The situation in Somaliland, the semi-autonomous region in the north of Somalia, has never been more positive in recent decades. Successful free and fair Presidential elections in 2010 and more than a decade of comparative stability have strengthened the argument that the region is now well-placed to achieve real and lasting development. In this respect, the Somaliland Development Fund (SDF) is intended to provide a critical dividend to stability and make a significant contribution to the country’s development.
STATT was asked to prepare a report that would draw from international best practices in financing for transition to develop options for the design of the SDF, evaluate their feasibility, and recommend a preferred model. We completed a comprehensive desk review and held broad based consultations with the development communities in Nairobi and in Somaliland, and with the National Development Planning Committee of Somaliland – the Ministerial level national aid coordination body.
Lessons learned from experiences with multi-donor funding instruments in other countries include:
1.Identify the right priorities and objectives: This requires timely and realistic planning for the development phase; a foundation based upon a proper understanding of needs and a prioritised but realistic vision of what can be achieved.
2.Establish clear links between financing instruments and national ownership: A well designed financing instrument should promote effective and coordinated engagement between government and donors. It should explicitly understand the linkages to other financing instruments and national governance frameworks.
3.Avoid a proliferation of funding instruments: When managed correctly, the benefits of pooled funding mechanisms are considerable. They can facilitate an agreement on priorities, strengthen ownership, increase transparency both domestically and internationally. They can facilitate risk management, improve coordination and aid effectiveness, and enhance monitoring and accountability. However they are not without their drawbacks. Pooled funding mechanisms are typically cumbersome tools, with heavy governance structures and high management costs. Therefore, in order to maximise the benefits and amortise the costs, the fewer funds established the better.
In an effort to apply these lessons, we proposed a model that will position the Somaliland Development Fund as the primary instrument for the development phase, minimising the creation of new structures but supporting existing national planning modalities.
In order to reinforce the National Development Plan, support the national budget and the government’s own structures, STATT’s design has five windows that mirror pillars in the National Development Plan. The national centre of planning, prioritisation and governance would be in the National Development Planning Committee (NDPC). In order to measure results and impact from the Fund, decisions about the funding allocation are based upon sector strategies designed through the Sector Coordination Forums (SCF), which are established as part of the National Aid Coordination Framework and which report to the NDPC. The SCFs include a much broader range of actors, including multi-lateral actors, NGOs, civil society, the private sector and bilateral donors.
International participation and oversight is channelled through an SDF Steering Committee that agrees broad prioritisation, supports resource mobilisation and does strategic planning. Management, monitoring and oversight are provided through a Fund Manager that will be located in Somaliland itself.
The STATT team completed a range of capacity building and sensitisation activities for the Government of Somaliland, in particular for the Ministry of Planning and Aid Coordination. The SDF is highly anticipated by the Government, who recognise it as a pivotal tool to furthering Somaliland’s development goals, and as an opportunity to ensure national ownership over the aid effectiveness debate in Somaliland. STATT would like to thank the Government of Somaliland for their open engagement in the process, to the counterparts who shared their views and perspectives frankly, and to the two leading donors, DANIDA and DFID, for giving STATT the opportunity to add value to this important initiative.