INFRASTRUCTUR PILLAR ANALYSIS
Nearly half of the Somaliland National Development budget ($1190.03 million United States dollars) was allocated for the infrastructure pillar ($486.99 million), which is further sub- allocated 59% of it to Roads development ( $287 million USD).Moreover, Road sector planned budget was further sub allocated to 30% Erigavo Road ($85million) and 66% ($188.6 million) to Berbera-Wajale Road aka Berbera Corridor.
Then, the worthwhile question is did the infrastructure pillar budget has been realized from the planned sources?. The NDP planned to receive the bulky of the finance(79%) from the external donors. Somaliland development fund (SDF) met only 4.2% of the total NDP budget of over one billion dollars, although the lion share of the SDF $60million dollars was allocated to the infrastructure pillar mainly the road development sub sector. There were unstated figures donated by the Islamic development bank to Gabiley-Kalabaydh Road. The Erigavo Road has received funding from multiple sources which other Road projects in the country has not received. It has received funds from; The wider Public,Busines community, Civil servants,Pastrolists and Diaspora contributions, on top of this a special road levy bill has been tabled by the government in the Parliament, which has been quickly approved. The new road levy act collects additional road tax from transport tankers and livestock export levy in Berbera Port on top of previously existed road development fuel levy, which is mainly funded to the Erigavo Road construction. Above hundred kilometers of Erigavo road has been finished on first phase and around 30 kilometers of it have been finalized. Similarly extensive repairs has been done on the Berbera-Wajaale Road aka Berbera corridor. However, complaints on methods of subcontract awards and lack of external auditors report on this fast sum of money overshadows any success on those road developments.
As far as project prioritization is concerned, there are common benchmarks as far as selecting a project from a pool of development projects when you have a limited finance. A cost benefit analysis (CBA) is usually performed, listing the benefits and costs of the project, and monetized or converted into monetary terms in terms of cash inflows and cash outflows, then discounting them using appropriate discount rate, by accepting projects with an NPV greater than Zero. Decisions are made based on the changes in after-tax cash flows, sunk cost and any project-specific financing costs are not considered. Opportunity cost and externalities-cannibalization and as well as the timing of cash flows are considered. Cost benefit analysis can be used to evaluate all kinds of infrastructure investments such as Roads,Airports,Hospitals,Schools and Ports. For example, when your are doing CBA analysis for the Road sector, usual benefits includes among others; reduction in congestion, improvement of the performance of a network by increasing travel speeds and by reducing operating costs and accidents rates, improvements in accessibility for people in peripheral areas and overall national economic development.Then,the one million question is; which one is economically beneficial to the country Erigavo road or Berbera corridor?. There are other exemplary community led road development projects which the government contributed money and materials such as Hargeisa-Salahley,Hargeisa-Baligubadle,Dilla-Borama,Berbera-Sheikh and various other regional networks, which has been completed or close to completion. There is also the Dawga Ad road project north of Hargeisa,which itself a community led project, which goes through a rough terrain full of mountains, the government has contributed financially.
One of the sub pillars of the infrastructure pillar is the Information and communication development (ICT),which the NDP planned only 2% of the overall infrastructure budget. Digital jobs and ICT is one of the universally agreed sectors which have a job creation potential and jobs can be quickly created to handle the conundrums of youth unemployment. Therefore, the plan should have envisaged its potential and gave its importance among the other sub pillars.
By: Mohammed Dahir Ahmed
Senior Financial Consultant and Independent Political Analyst.