Abdirahman Mohamed Sh. Abdilahi (Guray)
Email: abdirahman180@gmail.com
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
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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.
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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
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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
