UN-HABITAT has been working to build and strengthen financial management systems at the local government level in Somalia for over a decade. Having started in 2001 with only one district in Somaliland under the Berbera Technical and Institutional Assistance Programme, the current phase of the intervention is being carried out as an integral part of the UN Joint Programme on Local Governance and Decentralized Service Delivery, and now covers nine districts in Somaliland and four in Puntland. Extension to one district in south central Somalia is planned.
The municipal finance intervention is built around three main pillars:
- To strengthen the revenue base of local governments
- To improve planning and budgeting at the district level and link increased revenues to improvements in service delivery
- To enhance the provision of local services (such as urban roads, water supply, and solid waste management), either directly through support to the district administration or through public–private partnerships overseen by the local authority
Activities in the municipal finance sector directly benefit from UN-HABITAT’s work in other sectors – for example, by using the information collected through Geographic Information Systems as an input database for property tax billing systems. As a result of this specific type of support from UN-HABITAT, Hargeisa District was able to quadruple its property tax revenue in the past three years.
The municipal finance component seeks to provide tailor-made solutions to local governments in all three regions of Somalia (as the security situation allows), taking into account the fragile environment, low district staff capacities, the inadequacy of financial laws and regulations, and the lack of computerized financial management tools. The support aims to improve the policy and legal framework, the implementation of operating procedures, and the installation of technical systems. Capacity development and extensive consultations among stakeholders at local and central government levels bolster this threefold approach, and the rehabilitation of key infrastructure such as district offices and service infrastructure further complements it.
As part of this approach, UN-HABITAT – through its implementing partner for Integrated Financial Management Systems, the international NGO Terre Solidali – has been installing computerized accounting and billing systems in selected districts in Somaliland since early 2008. It started with a pilot version of the accounting systems in Puntland in 2010 and has been training district staff in their use; the full roll-out for the systems there will happen in 2011/2012. Already, the installed systems have helped improve transparency, accountability, and local governance practices. Similar systems have been installed at the central government level in the Ministries of Interior and Finance, as well as at the Magistrate of Accounts in Somaliland (with expansion to Puntland planned in 2011/2012).
UN-HABITAT and the central and local government partners developed road maps for municipal finance policy development in Somaliland and Puntland during 2010. These highlight the importance of enhanced performance in municipal fiscal/financial management through linking revenue and expenditures by service sector, upgrading the quality of municipal services and cost recovery (as applicable), and strengthening linkages between municipal planning and community participatory budgeting.
The local consultation process on the road map documents has resulted in tangible outcomes, such as increasing awareness on municipal finance and service delivery among a broad range of stakeholders. In addition, the Somaliland Ministry of Interior requested UN-HABITAT to assist with a review of the legal framework.
A first step in this is the preparation of draft ministerial decrees on service-based budgeting and accounting, as well as on the official adoption of automated systems for financial management and reporting for local governments in Somaliland. Puntland welcomed a similar process.
Further work on the regulatory framework is planned for 2011/2012. The adoption of this framework is the foundation for transparent and accountable financial management at the district level, and thus the basis for improved service delivery to the people of the Somali region.