Somaliland:Study on SL Government Budgets from 2010 Up To 2017

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A Study in Government Budgets in Somaliland from

2010 up to 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Introduction

 

Government budgets reflect the plans, prioritization and economic development of the

country. It shows how the funds will be raised and disbursed with one period of year. The

budget is the financial mirror of society choices.

 

The term budget is derived from the French Word “Budgette” which means a “leather bag” or

a “wallet”. It is a statement of the financial plan of the government. It shows the income and

expenditure of the government during a year. (Akrani 2011)

 

Somaliland is the only country in the world that is debt free, fully funds its operations budget

and the only country in Sub-sahara Africa that doesn’t not receive General Budget support

from developed countries. Sub-Sahara Africa receives the highest share of Official

Development Assistance. Approximately 20% of their budget is financed through a general

budget support. Compared to bordering countries, Somaliland Budget is higher than many

African countries including Federal Government of Somalia which in 2016 had a total budget

of $246,307,948 (Ministry of Finance 2016). The Donors both bilateral and multilateral

provided $107,100,000 which contributes 43.5% of the National Budget while the rest $56.50

comes from the domestic revenue. Receive

 

Somaliland, Unrecognized de-facto state in the Horn of Africa, faced a broad spacious of

progress challenges on all sides. Statistics showed that the unemployment rate is 56%,

rampant youth immigration, high rate of inflation, poor infrastructure, poor health facilities,

severe recurrent draught, food insecurity is wide spread in the country. According to FAO’s

Rapid Results Draught Response plan for Somaliland of March 2016, the number of people

in acute food insecurity was estimated about more than one million particularly the eastern

regions of Somaliland of at least one in ten people are acutely food insecure (FAO 2016),

Initial estimates suggests that 29% of population living urban areas are below poverty line

while the rural areas, the number is high as 38% (World Bank 2014) , high rates of maternal

and infant mortality, low literacy rate – only about half of 6-13 years olds go to primary

school, poor access to sanitation and clean waters. Furthermore the livestock industry which

contributes 30% of GDP and a backbone of the national budget was recently banned by

Saudia Arabi due to uncertain date.

 

 

 

The budget needs to be analyzed from this perspective and within the overall development

country context. Broadly speaking, the bulk of Somaliland budget is allocated to the recurrent

expenditure including staff salaries and administration expenses leaving unworthy portion to

development projects. In order the budget to be able to respond the socio economic, political

and environmental needs of the country requires steadily to get alternative source for the

livestock, implementation of new tax system particularly Value added Tax.

 

 

 

 

 

 

 

 

This article analyzes in detail the Budget of Somaliland for a period of seven years starting

from 2010 up to 2017 which is the first and last budget of President Silaanyo’s Government.

 

 

 

 

 

 

 

 

This study will focus where the money comes from and where it goes, the Allocations and

Appropriations of the Public body and where it represents the needs and aspirations of

Somaliland Population.

 

Budget Preparation Process

 

The ministry of Finance is the public responsible for Budget and expenditure management.

The Ministry of Finance is a custodian for the Republic of Somaliland. The Ministry of

Finance is also responsible for managing revenues, expenditures and government borrowings,

Coordinating government ministries/departments in the preparation of the annual budget,

Initiate and guide all ministries/departments to prepare their ministerial budget.

 

The budgeting process starts from July and ends on December. According to Somaliland

National Budget Act 2010, the minister finance announces the general policy of the budget,

priories and total forecast of the budget throughout the country. On 15th July each ministry

and agency submits their plan, polices and priorities to their line subcommittee of the House

of Representatives, The Ministry of Finance, on the basis of proposals, supported by

justifications made by each minister and of data gathered by officers of the ministry of

Finance, shall prepare not later than the 30th September of each year, the draft estimated

budget for the following year. The council of Ministers debates and approves the draft

estimated budget. The Ministry of Finance Submits to the House of Representatives the draft

estimated budget approved by the council of ministers together with a written statement of

the ministries of finance at least two months before the end of the financial year preceding the

year to which such draft estimated budget relates.

 

 

 

Approval

 

According to the constitution of Somaliland, the House of Representative have the authority

to debate and amend the budget and approve it by a resolution of the House. The House of

Representatives debates and approves the final draft of estimated budget submitted by the

Ministry of Finance on 31 December. If not done a vote on account may be authorized by law

for periods the total of which shall not exceed three months. During the Vote on account the

warrants authorizing expenditure shall be limited to one twelve of the total expenditure

shown under each sub-head of the draft estimated budget. Once the House of Representatives

approves the Budget, The budget goes to president for final signature and application.

 

 

 

The fiscal budget of Somaliland starts from 1st January and ends on December. The

budgeting technique is incremental approach which is taking the figures from the last year

and adding the changes, this has a disadvantage of ignoring fresh thinking.

 

Somaliland government failed to approve the National budget on the time enshrined under

the National Budget Act 2010. However there has been continues efforts to submit and

approve the budget on timely basis for the last seven years. On December 22, 2016 the

council of ministries approved 2017 Somaliland National budget, all of them voted. On

January 03, 2017 the House of Representatives approved 2017 National budget without

discussion (Geeska Afrika 2017). 67 Member of Parliament attended the meeting, 43 voted

for, 17 refused, 6 abstained and the chairman didn’t vote. This is the first time that House of

 

 

 

 

 

 

 

 

Representatives of Somaliland approved a budget without discussions and debates. If we

compare, the House of Representatives approved 2010 Budget which was the last budget for

President Rayale’s Term on 11 May 2010.

 

 

 

Budget 2010 – 2017: Key Issues and trends

 

On January 03, 2017 House of Representatives unanimously approved Budget 2017 featuring

an expenditure of Somaliland Shilling 2,175,104,355,662 equivalent to USD 362, 517,393.

On January 04, 2017 the President approved Budget 2017 to be effective (Hubaal Media

2017). Budget 2017 consists of Central Government, Independent Agencies, Local

Government, Somaliland Development Fund and Joint programme on Local government

(JPLG). This budget coincided with a period of severe draught affected in Somaliland

regions, particularly the eastern regions of Somaliland, ban on livestock export to Saudi

Arabia, regional and international focus on the strategic location of Berbera.

 

2017 National Budget

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Budget 2017 has stated increase in Military equipments, election expenditure and voter card

distribution, 10% Increase in Staff and Military salaries, Increase in search of recognition,

Draught response expenditure and some construction projects including building health

facilities, stadiums, repairing and renewing roads and educational facilities.

 

On 11 May 2010, the House of Representatives approved 2010 budget which was the last

budget for president Dahir Rayale’s term. 2010 National budget consisted of Central

government, Berbera Port, Water Agency and Electricity Agency, it was the first time to

incorporate these agencies which didn’t exist in the previous budgets.

 

2010 National Budget

No Agency Amount (SL

SHILING)

USD
1 Central Government 1,553,204,022,280 258,867,337
2 Independent Agencies 303,338,532,125 50,556,422
3 Local Government 208,570,347,257 34,761,725
4 Somaliland Development Fund 97,861,212,000 16,211,427
5 JPLG ( Joint Programme on Local

Governance

12,722,892,000 2,120,482
TOTAL 2,175,104,355,662 362,517,393
No Agency Amount (SL

SHILING)

USD
1 Central Government 1,553,204,022,280 258,867,337
2 Independent Agencies 303,338,532,125 50,556,422
3 Local Government 208,570,347,257 34,761,725
4 Somaliland Development Fund 97,861,212,000 16,211,427
5 JPLG ( Joint Programme on Local

Governance

12,722,892,000 2,120,482
TOTAL 2,175,104,355,662 362,517,393
 

No

Agency Amount (SL SHILING)
  Central Government 310,259,111,704
Berbera Port 28,167,118,628
Water Agency 17,535,408,348
Electricity Agency 7,846,946,132
TOTAL 363,808,584,812


 

 

 

 

 

 

 

2017 Budget which is the last budget for President Silanyo’s government indicates an

Increase of 498% when compared to Budget 2010 which was the last budget for President

Rayale’s term.

 

For the last seven years, the budget of central Government of Somaliland rose 401%. 2017

allocation of Central Government is 1,553,204,022,280 (258,867,337 USD). 2010 allocation

of Central Government is 310,259,111,704 SL Shilings ( 51,709,852 USD). The increase is

as high as 1, 242,944,910,576 Somaliland Shiling (207,157,485 USD)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Graph 1. Exchange Rate: $1 equivalent to 6000 Somaliland Shilings

 

The budget consists of estimated revenue and expenditure for a period of one year. For the

last seven years there have been constant changes on the revenue collections and Allocations.

 

 

 

 

 

 

 

 

On the revenue side, budget over the last seven years starting from 2010 up to 2017,

continue to show wide increase in the Non Tax Revenue which results from the service

provided by the government and also introducing new revenue budget items which

contributes 17.68% of the 2017 budget. The Non Tax Revenue includes Rent (Ministry of

Public Transport) 0.15%, Ministry of Farming, Ministry of Fishing (0.39%), Sale of

Passports (0.14%), Sale of Government Assets (2.53%), Fuel Levy (1.82%). A new tax were

imposed with name of developing the eastern regions of Somaliland which is 2% (2% G.

Bariga) which contributes 2.93% of 2017 National Budget. Another changes is the inclusion

of the surplus of previous years which contributes 6.86% of 2017 National budget. The

government placed the grants it receives from the World Bank which contributes 2.86% of

the total budget.

 

The customs and Inland Revenue contributes the majority of the revenue of Somaliland

Budget. However the has been an increase in Non tax revenue which results from the services

provided by the government agencies including the ministry of Post and Telecommunication,

Ministry of Rural development, Ministry of Water and Mineral Resources, Port Services and

Ministry of Information. The revenue of Judiciary ( Maxkamadaha), Ministry of National

Planning and Coordination and Immigration were transferred to the revenue of Ministry of

Finance.

 

On the expenditure side, the 2017 budget has allocated 458,867,377,260 Somaliland Shiling

representing 29.54% of the national budget to Security/Defence. In 2010 budget has allocated

174,133,995,888 representing 56.13% of the national budget to Security/Difference. For the

last seven years the allocations to the security sector/defence flourished 164%. This indicates

that Somaliland government is committed in sustaining peace and security. A preponderant

part of the allocation is used to pay the salaries and allowances of the army with minor

provisions for operating cost and new capital expenditure.

 

2017 Budget has allocated 358,603,761,931 Somaliland Shilings (59,767,294 USD) to a

General Reserve Fund contributing to 23.09%. Established in 2013 with an amount of

133,432,002,385 Somaliland Shilings (22,238,667 USD).

 

To improve the education, the government imposed free of charges of primary and

elementary schools. For the last seven years, Somaliland government increased the budget

allocation for Ministry of Education and Higher Studies exactly 601%. The same is true of

the health sector which increased 609% for the last seven years. Health sector is an important

to Somaliland population, although the health service is not developed, many people go for

medication to overseas countries including Ethiopia, India, Bangladesh, Thailand and

Western Countries. 2017 Budget has allocated 62,249,529,774 Somaliland Shiling (4.01%) to

the Ministry of Health while 2010 Budget allocated 8,783,810,960 Somaliland Shilings

(2.83) The health sector increased 53,465,718,814 Somaliland Shiling (equivalent to 609%)

 

 

 

2017 budget has allocated 48,867,384,448 Somaliland Shiling representing 3.15 of the

national budget to Judiciary sector. Compared to 2010 budget allocated 7,787,4020,800

Somaliland Shiling representing 2.51% of the national budget. This sector increased 37%.

 

The ministry of foreign Affairs has allocated 30,207,733,280 representing 1.94% of 2017

Budget. In 2010 budget allocated 4,597,004,640 representing 1.48%. For the last seven years

 

 

 

 

 

 

 

 

the foreign affairs sector flourished 557%. The budget of Ministry of Foreign Affairs is not

sufficient for lobbying and advocating Somaliland case.

 

There has been increase in the government agencies for the last seven years starting from

2010 up to 2017 with some agency overwhelmed other institutions, the largest increase were

given to the National Demobilization Commission (NDC) amounting 5344.18%. It is not

worthy to provide such allocation to this institution because there are no Demobilization and

Disarmaments of militia’s activities. According to NDP the country embarked on

Development issues. This amount could have been transferred to the health facilities of the

country.

 

Civil Service Commission was given to an extraordinary increase of 2581.63%, National

Human Rights Commission was given an increase of 1202.63%, Ministry of Information was

increased 1255.38%, Ministry of Industries was provided an increase of 884.55%, Ministry of

livestock was provided 795.30%, Ministry of National Planning and Coordination was

provided 752.55%, Ministry of Education and Ministry of Health increased 600% each.

 

Silanyo’s government succeeded to fix the salaries and allowances of the president and vice

president. Although some of the budget analysts argue that the president and vice president

are highly paid compared to developed countries. The Office of presidency budget line was

decreased 68.50%. Starting from 2011 up to 2017, the president earns a fixed salary and

allowance amounting to 819,000,000 SLSH (11,375 USD Monthly) likewise the vice

presidency were decreased 49.18%, Starting from 2011 up to 2017, the vice president

receives a fixed salary and allowance amounting to 585,000,000 (8,125 USD Monthly). The

budget 2010 shows lumpsum amount for the president and vice president called

Administration expenditure and had no clear and fixed salaries and allowances.

 

 

 

New institutions were included in the budget for the period of seven years. The following

New Institutions or Agencies formed consumes 27.09% of 2017 budget are: General attorney

(0.13%), National Security Agency (0.71%), Sooyaal War Veterans (0.19%), National Fire

Fighters (0.82%), Somaliland Mine Action Centre (0.07%), General Reserve Fund (23.09%),

Executive Higher Education (0.36), Higher Education Committee(0.10%), Somaliland

National Health Professions Committee(0.06%), Zakat Registration Agency (0.17%), Quality

Assurance Agency (0.25%), Good Governance and Anti Corruption Committee (0.21%),

Registration and Approval Committee (0.16), Ministry of Water (0.77%).

 

 

 

Conclusion

 

Somaliland budget is based on the recurrent expenditure of the government, there are no

allocations to respond the issues facing the country including creation of employment

opportunities particularly the youth, youth immigration, searching recognition, health

services and poor infrastructure. Therefore the budget doesn’t represent the aspirations of

Somalilanders. It requires leaders to take a painful decision to reduce the recurrent

expenditure, dismantle superseded agencies and advance of revenue collection mechanisms.

This allows allocating more to activities and establishment development projects to address

 

 

 

 

 

 

 

 

the

 

 

 

 

 

 

needs

 

 

 

 

 

 

of

 

 

 

 

 

 

Somaliland

 

 

 

 

 

 

population.

 

 

 

The format of Somaliland budget is not applicable to the international standards of budgeting,

the language is not constant. Some of the budget items are written in English while the

official language of the budget is Somali. There is no comparison table of Revenue and

Expenditure to draw whether there will be a surplus or deficit. I recommend to translate the

budget into English language to allow the international community to understand.

 

Finally, the citizen’s participation of the budget development is important to address the

social, economic and political environment of the state, assist in revenue collection and can

make service delivery more effective. Furthermore the participation of citizens in budget

formulation and executive will result in setting goals and drawing prioritization to the sectors

of the state including health, educations, infrastructure and security/defence.

 

 

Bibliography

Akrani, Gaurav. What is Budget? Components of Government budgets. Feb 23, 2011. http://kalyan-

city.blogspot.com/2011/02/what-is-budget-components-of-government.html (accessed January 24,

2017).

FAO. FAO’s Rapid Results Draught Response Plan for Somaliland and Puntland. March 2016.

http://www.fao.org/emergencies/resources/documents/resources-detail/en/c/405392/ (accessed

January 22, 2017).

Finance, Ministry of. Appropriation Act 2016. 2016. http://mof.gov.so/wp-

content/uploads/2016/05/Budget-Appropriation-2016-Web.pdf (accessed 2017).

Geeska Afrika. Golaha Wakiilada oo Duuduub ku Ansixiyay Miisaaniyadii Sanadka. Jan 3, 2017.

https://geeska.net/archives/38747 (accessed Jan 18, 2017).

Hubaal Media. Madaxweyne Siilaanyo oo meel mariyay Dhaqan galka Miisaaniyad Sanadeedka

2017ka. Jan 4, 2017. http://www.hubaalmedia.net/madaxweyne-siilaanyo-oo-meel-mariyay-

dhaqan-galka-miisaaniyad-sannadeedka-2017-ka/ (accessed Jan 24, 2017).

World Bank. New World Bank GDP & Povery Estimates for Somaliland. January 29, 2014.

http://www.worldbank.org/en/news/press-release/2014/01/29/new-world-bank-gdp-and-poverty-

estimates-for-somaliland (accessed January 25, 2017).

 

Somaliland Budget 2017

 

Somaliland Budget 2016

 

Somaliland Budget 2015

 

Somaliland Budget 2014

 

Somaliland Budget 2013

 

Somaliland Budget 2012

 

Somaliland Budget 2011

 

Somaliland Budget 2010

 

 

 

 

 

 

 

 

Somaliland National Budget Act 2010

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