On 3 August 2011, Mohamed Abdi Gaboose, the Minister of Interior for Somaliland, signed a ministerial decree that introduces revised budgeting and accounting formats for local authorities. The decree follows an active campaign by UN-HABITAT and its long-standing implementing partner, Terre Solidali, to raise awareness on the benefits of accounting systems that are based on the different services local governments render.

In the revised budgeting and accounting formats, costs and revenues are classified under separate budget components for each service sector. By adopting these new systems, districts will be able to do the following:

Accurately determine the actual income and expenditures for all municipal services 

Assess the unit cost of municipal services

Establish appropriate tariff structures (fees and rates)

Strengthen their local revenue base 

Improve financial planning and fund-raising efforts for investments in basic services and public infrastructure

Improve the provision of local services (such as urban roads, water supply, and solid waste management)

The Government of Somaliland is currently reviewing a second decree on the formal introduction of automated accounting and billing systems. Further work on the regulatory framework and the development of automated municipal finance systems is planned for 2011/2012. This will include assisting the Ministry of Interior in the implementation of the decrees, developing an asset management manual and a procedural manual for budgeting and accounting, upgrading and merging the automated accounting and billing systems, and providing continued training at the local government level.

Activities in this field are being implemented in both Somaliland and Puntland, and an agreement for the third phase of automated municipal finance activities was signed in July 2011 with Terre Solidali.

The ongoing review of legislation and the strengthening of municipal finance systems in Somaliland and Puntland are expected to bring important changes and improvements. Beyond the scope of financial management, there will be direct benefits for ordinary residents and taxpayers through enhanced investments by district councils in improved service delivery and public infrastructure.