By John Alliage Morales/Devex
Somalilandsun – In recent months, donors have been enamored with Somalia’s President Hassan Sheikh Mohamud and his new government, with a flurry of activity surrounding work in his country — from handing out more development aid to considering lifting of a decades-old arms embargo.
In a recent tour to the West, the Somali president made some powerful friends, meeting the likes of World Bank President Jim Kim, U.S. President Barack Obama, U.K. Prime Minister David Cameron and European Commission President Jose Manuel Barroso.
The Somali government is now meeting donors halfway.
It is reportedly setting up an aid coordination unit that would organize the efforts of donors on the ground. This central unit for aid coordination is the first step in a long process to transition Somalia out of conflict and towards peace and stability.
But the transition may take a while yet.
Currently, Somalia’s biggest donors are considering smaller aid assistance commitments this year for various reasons: The development fund for Somalia is drying up; less of the population are now vulnerable to famine and in need of humanitarian assistance; and because governments have once again begun to engage with the government.
Long-term development plans may still be premature, however, donors conclude. While many support country-led development, they remain cautious for the moment about giving direct aid to the government.
This is a tacit admission that despite the progress made by the new political leaders, not everything is entirely rosy just yet.
Radical Islamist group al-Shabab stills holds some residual influence in south Somalia; pirates loom large elsewhere; and, most importantly for the donors, the newly established government lacks a strong financial system to handle the influx of billions of dollars of aid money.
With security remaining a primary obstacle to doing business in Somalia, the transition plan presently remains just that — a plan. Donors note that a compact that would guide them on what Somalia wants to prioritize for its future has yet to be finalized or agreed.
Compact for Somalia’s future
The signing of this compact is significant on the road to a peaceful Somalia.
The compact lays down the foundations of how both the international community and Somalia will help each other and is a requirement to press ahead with the implementation of the New Deal for Engagement in Fragile States, which seeks to align the resources of donors to the priorities of such states. In essence, the fragile states themselves make the decision on where donors should invest.
Somalia is one of the countries that endorsed the New Deal, which lists five dimensions of fragility into which donors can direct their money: legitimate politics, security, justice, economic foundations, and revenues and services.
For Somalia and its donors to agree on the terms and conditions of this deal, a compact between them has to be signed. Without it, aid delivery on the ground would remain the same: donors working on different directions.
“Somalia is putting into place the way in which aid coordination can occur,” Holly Dempsey, East Africa deputy mission director of the U.S. Agency for International Development, told Devex. “The last thing that you want is having one donor in one ministry talking about the provision of services and another ministry or another donor with a different model of delivering services.”
But for the moment, priorities and commitments vary from one donor to another.
According to the Organization for Economic Cooperation and Development, Somalia is one of the fragile states that is projected to receive increased aid funding in the coming years.
However, funding appears to have declined dramatically – at least on paper – of late.
The European Union’s commitment, for example, decreased by about 75 percent from €158 million ($203 million) in 2012 to €38 million this year. The United States’ commitment, meanwhile, declined by 80 percent from $360 million to $74 million this year.
The EU is said to be committing smaller amounts of aid to Somalia this year as the multiannual development fund for the period 2008-2013 is drying up. The union is estimated to commit €38 million to develop road infrastructure, light up homes and give vocational training to Somali nationals.
“There is no drop in allotment, but a drop of what we call the commitments,” European Commission spokesperson for development Alexandre Polack told Devex.
It is a normal thing, said Polack, because the current development fund ends this year. Funds committed in 2012, he added, are now being disbursed as projects are being implemented.
The United States, meanwhile, is said to commit about $74 million for projects ranging from peacekeeping operations and conflict mitigation to good governance, according to data sent by USAID to Devex.
“I would expect a decrease in the humanitarian fund,” noted Dempsey. “We are no longer in a famine situation but we’re certainly not suggesting that Somalia doesn’t have a huge amount of challenges in front of it.”
The Japan International Cooperation Agency, which resumed operation in Somalia two years ago, is expected to finalize its commitments in April, the start of Japan’s fiscal year. But early signs indicate that JICA may not provide bigger assistance this year.
These preliminary budget data are, of course, not reflective of the donors’ commitments to Somalia for the whole year. These commitments will ultimately rest on the outcomes of conversations among donors and Somalis during the two big conferences slated this year.
On May 7, Somalia and the United Kingdom will host a conference aimed at drumming up more support for the country.
Later this year, the EU will hold a conference aimed at finalizing a compact between Somalia and development actors to guide Somali reconstruction.
The EU is also expected to outline its peace-building and state-building plan in a country strategy paper for 2014-2020, which has yet to be finalized.
“This strategy will align behind mutually agreed donor and Somali government priorities,” Polack told Devex. “These mutually agreed priorities are being discussed with a view to reflect them in a donors-Somali government agreement [the so-called compact].”
Access to this future aid does not only depend on the compact, however.
“Access […] will depend on Somalia’s accession to the ACP-EU partnership [Cotonou] Agreement,” said Polack.
The United States, meanwhile, has yet to flesh out specific details of the projects lined up for Somalia in the coming year, but is currently prioritizing education, health and assistance to parliament.
Economy, capacity building
In the meantime, Somalia’s biggest donors are eyeing projects meant to spur economic growth and build the capacity of the newly established government.
The EU, for example, is considering rehabilitating about 1,400 kilometers of paved roads and 2,500 kilometers of unpaved roads.
In broad strokes, Dempsey outlined USAID’s priorities this year: “We’re working in education. We’re working in economic growth. We’re working in stabilization. There’s support to parliament. There’s a whole plethora of work under way.”
The United States is planning to train parliamentarians within 12 months, said Dempsey.
“The training was on the agenda for parliament – the real nuts and bolts of a new parliament working,” Dempsey said.
For its part, the United Kingdom made a pledge in February to help Somali parliamentarians and, at the same time, bring food to vulnerable people. Earlier, it pledged about $4.7 million in aid to support these projects.
JICA is set to continue its technical cooperation projects with Somalia.
“We will seek any possibilities and start processing and implementing projects and programs as we run in the next year,” Akira Sato, at JICA’s Africa desk, told Devex.
Japan would continue providing training outside of Somalia and conduct needs surveys, Sato said, “since we don’t have any direct access to Somalia.”
Future of Somali aid
Aid delivered in a predictable manner has become all the more pressing for Somalia, which has experienced a decade of “aid shocks” – a phenomenon when there is a change of more than 15 percent in official development assistance from one year to another.
Aid shocks, of course, do not help in planning long-term strategies, derailing plans when money does not flow in and overwhelming the system when more money than expected flows in.
Somalia’s official development assistance took a nosedive in 2009, when donors disbursed $646 million in real terms from $722 million the previous year. In 2010, donors disbursed $490 million, which then surged in 2011 to some $923 million.
Hopes are raised that, with a new compact, consolidated appeals for Somalia would be largely funded.
So far, only 2 percent of $1.3 billion appealed by various organizations for Somalia this year was funded – well below the average of 60 percent of successful appeal funding by donors since 2000.
No direct aid yet
But even if appeals were ultimately successful, it may not necessarily mean the government gets the majority of the aid pie.
USAID’s Dempsey said providing direct budget support to Somalia is still a long shot.
“That’s a long, long way [away]. I mean, you need a strong public financial process to be undertaken and that’s being discussed now,” Dempsey said, adding that USAID hopes subcontracting would go to Somali firms.
The EU’s Polack, meanwhile, said aid had been channeled through nongovernmental organizations and U.N. organizations since the 1990s. Asked if the regional bloc was willing to provide direct budget support, Polack said there could be a chance in the future.
“This could be a possibility, but there is nothing concrete at this stage,” he said.