured by the proportion of development activities tagged with the conflict monitoring marker Extent to which financing targets conflict resolution (would require methodology for criteria) Extent to which inclusive mutual assessments of progress in implementing the partnership principles and other commitment has taken place (based on agreement of a set of minimum criteria) 55

57 ANNEX 4: Somalia s Debt Reconstruction: Progress Report (September 2014) Introduction This report provides an update on progress in reconstructing Somalia s debt database. The report, and the debt estimates therein, is based on information obtained from creditors as of end-september 2014, and it is therefore subject to change and revision, as more data becomes available. In the coming months, the FGS will step up its efforts to complete the construction and validation of its debt database and is seeking the renewed cooperation and commitment of all creditors to provide the needed loan-by-loan information and financial statements, especially from a few Paris Club creditors (who have not yet made their loan-by-loan data available) and to a large extent non-paris Club creditors. Summary of progress Somalia, one of the world s poorest countries, is eligible for the HIPC Debt Relief Initiative. It is also eligible, after reaching the HIPC Completion Point, for additional debt relief under the Multilateral Debt Relief Initiative (MDRI) from the World Bank and AfDB debt and Beyond-HIPC Relief from the IMF. Somalia is one of the three countries that have yet to qualify for debt relief under the HIPC Initiative. Among the prerequisites for Somalia to reach the Decision Point under the HIPC Initiative are that its external debt data has been reconciled with creditor claims and that a debt management system is in place. Somalia must hence reconstruct its debt database that was completely destroyed during the twenty-plus years of civil war. It must also rebuild the debt management capacity that was lost in the absence of a functioning government institution. During the last two decades, the country defaulted on the majority of its external debt obligations, resulting in accumulation of arrears, which now make up the bulk of Somalia s debt (estimated at some US$5 billion at end-2013). The main benefit for Somalia of arrears clearance and substantial debt relief is that it will open avenues to new financing, from both official and private sources, needed to reconstruct the country s war torn physical and social infrastructure. While grants will remain essential for Somalia for years ahead, access to concessional financing from official sources would be a most necessary complement. The significant reduction of the debt burden would enhance the prospects for foreign investment and other private financial flows. Since the Parliamentary and Presidential elections of September 2012, the FGS has committed itself to resolving its arrears/debt and normalizing its relationship with IFIs. The initial dialogue with IFIs and external partners on this issue resulted in the establishment of the Somalia Debt Technical Working Group (TWG), in Washington DC on October 9, The tasks of the TWG, which would meet on a regular basis, comprises the following: Monitor Somalia s progress in building a credible track record of economic reforms needed for accessing arrears clearance facilities and HIPC Debt Relief Share information on technical debt issues in the context of HIPC, including on the structure of debt and technical assistance needs for reconstructing the debt database. With the endorsement of the TWG and cooperation of Somalia s creditors, the FGS has commenced the reconstruction of the debt database in a computerized debt management system (CS-DRMS) in a newly created Debt Management Unit (DMU) within the Ministry of Finance. 56

58 Since October 2013, with technical assistance provided by the African Development Bank (AfDB), the DMU has made progress in rebuilding the debt database, and has been in continuous dialogue with all creditors (except North Korea). Based on data obtained thus far, Somalia s external debt including arrears (but excluding any commercial debt) is estimated at some US$5.4 billion, with three components: Multilateral debt: Data on 170 loans obtained, totaling US$1.6 billion Paris Club bilateral debt: Data on 60% (105) of loans obtained, totaling US$2.2 billion Non-Paris Club bilateral debt: Data on 10% (35) of loans obtained; totaling US$1.5 billion The FGS will step up its efforts to seek creditors to provide the needed loan-by-loan information and financial statements in order to complete the construction of a validated debt database. In line with the endorsement by the Somalia Debt TWG, the FGS is seeking the renewed cooperation of all creditors, especially of a few Paris Club creditors (who have not yet made their loan-by-loan data available to FGS) and most non-paris Club creditors. The FGS sees the completion of the debt database and the establishment of debt management capacity in the Ministry of Finance as an important step in the preparation for arrears clearance and accessing HIPC debt relief in due course. Progress on Debt Reconciliation Significant progress has been made on the reconstruction of multilateral debt database. Through World Bank support, the FGS has obtained loan-by-loan data and financial statements from all 10 multilateral creditors. Most information has been reflected in the CS-DRMS database and validated, with the exception of claim data for the Arab Monetary Fund, of which information is yet to be obtained. In addition, the Islamic Development Bank has informally agreed to provide debt relief to Somalia prior to the FGS reaching HIPC decision point. Creditors Progress & Next Steps Progress Paris Club Creditors: Some progress has been made on the reconstruction of debt to Paris Club creditors. The FGS has sent requests to all 10 creditors for loan-by-loan data along with creditor financial statements. It has received debt data from all creditors, with the exception of the US. However, loan data for three creditors (Denmark, Russia, and the UK) is not yet complete. Quarterly budget execution reports to be prepared and published on the Ministry of Finance website. Non-Paris Club Creditors Progress with regard to non-paris Club debt has been slow. The FGS has sent requests to 13 known or potential creditors for loan-by-loan data along with creditor financial statements. While the DMU has received positive reactions from all creditors, claim data has been received only from the Kuwait Fund for Next Steps The FGS is seeking the renewed cooperation from remaining creditors for which loan-byloan data is still pending or incomplete. Obtaining the missing information will allow the DMU to complete and validate the Paris Club claims in Somalia s debt database in CS- DRMS. The FGS is stepping up its efforts to obtain the cooperation of its non-paris Club creditors, including the larger creditors in the Gulf who account for 80% of non-paris Club claims. 57

59 Development. Commercial Creditors: No information on Somalia s commercial debt is currently available, and the search for information on claimants through specialized channels has not yet commenced. The DMU has been in contact with IDA s Debt Reduction. The DMU is currently consulting about the appropriate timing of seeking support from IDA s Debt Reduction Facility for the handling of any commercial debt. 58

60 ANNEX 5: Financial Governance Committee Progress Update Introduction The Financial Governance Committee (FGC) plays a key role in the efforts of the Federal Government of Somalia (FGS) and the international community to strengthen public finance institutions in the country. The FGC advises on a number of key financial governance areas and provides a space for frank and, where necessary, confidential discussion. This report presents a brief overview of the development of the FGC, its impact on key financial governance work streams, and planned adjustments to the FGC following a recent independent review. Development of the FGC The FGC was established in early 2014 by mutual agreement between the FGS, donors and international financial institutions (IFIs). The FGC consists of three senior members of the FGS (the Minister of Finance, the Governor of the Central Bank and the Chief Policy Advisor to the President), two delegates from international financial institutions (the World Bank and the African Development Bank) and one adviser-member from the International Monetary Fund. Through its IFI participants, the FGC offers a source of advice to the government and a forum for open and honest discussion of sensitive policy issues. The FGC aims to support improvements in financial governance in Somalia in a way that balances the aspirations of Somali reformers, the requirements of development partners and the realities of the Somali political economy. Through such improvements, the FGC hopes to enhance the legitimacy of the FGS in the eyes of Somali citizens and international partners. The FGC was originally established to support the Financial Governance Program (FGP), also developed in early Subsequently the FGC has defined an agenda for itself based on areas of engagement that it believes it can meaningfully influence. The current agenda focuses on foreign asset recovery, public procurement and concessions, central banking, fiscal federalism as it relates to natural resource management, the use of country systems and the delivery of vital PFM-related technical assistance. The FGC's core agenda will be adjusted as new priorities emerge and in response to the suggestions of domestic and international stakeholders. The FGC s inaugural meeting was on April 23 rd, It has formally met on three subsequent occasions, with the latest meeting having taken place on October 26 th, Progress against current FGC agenda items Foreign asset recovery Recovery of frozen public financial assets is a high priority for the government. Asset recovery emerged as a controversial issue following the resignation of the previous Governor of the Central Bank of Somalia (CBS) in October Concern was expressed that the process of asset recovery was not transparent and the mechanism established for asset recovery was too costly. In July 2014, the present Governor of the CBS terminated the contract with Shulman Rogers for legal support to the asset recovery process (the President subsequently wrote to Shulman Rogers, confirming that authority over the asset recovery process now rests with the Minister of Finance). 59

61 On July 15 th, 2014, the government informed the SEMG that The FGC, cooperating with the Stolen Assets Recovery (StAR) initiative, will henceforth oversee and monitor the national asset recovery program, and will issue periodic reports to Presidency, Council of Ministers, Somali Parliament and Somalia Development and Reconstruction Facility Steering Committee on its activities and findings. The first FGC Asset Recovery Progress Report has been produced and made available to Copenhagen conference participants. In August 2014, the Minister of Finance and the Governor of CBS established an Asset Recovery Team, consisting of representatives from the two institutions. This team has subsequently selected and met with new legal representatives, selected from a shortlist provided by StAR. The Asset Recovery Team is preparing a Policy Statement on Asset Recovery and Use. The policy statement will clarify how recovered assets will be managed and allocated. This policy statement is attached. Public procurement and concessions At the time the FGC was established concern was expressed that the government had signed a number of public contracts and concessions without transparent procedure, and without the benefit of adequate technical expertise. It was felt that these contracts might not be in the best interests of the Somali state and citizens. The government therefore committed that all new contracts valued at over US$5 million would be reviewed by the FGC, and that all existing public contracts would be sent to the FGC for review. The government has since provided the FGC with 11 concessions, contracts and memoranda of understanding for review (in addition to the asset recovery contract). Of the contracts provided, the IFI delegates to the FGC have so far reviewed 8, with the remainder still pending. The Africa Legal Support Facility, funded by the African Development Bank, is providing legal support for the renegotiation of those concessions/contracts to which the government has decided to seek revisions. A report on FGC Reviews of Public Sector Contracts and Concessions is available to Copenhagen conference participants. The government is preparing a Procurement and Contracts Management Policy Statement that is intended to reiterate its commitment to transparent procurement and the development of a solid national public procurement capacity. Central banking The Central Bank of Somalia (CBS) serves as the fiscal and financial agent of the government, and thereby plays a vital role in public financial management. In addition, the CBS is charged with overseeing and regulating Somalia s financial sector. Since the FGC was established, the CBS has selected a new Governor through a transparent recruitment process, has established a Board of Directors, and has prepared a code of conduct for CBS staff. Additional internal reforms include adoption of an accounting and reporting framework and preparation of the CBS s first set of financial statements. The CBS has also initiated a work on secondary legislation to support the Central Bank Act of Somalia and has agreed an MOU with the Ministry of Finance to clarify their mutual obligations. The FGC will monitor CBS' preparation of and compliance with benchmarks relating to the CBS-Ministry of Finance MOU. The CBS is committed to external audits of its financial statements, although donor funding is required to achieve this. In addition, and with IMF support, the CBS is working to establish a financial reporting framework. 60

62 Public financial management Development of Somalia s public financial management (PFM) systems is central to ensuring that the government has the ability to deliver services to citizens. As such, improved PFM is an essential aspect of government capacity and accountability. At the time of the FGC s inception two key government positions, the Accountant General and the Auditor General, were vacant. The government has since appointed an Auditor General and an Accountant General. The Ministry of Finance has also drafted an Audit Bill and a PFM Bill, both of which have been approved by the Council of Ministers. The Ministry of Finance has begun to use the Treasury Single Account for receipt of all revenues and has established a task force to ensure that all payments are made directly from the Treasury Single Account and processed through the Somalia Financial Management Information System (SFMIS). The queue of legislation in Parliament has led to approval of the Audit and Public Financial Management bills being delayed. Use of country systems There is support for use of country systems by the international community, which recognizes the advantages it presents in terms of predictability, accountability, transparency and increased recipient country ownership. The commitments by donors in the Paris Declaration, in subsequent international meetings and in the New Deal Framework reflect this support. On June 24 th, 2014, the President asked the FGC to oversee the creation of a roadmap towards the use of country PFM systems for external aid spending. The FGC proposed a terms of reference for a joint donor-government technical working group to design the roadmap; this TOR was endorsed by the SDRF. The working group has produced a roadmap with detailed first year benchmarks and prospective benchmarks for future years. The roadmap will be used as a basis for discussion at the Copenhagen Conference. Fiscal federalism The FGC has elected to add fiscal federalism to its agenda, as an extension of the work it has been doing on reviewing natural resource (oil and gas, fisheries) concessions. The FGC is in the process of gathering information on fiscal federalism to build its understanding of the issues involved. Planned improvements to the FGC The FGC is a new institution and there is no blueprint for success. Through the course of the past eight months, members have been adapting to their roles and responsibilities. Government and international stakeholders have also been assessing the operations and effectiveness of the FGC. As part of this complex learning process, the SDRF endorsed the terms of reference for an independent, external review of the FGC. The review consultant began her engagement on October 12 th, 2014 and presented her findings and recommendations on November 6 th, The FGC has drafted a response to these findings that sets out actions to improve its functioning and communication with financial governance stakeholders. The proposed improvements include: Revision of the FGC s terms of reference to clarify and simplify its responsibilities; 61

63 One additional FGS members and one delegate of bilateral donors; Increased provision of information on the outcome of FGC discussions and deliberations; Holding of open meetings with the FGC on a quarterly basis. 62

64 ANNEX 6: Interim roadmap towards the use of country PFM systems Introduction This concept note suggests an interim roadmap towards the increased use of Federal Government of Somalia (FGS) country public financial management (PFM) systems. It aims to provide a starting point for discussion between the FGS and international partners. The document was drafted by a Task Force consisting of FGS and donor representatives under the supervision of the FGC. The note reiterates the rationale for using country systems, including increasing accountability. It also notes that whilst FGS is ultimately responsible for developing financial management systems, development partners should provide support for these efforts. It begins to set-out the sort of benchmarks that could allow greater use of country systems, detailing some achievable steps for development partners and FGS. It further attempts to establish some concrete short/medium term actions, whilst looking forward to a more detailed longer-term roadmap. The framework presented in this concept note is based on mutual accountability as defined and endorsed in the Somali Compact. The scope of the paper is limited to the broad technical steps required for the use of different country expenditure systems. Development partners will have different thresholds and requirements for greater use of country systems. Many development partners will also have non-pfm criteria (e.g. commitment to poverty reduction, human rights etc.) that will be applied to decisions about the increased use of country systems in the long-term. The Interim Roadmap will lead towards the elaboration of a more detailed and comprehensive Roadmap in 2016, informed by the results of the expected joint Public Expenditure and Financial Accountability (PEFA) assessment exercise to be completed before the end of Commitment on using country PFM systems Overall FGS has taken some important steps to strengthen its PFM systems, including taking the first steps towards implementation of a financial management information system (FMIS), improved expenditure controls, and publishing of national financial statements. While Parliamentary approval of the draft PFM, Procurement and Audit Bills is pending, the administration has made progress in modernizing the legal PFM framework by issuing ministerial orders, treasury circulars and incorporating administrative and legal procedures in the Fiscal Bill. The focus should be on continued government efforts to address weaknesses, whilst development partners commit to support these efforts. Significant progress has been made establishing the funding windows of the Somalia Development and Reconstruction Facility (SDRF) and development partners are increasingly aligning their spending plans behind these structures and FGS priorities. Internationally there is commitment to channel aid through recipient country systems, as defined in the Paris Declaration, principles of engagement with fragile states and the New Deal. Use of country systems enables more comprehensive public budgets, increased effectiveness of expenditure, reduced transaction costs, stronger recipient country ownership, greater transparency, and greater accountability. A precondition of channelling support through country systems, especially where this entails fiduciary risk, is that governments take all reasonable measures to strengthen their PFM systems and implement measures to ensure transparency and accountability. Governments also usually seek to increase their own revenues to support medium- to long-term fiscal sustainability. The FGS and development partners made the following commitments in the Somali Compact, agreed in September 2013: 63

65 Aid is provided in line with the government budget cycle and helps to strengthen government Public Financial Management (PFM) systems By 2016, 66% of external financing will be recorded in the government s budget documentation using the government s chart of accounts (consistent with the Paris Declaration) (Commitment 1). Government and development partners will move towards joint fiduciary risk and diagnostic work on PFM and other country systems. This will provide the basis for dialogue between government and development partners on the use of country systems. (Commitment 2) On the basis of agreed benchmarks, development partners will seek to increase the overall share of aid funding that is channelled through the national budget and uses country systems. 4 (commitment 3) In a speech to the High Level Partnership Forum on 24 June 2014, the President of Somalia called on the Financial Governance Committee (FGC) to oversee the agreement of a documented plan, complete with benchmarks and indicators that articulates the necessary steps and associated timeline toward achieving the goal by the Copenhagen Conference on 19 November The President also called for benchmarks to be reciprocal, reflecting the commitments of FGS to stronger transparency and accountability, as well as those of international partners. Although there is broad agreement in the international development community that use of country systems is beneficial, the goal is often difficult to achieve. Development partners accountable to their national governments and populations face real and perceived fiduciary risk when working with the relatively weak institutions in fragile states. A contributing factor to weak institutions is the lack or minimal use of country systems and engagement of government institutions in the planning and implementation of programs. As such, the use of country systems will strengthen institutions and requires action by governments to reduce fiduciary risk and for development partners to find mechanisms allowing them to accept greater risk in delivering aid to fragile states in the spirit of the New Deal. Defining country PFM systems This concept note defines country PFM systems as the mechanisms through which financial resources are allocated and spent, including both recurrent and capital expenditure, at the federal level, as managed by the FGS. This includes revenue and expenditure funded by external partners as well as expenditure funded by domestic revenue. It does not for instance include financing for military and humanitarian aid 5. The Somalia PFM system comprises several different functional components. Four main stages and eight components are identified below. Stage of budget process Budget formulation Component of the FGS PFM system Activity/Program planning Budget preparation Potential fiduciary risk (indicative) Lower Lower 4 The Somali Compact (June, 2013): p The question of eligibility of development spending will need to be agreed. For instance there will need to be a definition and classification of both military and humanitarian aid. It is acknowledged that development partners will seek to reduce the share of humanitarian/emergency assistance in their overall aid to Somalia, as increasing stability leads to better access to beneficiaries. 64

66 Budget approval Budget appropriation Lower Procurement Higher Payment through Treasury Higher Budget execution Accounting Higher Budget evaluation Reporting Audit Lower Higher Separation of the budget process into its separate components allows the use of country systems to be broken down into its constituent parts. It also allows for a segmented assessment of the risks and benefits of each component of the budget process. For example, supporting use of government systems by including information on external assistance in planning and reporting does not present significant fiduciary risk to development partners and has a very low cost. However these actions present significant benefits in terms of planning, country ownership, transparency and accountability, as exemplified by the inclusion of donor activities under the umbrella of SDRF coordination. It is useful to distinguish between the recently established national windows within the multi-partner funds that are fully government-executed, and other development spending. While all aid instruments should over-time seek to make greater use of country systems, national windows offer development partners a ready -made mechanism to begin using country systems whilst safeguards remain in place to mitigate against fiduciary risk. But increasing transparency and accountability goes beyond managing fiduciary risk. The budgetary process should have sufficient credibility, meaning it should be comprehensive (avoids off-budget expenditures), and can be accessed by the public relatively easily. Overall, use of country PFM systems must be a two-way street. Government must make every effort to strengthen its financial management systems, leading to improved controls, transparency and accountability. Development partners should look to support this process with technical assistance, as well as increasing the portion of their funding channelled through country PFM systems as conditions improve. This mutual accountability aspect of use of country systems can be summarized as follows: Short-Term goals and benchmarks for the use of country PFM systems (next 18 months) It is recognized that different development partners will be able to move at different speeds and take different levels of risk. This paper therefore is focused on the minimum benchmarks, and does not therefore preclude partners choosing to make even greater use of country systems than is implied here. In the short-term, the primary goals of the government and its development partners are to: - Increase the transparency and accountability of FGS to its citizens. Government will lead the reform process but development partners should support Government reform efforts. - Align all eligible external financing with FGS planning and budgeting processes. This will be achieved through use of those components of the budget process that present lower PFM risk. - With safeguards in place, provide support for national windows of multi-donor funds. These vehicles will channel some funds through country PFM systems in order that the government can begin building the capacity of those systems, as for instance the World Bank s Multi-Partner Fund (MPF) Recurrent Cost and Reform Facility (RCRF), supporting recurrent costs. Some development partners 65

67 may also chose to channel some funds through country PFM systems via other direct or multilateral spending. Government and development partner benchmarks are listed in the table below (next 18 months). Government benchmarks 2015 budget with realistic revenue forecasts, and credible cash/arrears management plan to reduce arrears. Quarterly budget execution reports to be prepared and published on the Ministry of Finance website. Budget Strategy Committee to manage 2016 budget preparation Reform of the operating costs payments process to introduce new business processes, including preventative controls.* Establishment of the legislative framework supporting the PFM system Strengthen the oversight functions of the Accountant General and Auditor General positions, in line with Somali Constitution Automatized salary payment with integrated payroll/ staff database (IFMIS) 100% of revenue collected must be documented and deposited into the Treasury Single Account. All ministerial accounts should be phased out. Development partner should use the Treasury accounts, instead of directly depositing grant funds in separate ministerial accounts outside the Central Bank of Somalia. Interim Ministerial Orders / Treasury Circulars will be issued to start strengthening procurement processes. Completion of revisions to reviewed concessions/procurement contracts, or termination where required, in line with FGC advice Annual and Quarterly financial statements prepared by Accountant General within following quarter, and published on MoF Development partner benchmarks Government is requesting that in 2015, 15% of external development spending channeled through SDRF national windows, which use treasury. These windows will, with safeguards in place (e.g. ex-ante controls, monitoring agent, etc.), make use of country PFM systems as a means to strengthen those systems. Increased development partner support for PFM reform, including provision of sufficient and on-the-ground technical support to build the capacity of country PFM systems. All eligible externally financed projects/programs report their actual expenditure and delivery of outputs to the government. All eligible development spending on plan, which means that externally financed projects/programs are integrated into the plans and budgets of government budget units. These projects/programs should reflect joint government-development partner policy priorities. All eligible development spending on budget, which means that externally financed projects/programs are listed in the National Budget in alignment with government budget units and according to government expenditure classification. These listings should include planned disbursements and planned outputs. Externally financed projects/programs will be presented to Parliament for information, as part of the National Budget. Timely disbursement and expenditure of funds in line with commitments. Externally financed projects are designed and implemented with participation by the 66

68 website.* Interim Ministerial Orders / Treasury Circulars will be issued to start strengthening budget execution and other controls and improving transparency and accountability. Annual financial statements to be audited and approved, with associated audit reports submitted to parliament. Monitoring and reporting mechanism of development spending outputs are established. Completion of a complete and comprehensive external audit conducted and published by the Auditor General. relevant ministry/agency and approved by the SDRF. Projects and programs reflect joint government-donor priorities. FGS to participate in some of the procurement processes of implementing agencies, which will help develop government procurement capacity. Immediate budgetary support to address gaps The government is requesting support to meet critical gaps in its budget. The 2015 budget is in the final stages of preparation but initial assessments of projected revenue indicate that the FGS will not be able to adequately finance the following important areas: 1. Civil Servants Salaries 2. Operating Costs 6 3. Establishment of Regional and District Level Administrative Capabilities 4. Security Sector: Salary & Rations for Police and Military The government is requesting that development partners provide immediate support in order to fill gaps in the 2015 National Budget. These areas are being partially addressed through the funding vehicles of the SDRF; numbers one and two are being partially addressed through the World Bank s Multi-Partner Fund, and number four through the Police Stipends program. The government recognizes that immediate support of this kind requires it to expedite certain reform benchmarks. As such, the government commits to implementing the reform benchmarks marked with an asterisk above as a condition for immediate support. Medium and Long-term targets and benchmarks for use of country PFM systems (2016 and beyond) In the medium to long-term, and building on the roadmap to be defined in 2016, the government would like to see a steady increase in the proportion of external financing that is channeled through country PFM systems, as PFM reforms are successfully implemented. The table below sets-out some indicative benchmarks and milestones, representing the necessary PFM conditions for additional support through country systems. A more precise roadmap will require 6 To be defined 67

69 agreement on a joint fiduciary risk assessment, which will be used to assess PFM systems, establish critical weaknesses and achievable goals, as well as monitoring progress 7. This work could also provide an independent assessment of the quality and adequacy of international assistance for reforming PFM institutions and systems. The benchmarks developed under this process will be monitored together with the benchmarks and indicators defined under the Compact joint monitoring framework for Partnership Principles. Development partners will work with FGS to establish what such a mechanism will entail. This joint fiduciary risk assessment framework will be informed by a PEFA assessment, to be completed before the end of 2015, and should also be linked to overall monitoring of the Compact partnership principles. Indicative benchmarks are listed below, although these will need to be defined more tightly and reviewed regularly. The FGS will also develop how to guidance for development partners on aid delivery in line with the Partnership Principles and to bring aid onto country systems at different stages of the PFM cycle (On-Plan, On-Treasury, On-Report etc.). Indicative Government benchmarks Government will have sector plans covering all regions, including an interim poverty reduction strategy (I-PRSP) which is povertyfocused, has linkages to the budget, is consultative and participatory. Budget policy, review and execution strengthened. Enhance revenue generation for transition out of donor support for recurrent costs. Put into place procurement practices that are equitable and transparent. Competition, value for money and controls established in procurement. Adequate records and information are produced, maintained and disseminated to meet decision-making control, management and reporting purposes. Arrangements for scrutiny of public finances and follow up by executive are operating. Reporting on physical performance informs subsequent year's budget planning process (not in PEFA framework) Indicative Development partner benchmarks Government is requesting in 2016, 25% of external development spending channeled through full country PFM system, i.e full use of the treasury system. Implementation of a single, harmonized system of monitoring and assessment of country PFM systems 8. Year over year increase in the percentage of external development spending channeled through country PFM systems. All eligible projects/programs will require sign-off by the Minister of Finance as part of the National Budget. 7 Unless prohibited by law. This process will require reconciliation of the authorities and fiduciary requirements of different development partners, with the latter having to take into account different legal requirements of their home countries 8 See above caveat related to development partner legal requirements 68

70 Social Accountability mechanisms allow for citizens to understand; provide input and monitor budgets Capacity building The government and international partners recognize that country PFM systems require improvement and that Government should take the lead in that effort. It is also recognized that capacity building support from development partners is essential to achieving reform. International partners therefore commit to supporting improved capacity within the center of government and budgetary units, in a timely manner that allows improvement of country PFM systems so that targets may be achieved. The government commits to implementing reforms to improve PFM systems. It is important that regular, independent expert assessments should be undertaken regarding the externally financed capacity building to ensure the FGS receives the best possible support. This should include an assessment of the quality of assistance provided, identification of any gaps or duplications, as well as of donor-by-donor commitments to fulfill needs, and an assessment of progress in delivery and recommendations on how to improve it with follow-up monitoring. As mentioned above, this independent expert assessment could be done as part of the joint fiduciary risk assessment framework. 69

71 ANNEX 7: Overview of SDRF funding windows I. UN Multi Partner Trust Fund The UN Multi Partner Trust Fund (UNMPTF) is one of the funding windows established under the SDRF governance structure. The UNMPTF covers activities throughout the five PSGs. In addition to channelling funds for programmatic activities, the Somalia UN MPTF will also perform a coherence and alignment function for on-going existing UN programmes. In that regard, it will foster the progressive inclusion of these programmes under the UNMPTF and SDRF oversight. The UN will strive to align the governance of its existing programmes to the SDRF governance, to the extent possible. The UNMPTF has two funding streams the UN funding stream and the national funding stream. Under the UN Funding Stream, participating UN Organisations are eligible to receive funding. Financing may be provided to national and sub-national institutions and international NGOs through one of the UN Agencies. Under the National Funding Stream, financing can be provided directly to the National Entities that are included as Government Implementing Partners in the programmatic documents approved by the Steering Committee. Endorsement process: In a first step, strategic funding priorities are identified through the PSG WGs and included in a forward-looking funding pipeline to be presented to the SDRF Steering Committee for endorsement. On the basis of the endorsed priorities, programmes will be developed and presented to the SC for approval, after having undergone a review and consultation process through the PSG WGs. Thematic focus: the initial funding pipeline endorsed in August 2014 focuses on strategic priorities identified by the WGs under PSGs 1-5 and Capacity Development. The five areas of initial thematic focus include in (1) Inclusive Politics, (2) Rule of Law; (3) Economic Foundations/Youth Employment, (4) Basic Health Services and (5) Capacity Development. Each of the thematic priorities are aligned with the priorities identified in the Somali Compact, the FGS 2014 workplan and the Vision 2016 Framework of Action and address cross-cutting issues identified in the Compact. Inclusive Politics Federalism, State Formation, Reconciliation and Dispute Resolution Constitutional Review and Implementation Elections Security and Justice Strengthening Rule of Law Economic Foundations Identification process/ consultation with PSG Youth Employment Working Groups: The initial UNMPTF strategic priorities have been identified through a process of Revenue and Services ongoing consultation and engagement with government and a wide range of development Basic Health Service Delivery partners through the PSG WGs. Individual projects, within these thematic focal areas, will be developed Institutional Capacity Development to respond to specific government requests and/or Develop capacities for core government functions priorities set out in existing planning frameworks. Before being submitted for endorsement, projects will undergo in-depth consultation within relevant PSG Working Groups to ensure alignment with sector priorities and to enhance complementarity with the activities of other development partners. Strengthening country systems: While in the initial phase, many programmes and activities will be implemented by UN entities; the UNMPTF is designed to facilitate the development and gradual use of 70

72 country systems through the national funding stream. The activation and increased channelling of funds through the National Funding Stream will be linked to progress made towards mutually agreed benchmarks for the use of country systems. II. World Bank Multi Partner Fund The Multi Partner Fund (MPF) provides a platform for coordinated financing for sustainable reconstruction and development in Somalia. Administered by the World Bank, the MPF became operational in August 2014 as a funding window under the Somalia Development and Reconstruction Facility (SDRF), the framework guiding implementation of the Somali Compact. The MPF s first grant to support emergency recurrent costs in the federal institutions - is now disbursing. Thematic focus: The initial MPF pipeline focuses on core state functions and socio-economic recovery in Somalia, in line with the endorsed by the Board of the World Bank for strategic focus during the Compact period. These areas include: i) core government functions, ii) infrastructure, iii) productive sectors and iv) natural resources management and resilience (Figure 1). Joint process of identification: MPF initial investment priorities were identified through a process of ongoing consultation and engagement with government and a wide range of development partners. Individual programs within these thematic focal areas are being developed to respond to specific government requests and/or priorities set CORE GOVERNMENT FUNCTIONS Strengthen core public sector capacities INFRASTRUCTURE Rehabilitate and expand critical infrastructure PRODUCTIVE SECTORS & YOUTH EMPLOYMENT Enhance the productivity of high priority sectors and related value chains NRM & RESILIENCE Reduce competition over natural resources and improve livelihood resilience through better NRM out in national and regional government plans (e.g. the Economic Recovery Plan, the Somaliland National Development Plan, and the Puntland 5-Year Development Plan). Alignment with Compact Priorities: The objectives for these four areas have been developed to target specific priorities of the Somali Compact, focusing attention on areas of urgent need where the World Bank has a comparative advantage. The MPF focuses on PSG 4: Economic Foundations; PSG 5: Revenue and Services, and the crosscutting priority of institutional capacity development. Consultation and endorsement: Following discussions within relevant PSG Working Groups, the Executive Steering Committee of the SDRF endorsed the MPF pipeline, approving continued program development in the identified areas. The World Bank team has begun holding in-depth consultations on specific programs with related PSG Working Groups to ensure alignment with sector priorities and to enhance complementarity with the activities of other development partners. After sufficient consultation, specific programs are being submitted to the SDRF board, the governance body for the funding windows, for program endorsement. Strengthening country systems: One of the New Deal principles reflected in the Somali Compact is the commitment to build and use country systems. Drawing on the Bank s global experience of financing government systems, the MPF is a vehicle for building and using country systems, within a robust fiduciary framework, ensuring ownership and capacity development to allow for sustainability beyond 71

73 the project lifecycle. The performance of Government in delivering MPF projects will be monitored closely by the World Bank, as Administrator of the MPF. Financing: Three donors have now signed Administration Agreements with the Bank: the UK Department for International Development (DfID), the Swedish International Development Cooperation (SIDA) Agency, and the European Union (EU). In 2014, total cash contributions are expected of US$ 50 million, which includes US$ 8 million of internal World Bank resources from the State- and Peacebuilding Fund (SPF). The first grant to begin disbursing under the fund is for the Recurrent Cost and Reform Financing (RCRF) project, which finances and supports an operational payroll and payment system for the non-security sectors. A pipeline of investments is under preparation for SDRF approval in the coming months, including for PFM, Capacity Injection and Private Sector Development. III. African Development Bank Multi-Donor Trust Fund for Somalia (AFS) The African Development Bank Multi-Donor Trust Fund for Somalia (AFS) is currently being prepared. Following AfDB Board approval, the Fund is targeted to become operational by the middle of AFS will target Infrastructure Rehabilitation and Development over the medium to longer-term. The likely activities under AFS will not be limited to hard investments in infrastructure only. They will also include capacity building (for example at a Ministry level and on-the-ground skills development) and financing 9 elements related to infrastructure development. On-the-ground skills development is critical to enhance employment opportunities of the youth and ex-combatants, as well as promoting the development of micro and small enterprises. Lessons and experience from AfDB s Multi-donor Trust Fund for Zimbabwe (operational since 2010) and from AfDB s current Somali Enhanced Programme (approved in April 2013) are informing the design of AFS. Alongside the preparation of AFS, AfDB is already working on building an initial pipeline of projects. This is being driven primarily through the preparation of needs assessments in the ICT, Water & Sanitation, Transport, and Energy sub-sectors. The ICT assessment was completed in May 2014, and a concept note has already been prepared for a US$ 70m ICT Sector Development Programme. This will be discussed in the PSG 4 WG for further refinement and development. The Water & Sanitation assessment is well advanced and a validation workshop is being planned for November The development of the Transport and Energy assessments are behind schedule due to the complex nature of the tasks. AfDB is, however, working expeditiously to move these forward and draft reports are expected in early AfDB is also continuing consultations with potential donors and, using the experience of the Zimbabwe Fund, finalising the internal administrative and institutional arrangements for managing AFS. AFS is likely to be administered by a dedicated team that will be based in the Bank s Nairobi Office. This team will be led by a full-time Project Leader who will have the requisite technical, trust fund, project, and financial management experience. Other team members will include a full-time Administrative Assistant, and Bank staff from various departments (e.g. operations, legal, financial management and procurement) will provide inputs and oversight. This team will be the Fund s Administrative Agent (AA), and will conclude Grant Agreements with FGS, Memorandum of Understandings with implementing partners and Administrative Arrangements with contributing partners. The AA will receive, administer, 9 For example, continued work on PFM, Procurement and Government Systems for planning, managing and funding infrastructure projects, as well as progress on Arrears Clearance and Debt Management to open the way for greater resources to flow into Somalia for infrastructure development. 72

74 and transfer funds to implementing partners upon instruction from the SDRF-SC, and will submit biannual narrative and financial reports, in accordance with the standards and fiduciary arrangements established under the SDRF, to the SDRF-SC and all contributing partners of AFS. Utilisation and administration of capital contributions by recipient institutions will be in accordance with the Bank s policy, procedures, and guidelines for managing trust funds. These guidelines cover all aspects of trust fund management, including timing of capital contributions, transaction currency or currencies, procurement, financial management, accounting and treasury functions. The AFS will have an initial tenure of five years with a likely renewal for another five years. However, the tenure may be adjusted if the FGS and participating donors deem this necessary. 73

75 USD Millions Number of donors reporting ANNEX 8: Aid flows in Somalia Aid flow analysis is an integral component for monitoring implementation of the Somali Compact. In 2014, the Ministry of Finance Aid Coordination Unit (ACU) administered a donor-survey to collect planned aid flows with the support of the World Bank. Thirty-four bilateral and multilateral agencies and funds reported planned aid flows. How much aid is going to Somalia? Development partners plan to provide more than USD 900 million in aid for Somalia in both 2014 and 2015 (Figure 1). Aid reported for 2014 (USD 921 million) will likely be disbursed by the end of this calendar year, but these disbursements may finance project expenditures for multiple years thereafter. Out of USD 953 million in aid projections for 2015, half (52%) have been allocated for a specific purpose. The remainder (USD 457 million) has been captured in forward spending projections reported by donors; how these projections will be allocated has not yet been determined and/or reported. Figure 1. Planned Aid Flows in Somalia and Level Donor Reporting, Forward spending projections Planned disbursements 600 Number of donors reporting Source: ACU Aid Flow mapping, Oct How does aid compare with other resource flows? With roughly USD 1 billion dollars annually, aid flows represent a significant flow of resources compared to other resource flows in Somalia for which data is available. Remittances still outpace aid as the largest inflow of resources to Somalia. Like aid, remittances have a significant impact on both the economy and welfare of the Somali people. Remittances total an estimated USD 1.3 billion annually 11. Remittances are often the largest inflow to fragile states. In nonfragile developing countries, foreign direct investment (FDI) generally accounts for a majority of inflows 12. FDI statistics are not currently available for Somalia. 10 At the time of report writing (Nov 2014), a majority of planned disbursements for 2014 have likely been disbursed to recipient institutions and agencies (although not necessary spent). However, they are still referred to as planned disbursements to indicate that they are estimates, rather than reporting of actual disbursements. 11 Orozco, Manuel and Julia Yansura (2013), Keeping the Lifeline Open: Remittances and Markets in Somalia, Oxfam. 12 OECD (2014), Fragile States 2014: Domestic Revenue Mobilization in Fragile States, OECD-DAC, Paris 74

76 More than half of the government budget is financed by donor funding. In October 2014, total budget support for 2014 totalled USD 87 million, compared with USD 82 million in domestic revenue. Like many fragile states, Somalia is highly reliant on external sources to finance its development. How much aid is delivered on treasury? A majority of aid flows are currently delivered outside of country systems. Payment through the treasury is one of the components of using country systems 13. Aid delivered on treasury is disbursed into the government s main revenue funds and managed through government systems. This provides an important channel for strengthening country systems through their use. Development partners are expected to increase delivery of aid on treasury in In 2014, 10% of reported aid is expected to be channelled through the treasury. A majority of on treasury financing is comprised of budget support, which is general funding for the government s budget or for specific sectors. Budget support accounts for 9.4% and 15.2% of allocated aid that has been reported for 2014 and 2015, respectively and thus makes up the majority of aid delivered on treasury. Two-thirds of budget support (67%) comes from non-traditional donors. According to Ministry of Finance figures, Turkey, the Arab League, Qatar, China and Nigeria provided budget support to the FGS in 2014; Turkey, the Arab League and the United Arab Emirates is expected to provide budget support in The other major sources of on-treasury support are channelled through the Somalia Development and Reconstruction Facility (SDRF): the Norwegian-administered Special Financing Facility (SFF) and the Recurrent Cost and Reform Financing Facility (RCRF) financed through the World Bank-administered Multi Partner Fund. The latter is expected to provide USD 25 million in recurrent costs financing in 2015, which will primarily be used to finance civil servants salaries. In addition, projects can also be delivered on treasury, although this does not qualify as budget support. How much aid is channelled through SDRF funding windows? Only a limited amount of aid is channelled through the SDRF funding windows. Planned disbursements to funding windows account for just 5% of planned disbursements reported by donors in 2014, and 8% of planned donor disbursements in Only five donors reported planned disbursements to SDRF funding windows for : the EU, Finland, Italy, Sweden and the UK. The UN Peacebuilding Fund and the WB State and Peace-building Fund are also contributors to SDRF funding windows. How have aid flows changed? Reported aid to Somalia has quadrupled over the past decade, reflecting increased assistance as well as increased reporting. In 2004, Somalia received USD 256 million in aid, compared with USD 1 billion in Planned disbursements reported to the ACU for 2014 total USD 921 million. As this figure does not capture most humanitarian aid, total aid to Somalia is expected to be higher once all aid has been accounted for. 13 See Roadmap Towards the Use of Country PFM Systems for more information on the components of use of country systems. 75

77 While humanitarian aid fluctuated in response to crises, other forms of aid steadily rose from , showing little volatility. This is an unusual trend, given that fragile states typically experience higher volatility and lower predictability than other developing countries. An increasing amount of aid is being directed toward longer-term development in Somalia under the New Deal. From 2004 to 2012, more than half of all aid in Somalia was directed toward humanitarian activities every year except one (2010). The USD 921 million in aid captured by the ACU aid mapping is for activities with a longer-term development objective. Of this total, USD 171 million (19%) supports activities that could potentially bridge humanitarian and development spheres. Aid with a purely humanitarian objective lifesaving humanitarian aid was not captured in the exercise. How much aid is allocated across PSGs? The ACU aid mapping provides a snapshot of aid allocations across PSGs, both in terms of the total and proportion of aid. With 34% of planned disbursements in 2014, PSG 5 (Revenue and Services) is the most financed PSG. PSG 4 (Economic foundations) is expected to receive 27% of the planned disbursements. The distribution of allocated funds across PSGs does not change significantly between 2014 and It is important to note that funding should be allocated across PSGs based on needs and prioritisation. The financial needs and number of sub-sectors vary significantly across the different PSGs. This is reflected in the different number of project activities per PSG. For example, PSGs 4 and 5 each have more than 100 activities reported for their sectors, compared to 15 for PSG 3. An even distribution of funding across PSGs is neither feasible nor desirable. What do we know about regional distribution of aid? Improved regional tracking of aid flows will be a key priority for The ACU aid mapping exercise captured the regions covered by reported projects and programs; however, the quality of reporting varied significantly across sectors. Moreover, many reporting agencies did not report the financial breakdown across regions, which is a key element for analysing allocation of aid across regions. Health and education were two sectors with relatively comprehensive reporting of the regional coverage of their activities. The mapping shows that health and education activities are currently active in all regions of Somalia. However, the current data does not indicate the size of activities within the regions, nor does it reveal the distribution of activities within regions. What are the next steps for the ACU aid flow mapping? The ACU aid mapping exercise was conducted as an interim measure for capturing and analysing aid flows. However, there is clear need for a user-friendly Aid Information Management System (AIMS) tailored to the needs of the Somali context. As follow-up to this aid mapping exercise, the FGS will conduct a review of its AIMS, with the support of the UN and the World Bank. Based on this review, a pragmatic strategy for aid flow monitoring will be developed. The improved AIMS will be implemented in time to monitor aid flows for the 2015 annual progress report. 76

78 Somaliland Special Arrangement Annual Report

79 Somaliland Special Arrangement Annual Report, 2014

80 TABLE OF CONTENTS 1. Introduction Progress Highlights PSG 1: Legitimate Politics PSG 2: Security PSG 3: Justice PSG 4: Economic Growth PSG 5: Revenue and Services Gender Overview of the Annual Report Structure of the Report Overview of Somaliland s National Development Plan and PSGs Budget Allocation for 2014 and Aid Flows The SSA and the Way Forward Next Steps to Strengthen the Report Traffic Light Report on PSGs PSG 1: Legitimate Politics PSG 2. Security PSG 3: Justice PSG 4. Economic Growth PSG 5. Revenue and Services Partnership Principles Government Ownership Alignment Use of Country Systems Use of Preferred Funding Channels Capacity Development Harmonisation Conflict Sensitvity Monitoring and Risk and Results Annex 1: PSG 1. Legitimate Politics Annex 2: PSG 2. Security Annex 3: PSG 3. Justice Annex 4: PSG 4. Economic Growth Annex 5: PSG 5. Revenue and Services FIGURES Figure 1. Somaliland's preliminary GDP estimates by sector (excluding nomadic populations)... 4 Figure 2. Labour Force Survey, Burao, Borama and Hargeisa, ILO... 6 Figure 3. Employment challenges, particularly for youth, Labour Force Survey, ILO, Figure 4. Literacy rates, Household Survey, Figure 5. Location of delivery, Household Survey, 2013 Figure 6. Births attended by skilled health attendants in urban and rural Somaliland... 7 Figure 7. Access to water and sanitation, Household Survey, Figure 8. Current hierarchy of governance, planning and implementation of the National Development Plan, Somaliland Figure 9. Government budget allocations against PSGs Figure 10. Planned aid flow data for 2014 collected from implementing partners by the Ministry of National Planning and Development Figure 11. Aid flows per PSG collected in Nairobi TABLES Table 1. Objectives of the Somaliland Gender Action Plan as aligned to the PSGs... 8 Table 2. Somaliland National Development Plan ( ) Pillars mapped against PSG... 11

81 ACRONYMS A2J Access to Justice MoLSA Ministry of Labour and Social Affairs ADRA Adventist Development and Relief Agency MoNPD Ministry of National Planning and Development AIMS Aid Information Management System MOU Memorandum of Understanding AML/CTF Anti Money Laundering/Counter Terrorism Financing MoW Ministry of Water APD Academy for Peace and Development MPF Multi Partner Fund ARC American Refugee Committee MPs Members of Parliament CDR Community Driven Recovery MPTF Multi Partner Trust Fund CEDAW Convention on the Elimination of all forms of Discrimination Against Women NED National Endowment for Democracy CERF Central Emergency Response Fund MSF Medicines Sans Frontiers CID Central Investigation Department MTT Mentoring, Teaching and Training CILPRA Critical Infrastructure & Littoral Protection & Response Agency MTEF Medium Team Expenditure Framework CLTS Community Let Total Sanitation MTFF Medium Team Fiscal Framework CSD Central Statistics Department MVTS Money Value Transfer Service CSP Capacity Surge Project NDP National Development Plan CSR Civil Service Reform NDRC National Demobilization Re- integration Committee CVCBs Charcoal Value Chain Beneficiaries NEC National Electoral Commission DAD Development Assistance Database NOC Norwegian Crisis Management DANIDA Danish International Development Agency NPC National Planning Commission DDG Danish Demining Group NSDS National Statistics Development Strategy DDR Disarmament Demobilisation and Reintegration OCHA UN Office for the Coordination of Humanitarian Affairs DFID UK Department for International Development NSI National School of Government International DRC Danish Refugee Council OAG Office of the Attorney General EAC Educate a Child ODF Open Defecation Free EC European Commission OTP Outpatient Therapeutic Programme ECHO European Community Humanitarian Aid Office PFM Public Financial Management EPHS Essential Package of Health Services PHC Primary Health Care EPI Expanded Programme on Immunisation PMTs Project Management Teams EU European Union PPP Public Private Partnership EUCAP Nestor EU Mission on Regional Maritime Capacity Building in the Horn of Africa PSG Peace and Statebuilding Goals FAO Food and Agriculture Organization of the United Nations RED Reaching Every District FIU Financial Intelligence Unit RVI Rift Valley Institute FMIS Financial Management and Information Systems SALW Small Arms and Light Weapons G2S Go to School SAM Severely Malnutritioned Children GBVIMS Gender Based Violence Information Management System SBF Somaliland Business Fund GFATM Global Fund to Combat HIV/AIDS and Malaria SNM Somali National Movement GFS Global Forecasting System SBM School Based Management GGACC Good Governance and Anti- Corruption Commission SDC Swiss Development Cooperation GIS Geographic Information System SDF Somaliland Development Fund GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit SGBV Sexual and Gender Based Violence GoSL Government of Somaliland SIDA Swedish International Development Agency GPE Global Partnership in Education SJSP Somaliland Justice Sector Project HJC Higher Judicial Council SL FMIS Somaliland Financial Management Information System HLACF High Level Aid Coordination Forum SLTRC Somaliland Legal Training Resource Centre HOA Horn of Africa SLCG Somaliland Coastguards ICC Independent Complaints Commission SMRSS Somali Maritime Resource and Security Strategy ID National Identity Card SOLJA Somaliland Journalist Association IDPs Internally Displaced Persons SONSAF Somaliland Non State Actors Forum ILO International Labour Organization UNFPA United Nations Population Fund IMFs International Monetary Fund SRH Sexual and Reproductive Health IOM International Organization for Migration SSA Somaliland Special Arrangement IRC International Rescue Committee TIS Transition Initiatives Programme IRI International Republic Institute TVET Technical Vocational and Education Training IT Information Technology UNESCO UN Educational, Scientific and Cultural Organisation IUU Illegal, Unreported and Unregulated Fishing UN United Nations JHNP Joint Health and Nutrition Programme SMRSS Somali Maritime Resource and Security Strategy JHNP Joint Health and Nutrition Programme UNDP United Nations Development Programme JPLG Joint Programme on Local Governance UNICEF United Nations Children's Fund KFW KFW German Development Bank UNODC United Nations Office for Drugs and Crime LCE&D Littoral Community Engagement UNOPS United Nation Office for Project Services MoA Ministry of Agriculture USA United States of America MoERD Ministry of Energy and Regional Development USAID United States Agency for International Development MoERD Ministry Of Environment and Rural Development USD United States Dollar MoI Ministry of Interior VRA Voter Registration Act MoJ Ministry of Justice WFP World Food Programme MoL Ministry of Livestock YFC Youth for Change 1

82 1. INTRODUCTION The international community endorsed the Somaliland Special Arrangement (SSA) at the New Deal Conference on the Somali Compact on the 16 th of September 2013 in Brussels. As stated in the SSA, The Somaliland Special Arrangement is a separate and distinct part of the Somali Compact, and is the sole framework for engaging with Somaliland s development process under the New Deal Partnership. Somaliland has made impressive progress in achieving peace, stability, reconciliation and democracy over the past 23 years, and based on this experience of bottom- up statebuilding, the SSA sets out a set of concrete priorities extracted from Somaliland s National Development Plan (NDP). Additionally, based on Somaliland s experience with leading the identification of priorities through the Somaliland Development Fund which is based on New Deal Principles - a Fund initially supported by the United Kingdom and Denmark, and now joined by Norway and the Netherlands - the SSA sets out partnership principles firmly grounded in the Somaliland context. The SSA is thus a set of priorities owned and identified by the Somaliland people to continue its path as a beacon of hope and success in a mostly volatile region. Somaliland s continued success in development, maintaining peace and stability is for the benefit not only for Somaliland, but also for the region and the global community at large. Somaliland s bottom- up statebuilding, which was shepherded under the guidance of Somaliland s traditional authorities and through the tireless efforts of its people, serves both as the basis for a context- specific approach to development partnership with the international community, as well as an example from which to model similar efforts to build peace and stability throughout the Horn of Africa. One year on, Somaliland has gone a long way in transforming the SSA from concept into reality. In part, this was due to the social capital, institutional effectiveness, political stability, security, freedom of movement and national planning and development processes that Somaliland had already established over time. But it is also a reflection of the firm commitment of the Somaliland government, its people and the international community to translate into reality the principles and ambition of the New Deal in all their development cooperation activities since the process was initiated. As noted by Mr Phil Evans, Head of UK Department for International Development (DFID), Somalia and Somaliland, speaking on behalf of the donors, at the June th High Level Aid Coordination Forum in Hargeisa, We congratulate Somaliland for grasping the New Deal so effectively with the Somaliland Special Arrangement centre stage in our discussions today... With such momentum, the targets set out for the remaining two years of the SSA s mandate, Somaliland has the potential to be a shining example of what the New Deal can accomplish, with tangible results for those who have invested in Somaliland to achieve our common goal of poverty reduction, a more peaceful and stable Horn of Africa. This is an opportunity that should not be allowed to go to waste. This is the first annual report on the implementation of the SSA, and was endorsed at the 7th High Level Aid Coordination Forum (HLACF) held on 3 rd and 4 th October 2014 in Hargeisa. The meeting was officially opened by the President of the Republic of Somaliland H.E Ahmed Mohamed Mohamoud (Silanyo) and co- chaired by H.E. Saad Ali Shire, Minister of National Planning and Development and H.E Geert A. Andersen, Ambassador of Denmark, Phil Evans, Head of DFID Somaliland and Somalia, and Sheikh Cisse, UN Resident Coordinator, a.i. Over 220 delegates attended it from the Somaliland Government, members of parliament, and representatives from the civil society and the private sector. International participation included delegations from Australia, Denmark, Germany, the Netherlands, Sweden, Switzerland, Turkey, the United Kingdom, and the United States of America, as well representatives from Inter Governmental Authority on Development (IGAD), the African Development Bank, the European Union, the United Nations, the World Bank and the NGOs Consortium. This was the second time in 2014 in which all the parties met to discuss the development needs and the ongoing partnership between Somaliland and the international community under the Somali Compact. The Ministry of National Planning and Development (MoNPD) has prepared this report based on consultations with the National Planning Commission (NPC), one- on- one interviews with the relevant Ministers and their staff, and civil society. Data was collected manually from donors and implementing partners. This report sets out an assessment of progress to date against the milestones, targets and partnership principles. However, the assessment is subjective, as Government and international partners have not yet jointly set indicators or developed a mechanism to measure results. 1

83 The SSA Monitoring and Evaluation Framework was endorsed at the 6 th HLACF in June The key elements are set out in Figure 1. Figure 1. Key Components of the M&E Framework Aid effeckveness Partnership principles: Assessment of mutual commitments made by the government and development partners measured through quanktakve and qualitakve indicators. Aid flows: Transparent tracking of aid flows against the Peace and State Building Goals (PSGs). Milestones Key targets: Short- term, concrete objeckves focused on outputs needed to achieve results. Achievement of objeckves will be assessed by the HLACF based on compiled evidence of deliverables. Results PSG results: Assessment of progress toward the achievement of the PSGs, measured through global PSG indicators complemented by context- specific indicators aligned with SSA priorikes. 2

84 2. PROGRESS HIGHLIGHTS 2.1. PSG 1: LEGITIMATE POLITICS Somaliland is a beacon of democracy and stability in East Africa. Its population has held five elections since 2002, all monitored internationally and declared fair and free. In 2015 two elections, a Presidential election and a Parliamentary election, are planned to take place simultaneously. The Government is fully committed to carrying out these elections on time. It has allocated USD 6 million for the national elections and voter registration. However, to ensure that the elections meet the technical, institutional and human capacity requirements to allow for the entire citizenry to take part in voting without concerns over fairness or obstacles, the Government of Somaliland calls on its partners, friends and donors to maintain and build on the generous support it has already provided to Somaliland s democratization to date. A new National Electoral Commission (NEC) has been appointed to take up responsibility for the election, and all political parties have reached consensus over all major aspects of the electoral process. The election of Members of Parliament (MPs) is just the first step in efforts to further strengthen Somaliland s representative and legislative capacities. MPs need to maintain close contact with their constituencies to truly represent and voice their interests. That has been a challenge due to lack of resources, but MPs are more actively engaged as the elections draws closer. The press is another cornerstone of democracy, and despite challenges in building a satisfactory regulatory framework for governing relations between the state and the media sector, important dialogue, trust- building and consensus- building is taking place, with strong leadership from civil society. Somaliland has a dynamic, vibrant and free press, but which needs greater capacity to raise its professional standards. At the same time, the government requires greater capacity to sensitize its police forces and judiciary on ways to enhance cooperative relations and proper conduct when handling issues related to the media. The international community has been supportive to local journalists associations, but more needs to be done PSG 2: SECURITY Somaliland s coastline and territorial waters host one of the busiest maritime lanes in the world, for which it has national and international obligations to keep it safe and open, a duty which it takes seriously so much so that it managed to keep it free of piracy infestation even with limited means. The Government has determined that development and management of its marine resources is a priority and has the fisheries sector as a priority. This too requires a stronger coast guard to manage illegal, unreported and unregulated fishing. The Government is committed to building a coast guard, and has benefited from United Nations Office on Drug and Crime (UNODC) and EUCAP Nestor programmes. Transforming our police system from a military system to a civilian system is important. This requires investment in all aspects of security sector reform including training, and particularly improving police community relations. Actors such as Adam Smith International supported by the United Kingdom has made an important contribution to all aspects of security reform. Somaliland shares borders with Djibouti, Ethiopia and Somalia. Given the security situation of the region, Somaliland understands the importance of keeping tight control at border crossings. Contraband, money laundering, illegal immigration and human trafficking are some of the illegal activities that the border police have to manage. International Organisation for Migration (IOM) has been very supportive, but other organizations such as Danish Refugee Council (DRC) have also provided assistance. The border police is coping well, but given the length of the border, it needs more substantive support to strengthen its deterrence, detection, and detention capabilities PSG 3: JUSTICE Justice is the mother of stability. We, in, Somaliland understand this very well. The administration of justice requires a package of well- trained judges, court support staff, police force, custodian corps, detention facilities, and proper prisons for men and women and rehabilitation facilities for children. Laws should be known and their application predictable. Somaliland has an established judicial system based on secular courts, tradition and Shariah. At the present time, most of cases are settled outside the courts through the traditional system. But our vision is to establish a modern judicial system that is efficient, effective and accessible to all citizens. To achieve that vision, we committed ourselves to a comprehensive justice reform programme. This requires training and developing all legal professionals and support staff as well as the police; overhauling the case management system; using mobile courts; improving 3

85 physical facilities- courts, detention centres and prison facilities, and strengthening the capacity of the Higher Judicial Council. Moving from one stage of statebuilding to the next means, that Somaliland requires updating many of its laws. Updating laws requires technical support, which means in most instances laws are first drafted in English. Somaliland does not have the legal translation capacity to ensure that when laws are translated into Somali, they accurately represent legal concepts. Furthermore, the Solicitor General plays an important role in ensuring that when laws are updated, they are in fact compliant and harmonised with the relevant legislative framework. Support through UNODC to develop a manual on standardised legal terminology are important steps. However, an under resourced and overburdened Solicitor General s Office means delays. The Government considers justice as a top priority and has increased its budgetary allocation for the sector by more than 30% in its 2015 budget. But our means are limited, and we need the support of our partners and donors to realize our reform ambitions. United Nations Development Programme (UNDP), UNODC, United Nations Population Fund (UNFPA), Save the Children, UNICEF and others have been our partners in the reform process, but we need that support to be up scaled PSG 4: ECONOMIC GROWTH Somaliland has made remarkable, visible progress in rebuilding its economy in the last two decades. According to the 2013 World Bank/MoNPD Household Survey, Somaliland s GDP is estimated at USD 1,390.9, million with GDP per capita estimated at USD 348. But there is still a long way to go to achieving prosperity as set out in the Somaliland 2030 vision. Somaliland is strategically located and well endowed with natural resources. It has marine resources, mineral resources, as well as good agricultural resources. There is a lot of potential for development. What is lacking is capital, infrastructure and know- how. A Figure 1 sets out, livestock industry is the main sector contributing to Somaliland s GDP. The direct contribution of the livestock industry is 29.5% however, the indirect contribution of the livestock sector is over 60% to the economy, and this includes the whole value chain, much of which is captured in the services sector. Figure 1. Somaliland's preliminary GDP estimates by sector (excluding nomadic populations) As the 2013 Household Survey showed, Somaliland has a very open economy, the ratio of imports and exports to the GDP is 91.5%, the 7 th highest in Sub- Saharan Africa, and the 45 th highest in the world. The Survey also estimates that based on 2012 figures, there is a trade deficit of about USD 496 million or 37.5% of the GDP (USD 883 million: imports, and USD 387 million: exports). In 2012, gross fixed capital formation was at 11.1% (USD million) of the 4

86 GDP, with Somaliland ranking 180 out of 188 countries which is low which emphasises the need to develop Somaliland s financial sector. The Government is committed to changing this, and attracting direct foreign investment. To create a conducive environment, attractive tax incentives are provided; revised company and investment laws are to be introduced soon; one- stop shops for company registration are set up, and one- stop shop investment office has been established within the Ministry of Trade and Investment. Challenges to foreign direct investment are access to finance, access to land and transportation. The Government is fully aware of its limitations in accessing international financial credit facilities, but is also aware of the potential for mobilizing domestic capital with the right policy environment and regulatory framework. That is why the Government is working hard to facilitate the development of the banking sector. Both the Central Banking Act and an Islamic Banking Act has been approved and legislated, but the conventional Banking Act is still with Parliament, and Somaliland and the international community need to work together to discuss how the conventional Banking Act can be compatible with the principles enshrined in the Constitution. Access to land and water are critical stress points in Somaliland. The National Planning Commission has allocated funds from the Somaliland Development Fund, to look at best practice in the region on land reform. Infrastructure is absolutely critical to development. Without a good road network, first class ports and airports, and efficient, affordable and accessible energy, economic growth will be painfully slow. In 2014 and 2015, the Government s development budget has been allocated to improving roads. The National Planning Commission has also made some of the largest allocations from the Somaliland Development Fund to roads. The European Union has recently announced a co- contribution to the important rehabilitation Berbera Corridor and the Government continues to fund raise for this and other roads such as the Berbera- Erigavo Road through international actors, communities and the diaspora. The Government is also for the first time in recent history investing in upgrading the Burao Airport. The Government is also working on an appropriate legal framework for the mining and oil sector to ensure transparency, prudent management and protection of the environment. This is of the highest priority for the Government, and this the Government cannot do alone. The Government is actively promoting alternative energy for both household and commercial consumption. DFID will be launching a substantial alternative energy program starting 2015, with the promotion of mini- grids to supply energy to health facilities during the first phase. It is anticipated that the World Bank will also be providing support with more strategic and policy- oriented technical advice. The Government is also in talks with the Ethiopian Government on transit and trade and the development of Berbera Corridor. The Government continues discussions with the Ethiopian Government. Food security is another area on the top of the Government agenda. Somaliland depends largely on imports for its consumption. But it has the potential to grow much of it needs with the right investment in research, extension, marketing and infrastructure. Our development partners: the European Union (EU), and its member states, United States of America (USA), the World Bank, and United Nations (UN) agencies and others have been supportive in developing the economic sector, but greater commitment, particularly in infrastructure is needed to realize Somaliland s potential. Without proper management of water and environmental resources, an economy like Somaliland will continue to face shocks like in many countries in Africa. The Government has also placed environmental protection as one of the highest priorities, given that it is the backbone of Somaliland s economy. A matter of great concern to the Government is overall unemployment, but particularly youth unemployment, with over approximately 70% of the youth below the age of 30 years. According to the Population Estimation Survey completed in 2014, the median age across nomadic, rural and urban, and internally displaced persons is 17. The International Labour Organisation (ILO) conducted a Labour Force Survey in 2012 in Borama, Hargeisa and Burao. The findings set out in Figure 7 show that low employment to population ratios, and labour participation rates of women were higher in both rural and urban areas. The same study found that employment was dominated by the service and sales sector with 60% participation by females and approximately 38% participation by males. Figure 2 sets out unemployment challenges. In order to address the youth unemployment challenges set out in in Figure 3, the Government has established a Youth Fund, and established job centres, as well as supported sporting and cultural 5

87 centres to not only to address unemployment, but also create a space for civic engagement. There have been successful models for vocational educational education and job placement supported by DFID. Such efforts need scaling up. The National Planning Commission has allocated funds through the Somaliland Development to compliment such efforts. The World Bank is also looking at establishing a youth entrepreneurship fund, which is welcome. Figure 2. Labour Force Survey, Burao, Borama and Hargeisa, ILO Figure 3. Employment challenges, particularly for youth, Labour Force Survey, ILO, PSG 5: REVENUE AND SERVICES The Government has a lead role in Somaliland economic development and provision of vital social services to the citizenry. To dispense of its responsibilities, the Government is fully aware that it needs not only resources, but also a sound public financial management and motivated and efficient civil service. Hence, the Government has embarked on a public finance reform. Like all reforms, it is challenging and is taking more time than anticipated, but it will be soon put to Cabinet and Parliament for endorsement. The Government has also initiated a civil service reform to improve efficiency, accountability and service delivery. Progress has been made, but a lot more needs to be done. DFID has been key in both efforts. A division of labour has been agreed upon between DFID, the World Bank, and the EU a model of good coordination through Government- led efforts. According to the 2013 Household Survey, export levies and import taxes collected more than 50% of the revenue in Somaliland s effective tariff rates stand at 4.15% for imports and 3.34% for exports. The Government is performing well as the budget figures show, but fully understands the importance of expanding the revenue base and with the support of DFID, the Government will embark on an Inland Revenue Strengthening Project. 6

88 The Government has embraced the principle of decentralization, which is also enshrined in the Constitution. It believes that services are best delivered when the community and their representatives are closely involved in their planning and administration. There are pilot programmes supported through the Joint Programme in Local Governance (JPLG) in seven districts, but the goal is to implement the programme in all the regions. The Government considers access to basic services such as water, health, nutrition and education as an inalienable right of every citizen which must be delivered. Great strides have been taken in all with the support of the international partners, but we are still well short of the Millennium Development Goals targets, As set out in Figure 4, Somaliland stands at below the regional average of 67%, with rates being higher in urban areas at 59% and 47% in rural areas. Almost half of the school age children are not going to school. Figure 4. Literacy rates, Household Survey, 2012 Life expectancy at birth is less than 50 years, and infant, child and maternal mortalities are unacceptably high. Figure 5 shows that there are large urban- rural disparities in access to health services. Figure 6 estimates that almost 79% of births are attended by unskilled birth attendants. Figure 5. Location of delivery, Household Survey, 2013 rural Somaliland Figure 6. Births attended by skilled health attendants in urban and 2.6. Access to water is of critical importance in Somaliland, particularly in the East. Figure 7 sets out that only 3% of the rural population have access to water and sanitation, as opposed to 43% of the urban population in Somaliland. In parts of Somaliland, the water is too brackish for human consumption. The international community particularly the EU has been generous in improving access to water resources in both urban and peri- urban areas. The EU, and the Somaliland Development Fund are supporting a major project to improve access to water in Hargeisa. Similarly UNICEF, Terre Sollidali and Somaliland Development are involved in improving access to water in other urban areas. With the support of Somaliland Development Fund, boreholes are being tested in Las Anod to see if there is access to potable water. 7

89 The Government is committed to equity for disadvantaged groups and underserved regions such as Sool and Sanaag, and calls upon our development partners to pay special attention to these groups and regions. The international community, through its many programmes has traditionally supported the social service sector, specially education and health, but the statistics show that there is still a huge gap to fill, particularly in the East. The Government has allocated 2% of the total budget to provide services in the East, in both 2014 and Figure 7. Access to water and sanitation, Household Survey, GENDER Women have played an important role in the peacebuilding and statebuilding process in Somaliland. However, like in many other countries, women across Somaliland face different experiences and challenges than men in many aspects of life. Historically, women had a smaller role to play in the economic foundations. After 1991, the increased level of urbanization created the conditions for improved women s participation in the informal sectors of the urban economy. Although there are still challenges in relation to access to education for girls and women, significant progress has been made since These changes have not immediately resulted in a significant overall improvement of the lives of women in Somaliland, but built the foundations for greater acceptance and gradual access of women into public life, through education and employment. Like in many conflict environments, women took on a greater share of the burden in contributing to the domestic, economic sector and the provision of social services, and such empowerment still has an effect on the status on women in Somaliland. This was enhanced by the major role played by women in the peacebuilding process, and many of those same female leaders now play prominent roles in civil society, government and service delivery (such as Edna Aden and her maternity hospital). The Ministry of Labour and Social Affairs (MoLSA) is the line ministry mandated to cover gender issues. Somaliland has a National Gender Policy, 2009, as well as a National Gender Action Plan ( ). The overall goal of the National Gender Policy is to facilitate the mainstreaming of the needs and concerns of women and men, girls and boys in all areas for sustainable and equitable development and poverty eradication. Table 1 below sets out how the objectives of the Gender Action Plan correspond with the PSGs. Table 1. Objectives of the Somaliland Gender Action Plan as aligned to the PSGs PSGs PSG 1 PSG 2, 3 PSG 4 and Objectives Political participation and decision- making. To enhance gender parity in political participation and decision- making at all levels. Sexual and gender- based violence. Preventing and eliminating all forms of Sexual and Gender Based Violence Against Women and girls in Somaliland. Poverty reduction, economic empowerment and employment. To eradicate obstacles to women s access to and 8

90 5 control over productive assets, wealth and economic opportunities, safe drinking water, shelter, and promoted measures for conserving the environment. PSG 5 PSG 5 PSG 5 Education and training. To develop and sustain measures to eliminate gender disparities in access, retention, and performance in education for both boys and girls. Health and Reproductive Health. Increase access to comprehensive, affordable and quality health care. Nutrition. To advocate for increased food and nutrient intake of women and children to reduce the major nutritional disorders prevalent in Somaliland. Women and political participation is a priority that needs to be addressed. Currently, there is only one Member of Parliament, while there are none in the House of Elders or Guurti. President Silanyo has twice proposed a quota proposal for women, however, this has been blocked by Parliament. However, 10 women won seats in local elections in 2012, and MoLSA and others have provided training to ensure they have a voice and actively participate in decision- making. MoLSA has carried out an assessment for the impact of female political participation post elections, which can inform the next elections. The EU supported organisations such as Progressio to advocate for the adoption of a women s quota in political governance in Somaliland. This must be addressed for the next elections through early sensitization of legislative bodies (House of Representative and House of Elders, Guurti, and other stakeholders to the importance of women s political participation through quotas. Addressing Sexual and Gender Based Violence (SGBV) is a priority for the Government, and MoLSA conducts monthly coordination meetings of national and international actors. A Zero Tolerance SGBV policy has been drafted. With international support, an Anti Rape Bill was drafted. A coordination forum, to address Female Genital Mutilation (FGM) was also addressed. However, challenges remain for example, there is a lack of a common stand among religious leaders on FGM/C. One group preaches total abandonment of FGM/C, while the second group advocates for abandonment of Pharaonic type (infibulation) but condones Sunna. Baahi- Koob (counselling) centres which provide medical and counselling to the GBV survivals was launched in Hargeisa and expanded to Burao and Borama regions with the support of UNICEF. Lack of SGBV service providers in the remote and rural areas and community means that that the incidence of SGBV is high. Government, civil society, community leaders and development partners continue to focus on the prevention and response to SGBV cases including FGM practices. All stakeholders should also develop a network of trained focal points for raising awareness on SGBV as well as first- responders to SGBV cases to ensure access to justice. The Household Survey shows that women are more active in the economy in both urban and rural settings than men. However, women continue to face challenges to have control over productive assets, wealth and economic opportunities. For example women, including women who have assets have difficulties to access financial institutions as a male is required to stand as witness or guarantor. However, this is one of the priorities in the SSA. There have been a few specific interventions from the private sector. For example Dahabshiil, Salaama Bank, and KAAH remittance provides some micro finance to the poor, particularly women. KAAPA micro finance institution provided female GBV survivors for Islamic micro finance. 9

91 3. OVERVIEW OF THE ANNUAL REPORT 3.1. STRUCTURE OF THE REPORT The report starts with an overview of how Somaliland s existing National Development Plan (NDP) correspond to the PSGs. This is followed by an overview of the budget for 2014 and 2015 for the five NDP pillars, and estimates for PSGs. Given the different context in Somaliland, where development projects have been underway for several decades, rather than post- conflict peace- building activities, there is much to report on, and details have been provided in an Annex. The overview Traffic light report is thus a visual tool of where progress is being made, and where little progress has been made either due to delays on the part of Somaliland stakeholders, or due to a lack of resources. It should be read together with the more detailed report, which sets out some of the achievements, challenges and way forward. No or little progress towards target. Activities to meet target planned but not started. + Early stages of implementation Good progress but not completed. + Target met OVERVIEW OF SOMALILAND S NATIONAL DEVELOPMENT PLAN AND PSGS The SSA priorities were identified through a consultative process led by the MoNPD prioritized targets from Somaliland s National Development Plan ( ). The NDP has five pillars (Economic, Infrastructure, Governance, Social and Environment) and the components of the NDP are summarised in Figure 7. - T Figure 8. Current hierarchy of governance, planning and implementation of the National Development Plan, Somaliland 10

92 Table 2 sets out how the NDP pillars roughly correspond to the PSGs. The five pillars of the NDP are then divided into eight sectors, with the economic sector being split into productive sector, and trade and investment; infrastructure being split into public infrastructure, and water infrastructure; social pillar being split into health and education. These form the basis of sector coordination. Table 2. Somaliland National Development Plan ( ) Pillars mapped against PSG NDP Pillars PSG 1: Legitimate Politics PSG2: Security Governance Democracy and Good Governance; International Cooperation Infrastructure Economy Environment Security and Defence PSG3: Justice Justice PSG4: Economic Foundations Economy and Planning Transport; ICT; Telecommunication; Water; Energy and Solid Waste Management Trade and Financial Services; Tourism; Mining and Drilling; Private Sector; Diaspora and Civil Society Agriculture; Livestock; Fisheries; and Industries Land Resources; Coastal and Marine Resources; Forests and Woodlands; Wildlife and Biodiversity PSG5: Revenue and Services Water Sanitation Social Sector Health and Social Protection Education; Sports; and Youth 3.3. BUDGET ALLOCATION FOR 2014 AND 2015 Figure 8 sets out the budget allocations against the NDP pillars. The total budget estimate for 2014 was USD 212 million, including USD 13.7 million from the Somaliland Development Fund which is reported on budget. The total budget estimate for 2015 is USD 251 million, which includes USD 14.3 million from the Somaliland Development Fund. Estimated revenue for the Central Government for the period January September 2014, was USD 114 million. Actual revenue for the same period is at USD million, which is 7.3% over the estimate for the given period. The Governance Pillar gets the largest share of the budget as this includes allocations to the security sector, which constitutes over 50% of the overall budget. Figure 9 sets out budget allocation against the PSGs. Figure 8. Government budget allocations by NDP Pillar for 2014 and 2015 and $ $ $ $95.44 $114.5 $ $ $ $ $.000 Governance & Rule of Law $23.6 $25.8 $19.41 $22.67 $13.42 $15.0 Economic Social Infrastructure and natural resource $1.06 $1.1 Environment 2014 (million) 2015 (million) 11

93 Figure 9. Government budget allocations against PSGs $ $ $ $ $ $ $ $ $.000 $36.60 $28.84 $62.36 $73.28 $3.97 $33.89 $4.21 Governance Security Juskce Economic Foundakon $41.94 $23.98 $22.94 Service Delivery PSG1 PSG2 PSG3 PSG4 PSG5 Amount 2014 (Million) Amount 2015 (Million) 3.4. AID FLOWS Figure 4 sets out planned aid flows for This information was collected from INGOs implementing partners, and UN agencies. Figure 5 sets out aid flows for 2013, 2014 and Figures for 2013 are actual disbursements. Figures for 2014 and 2015 are expected disbursements. All figures are indicative and subject to change. This information was collected in Nairobi through information exchanges with Somaliland s primary donor governments. Both these data collection efforts were manual, as the AIMS is not considered to be working. As stated above, both Government and donors have agreed that the AIMS needs to be reviewed in order to get more accurate information, as it is clear there are disparities between the information collected in Nairobi and the information collected through a field survey of implementers. Figures for institutional capacity development in Figure 10 is a new measure, meant to capture the degree to which SSA are contributing to Somaliland s overall institutional capabilities in implementing development projects across all of the PSGs. The low figures indicate that the disaggregation of data on capacity development is work in progress. Though the actual figures differ based on the collection process used, the trends that they illustrate are the similar. PSG 5 receives the largest portion of resources, largely due to investments in improving service delivery in key Millennium Development Goal targets of health, water, education and nutrition. PSG 4 is the second most resourced. However, as it encapsulates the entire economic sector including infrastructure, private sector development, the productive sector, energy such investment can be seen as low in comparison to overall resource needs. As the Government sees economic growth as the backbone of its long- term strategy of peace consolidation, through greater internal revenue resource mobilization for service delivery and the reduction in high levels of unemployment, the resourcing of this PSG is crucial. PSG 2 According to the MoNPD s figures, PSG 2 is the next most resourced with increasing support to the Security Sector from the international community. The Somaliland Government also invests a large proportion of its own budget to this PSG. PSG 1 receives relatively high levels of support, based on the figures collected in Nairobi. This is expected to continue with the planned Presidential and Parliamentary elections next year. However, the Government remains concerned that the collective allocation of the Government funds (USD 6 million) and the international community funds will be sufficient to successfully hold technologically robust and institutionally- capacitated elections, the kind of which that can guarantee that elections are fair and stable. PSG 3, the justice sector, is one of the priority areas of reform for the Government, which has initiated and later revitalized a Justice Sector Reform Work Plan. However, it is the least resourced sector. 12

94 Figure 10. Planned aid flow data for 2014 collected from implementing partners by the Ministry of National Planning and Development $ $ $ $80.00 $60.00 $40.00 $49.24 PSG1:Inclusive Polikcs PSG2: Security $20.00 $- $7.02 $7.19 $2.81 PSG3: Juskce PSG4: Economic Foundakons PSG5: Revenue and Services Figure 11. Aid flows per PSG collected in Nairobi $120 PSG 5: Revenue and Services PSG 4: Economic Foundakons $100 PSG 3: Juskce PSG 2: Security $80 $55.7 $53.2 PSG 1: Inclusive Polikcs Insktukonal Capacity Development USD Millions $60 $31.2 $40 $35.8 $26.3 $32.5 $20 $0 $3.9 $2.4 $3.6 $5.2 $2.0 $2.2 $13.5 $12.7 $10.4 $