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EU:SOMALILAND SPECIAL ARRANGEMENT

Framing the Somaliland Special Arrangement

 

Somaliland’s unique development trajectory has evolved out of a process of more than 20 years of grassroots peacebuilding and statebuilding, forged in relative isolation from other development contexts characterising the region. Over time, a complex and resilient institutional structure has taken shape in which modern institutions, traditional and religious authorities, the private sector and civil society work together in order to effectively ensure peace, stability, freedom against piracy and terrorism, economic growth, the delivery of basic services, the protection of livelihoods and social development. Since the ratification of the Somaliland Constitution by popular referendum in 2001, Somaliland’s development path has been led by five democratically-elected governments, with the House of Elders (Guurti) playing a traditionally-mandated role in maintaining peace, order and cultural integrity.

The Somaliland Special Arrangement lays out a way forward for institutionalising on-going Somaliland processes and initiatives within an overarching and equal partnership between the Somaliland government, its people and the international community. It is underpinned by a need to protect and build upon Somaliland’s development gains, as a means for maintaining and expanding upon security and economic prosperity throughout the Horn of Africa. The Somaliland Special

Arrangement represents an important element of a larger shift in approach to development partner engagement.

The Somaliland Special Arrangement is a separate and distinct part of the Somali Compact. The Somaliland Special Arrangement is the sole framework for engaging with Somaliland’s development process under the New Deal partnership. The simultaneous endorsement of the New Deal principles was conducted in the spirit of the 13 April Ankara Communiqué signed by the Government of Somaliland and the Federal Government of Somalia as part of their on-going dialogue process, in which the two sides agreed to work together to encourage greater and more effective international development assistance. While the two arrangements were developed through separate processes and will be implemented using separate government systems and mechanisms, their concurrent and mutually reinforcing implementation will help to ensure greater cooperation, trust and goodwill between all Somali people.

 Somaliland’s Vision 2030 and the Somaliland Special Arrangement

The Somaliland Special Arrangement is based on Somaliland’s Vision 2030. It has been developed under the leadership of the Somaliland Ministry of National and Planning and Development (MoNPD) in consultations with Somaliland stakeholders, including the National Planning Commission (NPC), line Ministries, Civil Society Organisations (CSOs) and implementing partners. The overall vision, as outlined in the Somaliland Vision 2030, is to create “A Stable, Democratic and

Prosperous Somaliland Where the People Enjoy a High Quality of Life.” 21 As the Vision 2030 states, “The government is determined to achieve economic prosperity and social wellbeing for its people while consolidating the nation’s accomplishments in building stability, maintaining security and developing democratic institutions. Our aim is to create an empowering environment where all citizens feel that they have a stake and a role to play in national development.” The Vision 2030 sets out a roadmap to:

• Enable Somaliland to take ownership of its development agenda;

• Inspire Somaliland and its leadership to mobilise resources and overcome development challenges to attain a higher standard of living;

• Guide development partners to align their assistance with Somaliland’s priorities and aspirations;

• Provide a framework upon which Somaliland´s strategies and implementation plans will be anchored.

In order to make progress towards the Vision 2030, a five year development plan for Somaliland for the period 2012-2016 was developed through a challenging, but rewarding process, which involved consultations across different stakeholder groups, including government and non-state actors, central and regional actors. The overall objective of the plan is to address and overcome the structural and institutional development constraints which Somaliland faces, and to achieve social and economic transformation towards the attainment of national prosperity.

The pillars of Somaliland's Development Plan correspond to the five Peace and Statebuilding Goals (PSGs) of the New Deal in the following manner: the Governance Pillar corresponds to PSG 1 (Inclusive Politics), PSG 2 (Security) and PSG 3 (Justice); the Economic, Infrastructure and Environment Pillars correspond to PSG 4 (Economic Foundations); and the Social Pillar corresponds to PSG 5 (Revenue and Services).

The priorities and corresponding milestones covered within these five PSG areas were derived directly from a wide range of assessments and evaluations conducted by the government and international partners over the past several years. In developing the Somaliland Special Arrangement, these assessments were consolidated and taken into consideration through a PSG lens by those Somaliland government and civil society representatives leading the Somaliland Special

Arrangement drafting process. Somaliland has been fortunate enough to draw on extensive prior background material, including a number of sector strategies and assessments, which are already structured to address the overall development framework—the Somaliland development plan—and has informed the Somaliland Special Arrangement.

Approach to the Somaliland Special Arrangement

The Somaliland Special Arrangement will serve as a strategic framework for development partners to engage with identified priority areas of Somaliland’s development plan. As a living document, the Somaliland Special Arrangement highlights targeted milestones that are specific enough to guide policy dialogue, project development and planning, while allowing enough flexibility for a changing contextual environment.

The Somaliland Special Arrangement will also provide the framework for improving international assistance to Somaliland by setting out a set of partnership principles, preferred financing modalities and mechanisms for coordination and monitoring.

Prioritisation and programming efforts currently underway to implement the Somaliland development plan, will serve as the starting point for kick-starting implementation under the New Deal framework. Further dialogue and planning will take place through the mechanism identified in the Somaliland Special Arrangement, in order to translate strategic priorities and milestones outlined in the document into concrete and tangible results.

Somaliland Peacebuilding and Statebuilding Priorities

Somaliland has undergone three prioritisation processes since 2011. The latest intensive exercise involved the prioritisation of the development plan in 2013, in preparation for financing of the Somaliland Development Fund by the NPC, which includes civil society. Ministries, Departments and Agencies identified priorities and continued to develop concrete sector strategy frameworks and priority projects based on prior discussions at regional and district levels and technical input from

CSOs, UN agencies and implementing partners. Additionally, for the first time, through an intensive data collection process led by the MoNPD, the government has a better understanding of estimated external resource flows in 2013, which has helped to inform government resource allocation.These prioritisation processes have consistently identified targeted areas that fall within Peace and Statebuilding Goals (PSGs 1, 3, 4 and 5).

The Somaliland Special Arrangement has focussed its attention on those areas where support under a New Deal framework will be most important. PSG 2 is not included in the Somaliland Special Arrangement. Although further gains in the security sphere is seen as a high priority for maintaining Somaliland’s peace and stability, Somaliland’s long-standing security cooperation with development partners means that this area is already being robustly supported, (and it is anticipated that this will continue) in comparison with other PSGs. Furthermore, the security sector receives a significant portion of resources allocated directly by the Somaliland government. On the other hand, a past neglect of economic foundations is addressed within the Somaliland Special Arrangement by inscribing an added focus on this sector. The Annex outlines in more detail the proposed milestones for each of the priorities.

The Somaliland government will continue to consult stakeholders through various fora, including regional and district meetings, under the leadership of the MoNPD and relevant line ministries. The findings will then be reported back and factored into future planning processes and the implementation of Somaliland’s peacebuilding and statebuilding priorities.

PSG1: Inclusive Politics

Strategic Objective: Build a politically stable and democratic Somaliland that adheres to the principles of good governance

Somaliland has transitioned out of the phase of reconciliation within Somaliland and reached a stable political settlement. It is now working to consolidate democratic systems and constitutional dispute resolution mechanisms, to enhance their strength and resilience. Traditional forms of authority and local spaces for participation must be further harmonised with state-level governance systems to ensure accountability and deepen bottom-up inclusivity, especially among women, youth, marginalized communities and under-represented regions of Somaliland.

While legitimate electoral systems and legislative structures are in place, their role as primary sources of stability and political legitimacy are dependent upon the institutionalisation of standardised voting processes and effective multi-party representation. Strengthening the government-society partnership will foster an enabling environment that promotes accountability and oversight through a vibrant, pluralistic and engaged civil society and media. While there have been significant gains, there are challenges that need to be addressed to move to the next stage of development. Two key priorities have been identified to help achieve the strategic objective:

¾ Priority 1: Strengthen electoral processes and practices by reforming the electoral system in key areas, including addressing gaps in representation, such as those faced by women and marginalized communities; conducting voter registration; and developing mechanisms for judicial and public oversight.

¾ Priority 2: Increase parliamentary accountability and responsiveness to the public by developing mechanisms that promote strategic communications, transparency, constituent outreach, coalition development and accountability to party platforms.

 PSG 3: Justice

Strategic Objective: Improve access to an efficient and effective justice system for all An effective administration of the justice system is critical to maintaining and enhancing peace, security, economic development and political stability in Somaliland. As with most institutions, the justice sector has suffered immense destruction, in terms of physical structures and human capital. While some progress has been made towards rebuilding the justice system, there remain challenges

to the establishment of a fair, transparent, efficient and credible system. The government launched a Justice Sector Reform Strategy in 2013, in line with the Somaliland development plan. However, its implementation requires a solid financing strategy complemented by specialized, high-quality technical support. Reform interventions must focus on demonstrating results delivering on the targets set out in the Justice Reform Strategy. Three key priorities have been identified:

¾ Priority 1: Strengthen the capacity of the courts through extensive training and the provision of required equipment to ensure that they can carry out their core functions.

¾ Priority 2: Clarify the roles and responsibilities of law making bodies and strengthen their institutional capacity including the capacity to prioritise and draft legislation that is harmonised with the existing body of laws.

¾ Priority 3: Promote a more responsive and accessible justice system that protects the human rights of all.

 PSG 4: Economic Foundations

Strategic Objective: Strengthen the management of Somaliland’s natural, productive and human resources, and create an enabling economic and financial environment to maximise economic growth and participation in the regional and global economy.

The priority given to the productive sector is based on the Government’s recognition of its potential for contributing to economic growth, employment generation, poverty reduction, and economic diversification. Livestock exports, including raw hides and skins (export of slaughtered animals was introduced only recently), represent about 50% of GDP and 80% of foreign currency earnings.

. The importance of infrastructure, roads in particular, for economic development and access to social services has also been recognised. There is a critical need to develop the financial sector to support increased investment opportunities, as well as access to finance. The Somaliland Food and Water Security Strategy (FWSS) of 2012 bases its approach on the understanding that cultivating the productive sectors (agriculture, livestock and fisheries), water and natural resources has the potential for not only addressing poverty, but also broadening the economic base and creating employment.  nvironmental protection and the development of renewable sources of energy for both household consumption and for larger scale commercial purposes have also emerged as key priorities. Finding solutions to address Somaliland’s clean energy needs are critical to dealing with impacts of climate change, deforestation, and environmental degradation, and also fit within Somaliland’s current economic potentialities. The importance of good management practice for mineral resources and extractive industries in Somaliland is also clear. The six key priorities are:

¾ Priority 1: Develop and implement an investment strategy for public and productive infrastructures, including roads, water, irrigation, markets, ports, and energy.

¾ Priority 2: Strengthen investment in productive sectors, particularly agriculture, livestock, and fisheries; create a legal framework to enable economic growth (including establishing property rights and land registration mechanisms). 

¾ Priority 3: Building efficient credit, investment and insurance institutions that contribute to economic growth and higher living standards.

¾ Priority 4: Generate employment, including through the development of vocational and technical training, and establish a special business fund for young entrepreneurs.

¾ Priority 5: Develop and implement a comprehensive and integrated environmental management strategy that addresses desertification, promotes alternatives to charcoal as an energy source, and protects land, water, forest and coastal resources.

¾ Priority 6: Put in place an affordable energy plan and policy that takes Somaliland from dependence on imported fuel to a greater use of its own abundant natural resources.

 PSG 5: Revenue and Services

Strategic Objectives: Build public service capacity to raise revenues, manage resources and ensure the provision of streamlined quality services in an accountable and transparent manner that guarantees inclusiveness and equity.

Somaliland Ministry of Finance, Annual Figures and Trade and Finance, 2012. 25  Somaliland is largely dependent upon a narrow set of custom taxes which generate approximately 75% of domestic revenue. Based on GDP estimates, central government revenues as a proportion of GDP are approximately 8%.There is increasing awareness across Somaliland society that bad governance and corruption pose a serious risk to the creation and institutionalisation of effective governance, economic growth, and socio-political stability. In response, the government has been reviewing the effectiveness of past efforts to support Public Financial Management (PFM). Through a government-led consultative

process, a Road Map for PFM Reform has been developed and will be presented to donor partners for technical and financial support. Similarly, the government has also recognized that “most public institutions are not adequately equipped to deliver services effectively and efficiently.” Many institutions do not have clear terms of reference for their mandate and functional structure. The government has established a Public Sector Reform Committee to identify a way forward.

The three priorities are:

¾ Priority 1: Establish an appropriate and effective system of public financial management based on the PFM Road Map that includes strengthening the budget process, establishing a chart of accounts and enhancing public procurement.

¾ Priority 2: Promote the equitable distribution and access to basic services both through both the use of clear service delivery mechanisms and standards, as well as the clarification of roles and responsibilities of the central and local authorities and service delivery providers.

¾ Priority 3: Create a merit based and equitably distributed civil service that delivers high quality basic services and security for all Somaliland citizens.

 Cross-Cutting Issues

Somaliland’s development plan contains a number of explicit and implicit crosscutting themes to be integrated into planning and implementation processes across all pillars. Further crosscutting themes address the relationship and impact of the development partnership in terms of relationship and engagement with society.

Gender mainstreaming: Fostering a positive and inclusive role for women will be a paramount consideration in all aspects of SSA implementation. Gender priorities are identified across the development plan but due to limited resources the government has not been able to implement the identified programs. Women’s groups have played an important part in promoting development, social cohesion, secure livelihoods, peacebuilding and community stability throughout omaliland’s

history. However, entrenched power imbalances continue to be pervasive within Somaliland’s socioeconomic environment. This contributes to gender inequality and inadequate representation of women within the political sphere. Interventions made within the New Deal framework must contribute to ensuring equitable participation of men and women as economic and political actors, and should respond directly to the structural challenges contributing to sustained gender disparities

across all of the PSG priority areas. Gender mainstreaming will be built into projects, programming and sector strategies, and progress in this area will be assessed as a specific theme through the joint aid coordination and monitoring mechanisms.

Strengthening citizen-state relations: A two-tiered approach to civic engagement will be fostered in which formal participation and inclusion within democratic processes will be complemented with the promotion of political spaces where civil society engagement, freedom of ideas and assembly, proactive advocacy, and community-led development activities can flourish. Popular ownership of government-led development initiatives are derived primarily from established democratic

processes, such as elections, which provide mechanisms for promoting legitimacy, accountability, responsiveness and popular representation within Somaliland’s governing institutions. At the same time, grassroots development approaches, in line with Somaliland’s traditional community-based governance structures, will be promoted in all planning, implementation, joint coordination and monitoring processes to ensure effective participation, accountability, transparency and

responsiveness by all citizens on a daily basis. Protection of human rights: Peacebuilding and the strengthening of institutional effectiveness will only be sustainable and legitimate if the human rights of the Somaliland people are upheld. The enactment of the Somaliland National Human Rights Commission Law in 2010 represents a positive indication of Somaliland’s commitment to protecting human rights. This theme must also be enshrined directly within the Somaliland Special Agreement planning and implementation process.

The Human Rights Commission and non-state human rights organizations will be encouraged to provide reports and assessments to aid coordination, monitoring and evaluation forums. Their findings and proposals will both serve as measures to ensure accountability to human rights principles compatible with international law, and help guide future programming.

Delivery Instruments: Development Financing The Somaliland budget continues to grow in line with increasing revenues; from USD 47 million in 2010 to USD 125 million in 2013. But the budget continues to fall well short of the financing 

requirements of the Somaliland development plan, meaning that the government remains highly dependent on external resources. This section identifies a set of operating principles and preferred financing modalities to guide development partner engagement in Somaliland.

Partnership Principles

The Somaliland government and development partners re-commit to the principles agreed at the High Level Fora on Aid Effectiveness in Paris (2005), Accra (2008) and Busan (2011), including the New Deal TRUST principles. Based on these global commitments, all development partners pledge to respect the following principles:

• Full ownership by the Somaliland government and people over the design, delivery and

monitoring of development partner-financed activities in Somaliland;

• Adherence to “do no harm” principles: Somaliland’s peace and stability, while proven to be resilient and deeply-entrenched, remain vulnerable to external shocks and internal threats. Interventions through the Somaliland Special Agreement must be underpinned by an adherence to conflict sensitivity in order to ensure that statebuilding processes and policy reforms mitigate rather than exacerbate the conditions for violent conflict. Particular attention must be paid to

reducing economic and political inequalities;

• Greater willingness to accept and manage risks, including the risk of non-engagement with Somaliland, and the importance of using Somaliland-specific and conflict-sensitive approaches to engagement;

• Alignment of international assistance with the government’s strategic priorities articulated in the development plan, related sector strategies and the Somaliland Special Arrangement;

• A harmonised approach which ensures horizontal coordination and a good division of labour between international agencies – avoiding duplication and wasted resources;

• A common effort to ensure development partner funds build and strengthen Somaliland capacity and institutions in line with Somaliland’s Public Sector Reform strategy and PFM Road Map.

• A focus on strengthening Somaliland’s public finance management system and supporting the Somaliland government in adopting an Open Budget Initiative. In turn, the Somaliland government strongly commits to implement the priorities set out in the PFM Road Map developed by the Somaliland government and to define realistic benchmarks with development

partners.

• Based on the achievement of jointly agreed benchmarks international assistance will increasingly

be channelled through Somaliland’s systems.

• Transparency and predictability of international assistance in Somaliland, including through the use of the DAD  (or other appropriate aid management tool), by reporting aid on Somaliland’s budget and by making publicly available reports, data and knowledge products related to development partner interventions and programmes.

• Dedicated support to building the statistical and monitoring and evaluation capacity of the Somaliland government to ensure that peacebuilding, statebuilding and development outcomes and results are tracked. All externally funded interventions should have a monitoring and valuation component that allows government to take part in joint monitoring activities. 

On the basis of these principles, the Somaliland government and development partners will develop a set of more specific commitments and benchmarks, and monitor progress towards the achievement of these (as described below).

Financing Arrangements

Financing arrangements for the Somaliland Special Arrangement will support a gradual and performance-based transition to increased ownership and alignment of government institutions, with the ultimate objective of providing the environment suitable for budget support. In line with New Deal Principles, Somaliland and development partners will build on funding modalities such as the Somaliland Development Fund (SDF), the preferred financing mechanisms, or develop new

external funding modalities like the SDF that make greater use of government systems and processes to ensure greater alignment with Somaliland priorities, lower transaction costs, better value for money for partners, and sustainable results.

6 The government of Somaliland led the development of the PFM Road Map which reviewed past programs on PFM through a process of rigorous negotiation with PFM stakeholders to ensure buy-in, which was previously lacking.

7 The effectiveness of DAD as an aid information management system will be reviewed in mid-2014 to see if both the Government and development community should look to alternatives.

The current arrangements for external financing rely on intermediary institutions to administer funds and implement programs and projects, mainly outside government structures. It is recognised that such arrangements cannot fully support the development of sustainable institutional capacity, Somaliland ownership and the basis for mutual accountability between government and development partners.

Development partners and the Government of Somaliland therefore agree to undertake a joint evaluation of the current funding mechanisms, particularly those of particular concern to Somaliland stakeholders, by mid-2014, to determine how scarce resources can provide better value for money, ensure that current parallel systems and processes (e.g. budget classification and bottom-up and top-down development planning) are harmonised, and tangible sustainable results delivered.

Recommendations from this joint evaluation will be presented to the High Level Aid Coordination Forum to ensure the findings are implemented. The government and development partners will work towards budget support modalities in the

longer term, recognizing that this is the government’s preferred mode of external financing. In the interim, the Somaliland Development Fund (SDF), and mechanisms that use the same approach, will be the preferred financing modality.

The Somaliland Development Fund is based on the principle of government ownership and leadership. In the SDF, the government establishes its own priority programs and projects, which the SDF, managed by a private firm, implements. Additional objectives of the SDF are to build the core capacity of the Government of Somaliland to plan, prioritise and allocate resources in an accountable and transparent manner, based on principles of inclusiveness, participation and non-discrimination.

The SDF was established by the DANIDA and DFID in 2012, with the Government of Somaliland and is based on the principles of the New Deal.

Where donors cannot join the SDF, a limited number of other Multi-Partner Trust Funds can be established if they are: multi-sector or sector-based; aligned with the development plan's priorities; use government systems. Such funds should be aligned as much as possible with government priorities and aligned with the Somaliland Special Arrangement operating principles and coordination modalities.

Stand-alone projects may also be considered but should be based on Somaliland-priorities, coordinated with government programs, and follow the principles set out in the Somaliland Special Arrangement. Such projects can take the form of either multi-lateral, bilateral, private or publicprivate partnerships, as well as the funding mechanisms utilised by non-traditional partners,including regional sources, non-OECD sources, Diaspora Investment Funds, Private Sector Investment, and Zakat.

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