Oodweyne News - Latest Somali News Update

Somaliland needs National Economic Reform before it is too late

According to economic growth rules, whenever a government experiences an economic system collapse or a prolonged economic crisis, an immediate economic reform strategy is to be introduced. At this economic state that Somaliland is within, we need a well designed National Economic Reform; which sets an economic policy, and the direction for economic growth. An economic reform which identifies strategies, decisions, programs, and projects to improve the economy; that covers the best systems for setting levels of taxation, government budgetary policy, money circulation management, labour market, local production booming, alternatives to increase country export capacity, and many other areas of government economic interventions to reach prosperity and rapid economic growth.
Our country was described as the fourth-world country dying for poverty and unemployment rate, with zero economic development and lack of international cooperation In terms of its economy. As we know, the livestock plays as the key driver where over 50% of our population were living in the rural area as nomads, depending directly on livestock and livestock products for their livelihoods; and other certain percent of the urban people depends indirectly on livestock trade processes.
As we know, about 60% of the livestock in Somaliland died during the last 5 years because of the recurrent droughts Somaliland faced in those years. These natural phenomena caused thousands of families of the nomad people loss their herds completely; gathering in unrecognized IDP camps around the villages and towns of Somaliland. Other thousands of nomad families are still in the rural areas with very few heads remained for them; not enough to sustain their survival.
It is likely that other droughts may come in the future to a level that the remaining less than 40% of the livestock will be driven out by the droughts; and livestock is the only item Somaliland exports to the outside world, and it is the most important hard currency source of income for the country. In that sector we need future-oriented strategic design principles that Its foundations lie in the analysis of external and internal trends and data, which enables to make the right decisions that can overcome these threatening phenomena to destroy our only export item–the livestock
Approximately half of the government’s annual budget is often spent in salaries, in the different security and law enforcement departments to maintain law and order in the country, and some minor acceptable administrative expenses. But the remaining half of the government’s budget is often prepared as a purely technical assemblage opening for corruption and a large-scale theft of public owned money. The institution responsible for preparing the Government National Budget together with the authorizing and approving institutions make it easy for their officers to steal the poor people’s paid taxes, through very lax, very general, non-specific and so much lump sum budget allocations.
That lump-sum budget based techniques leaves a great deal of discretion to the institutions’ authorized officers for expenditure; and causes very high percentage of frauds, thefts, corruption, personal own purchases, and many other wasteful use of the government budget draining millions of dollars every year. Along with the above mentioned problems, the government’s failure to fight against inflation becomes another setback and a socioeconomic problem to the government’s budgeted revenue. This intentional inflation epidemic, which is deliberately nurtured by the government and some few rich people; affected the livelihoods of the common people particularly the poor population in the rural and urban; causing thousands of families to become penny less not affording to feed their children .
The sharp decrease of the country’s livestock quantity, Saudi Arabia’s import ban imposed on the livestock from Somaliland, the misappropriation of the foreign donors provided funds, the very high percentage of fraud, theft and corruption within the government revenue and budget spending mechanism, and the problems of the hyperinflation, together affected the economic perspective of the country causing the state’s economy to collapse; diminished the income earnings of most of the community; and hardened the living conditions of the people. The unrecognized status is also preventing the country from dealing and interacting with the international community, international monetary institutions and foreign investment arrangements.
According to all these realities on the ground, every healthy minded citizen who knows something about the monetary policy which concerns the management of demand and supply of money in circulation, and the fiscal policy which deals with the taxing & revenue collecting systems and the government spending actions; understands that it is time to set a broad national economic reform for Somaliland to save the lives of the common people, to make the misery index of the people go down from this below the belt level, to create employment opportunities for the young somalilanders to realize their potentials, so they do not go out of the country to be humiliated, to save the lives of hundreds of thousands in the IDP camps with nothing to live on, and to make the country’s economy grow gradually.
Economic reforms are being undertaken and preceded almost throughout the developing world today. It is argued that the economic reforms are guided by standard rules dictated by the international monetary organizations like IMF and the World Bank. But with my little knowledge concerning an economic reform, I believe their PFM model is an unrealistic portrayal to most developing countries including our country. While it is important to attain and maintain fiscal discipline that their model holds; but every country has its own approach according to its circumstances, emphasizing not to prolong the process and to yield the desired results. The main objective of the economic reform we need is to improve the economy and social well-being of our people; and the goals that it seeks to accomplish are:

  • To maintain a sound economic policy
  • to enjoy with stable prices and money exchange rate
  • To encourage investment and job creation
  • to increase employment rate
  • To introduce a better mechanism for the allocation and distribution of the national budget and national income resources,
  • To improve and empower the national productivity in the agricultural and industrial sectors,
  • To restructure the ways our rural population manage their livestock, introducing a better way of dairy farming which is more secure, much productive and more profitable
  • To set the guidelines and implement the worldwide growing movement known as “Local Food” which is a policy empowering the farmers to grow and produce much local food selective expansion commodities and encouraging the consumers to buy the locally produced food items
  • To come up with a policy designed to make use of the demographic dynamics of the country which are favourable to create much economy derived from the country’s geostrategic location
    And lastly to reduce the poverty level of the people and accelerate the country’s economic growth.

An economic reform developed by a country comprises policies directed to achieve improvements in economic efficiency, either in individual sectors of the economy or by reforming economy-wide policies. I believe Somaliland has the chance to make this national economic reform possible; if the government is ready to begin this reform to itself by selecting and appointing the right person for the right responsibility. The interrelated economy and finance sectors need qualified professionals with 20/30 years experience, independent with their decisions, empowered with the availability of the resources needed and the government implementation of their strategic plans. It is the president who has the authority to select well experienced finance managers and economists and delegate them to the finance institutions. These can analyze and study all economic and finance standing problems; they can set and produce a multidimensional national economic reform framework; they can amend all undesirable procedures and make all adjustments and inclusions appropriate to achieve the desired economic reform we need.

\Adam Ali Younis E-mail: aayonis@hotmail.com