The Route to Fiscal Self-Sufficiency
Somalia: 2020 and Beyond: Realising Somalia’s economic potential requires good leadership, a step change in economic strategy and credible commitment to institutional reforms.
Rebuilding Somalia is every Somali’s business
The gap between the aspiration to rebuild Somalia and the reality on the ground is such that it would be impossible to think it can be resolved without sustained and substantial long-term political reform and investment. However, whenever the words “rebuilding Somalia” are uttered, the cry for donor support is usually not far behind. This highlights how many decades of overreliance on external help has conditioned expectations to the point where alternative options no longer come to mind. It is a mindset devoid of any notion of self-reliance and contributes to the current instinctive sense of national helplessness. Somalia is a country that is rich in natural resources and rebuilding it requires every Somali to try their best to unlock the country’s potential. Overreliance on external handouts will not build a nation. This is of course no more than common sense.
" Ninkii timir abuura iyo kii tiin talaalaba taariikhdu way qori” "
The solution to Somalia’s problems will come in large measure from the Somalis themselves. Many Somalis volunteer their time, expertise and money in order to make an invaluable difference on the ground in circumstances that are often very difficult. Such initiatives show drive and make enormously incalculable contribution to the country’s recovery. Moreover, when we look at the incredibly difficult (but by no means insoluble) challenges Somalia faces today, the answer is not to offload our responsibilities to others – be it economic stewardship, security or reconciliation. We should be asking ourselves why, after nearly three decades of discord and mayhem, we still have not developed a shared endeavour to deal with these issues of our time. Whilst the overarching vision and leadership generally comes from good government, rebuilding Somalia requires actions from all of us working together to make it happen.
The focus on politics and personalities is also blindsiding us about the biggest tragedy that is unfolding right in front of us without our noticing: the many millions of young Somalis across the country that had been disadvantaged for life by three decades of war and mayhem. They can neither support themselves nor contribute to the country’s recovery. This is not the start in life that anyone deserves and it is a situation that will inevitably have adverse consequences for the country’s future, and could do incalculable long-term harm. What we see in Somalia today is indeed a repetitive vicious cycle in which the victims of today invariably become the perpetrators of tomorrow. It is an unsettling story of “tiitiin abuuris” that has no happy ending.
We will therefore only make a difference if we can raise our game and develop innovative ways of funding our country’s development in order to create employment opportunities so that our people can have the brighter future they and the country deserves. Despairing for the country’s predicament, or “othering” – whereby everyone expects others to do more, will never be a solution. It is a challenge in which we all have to do our bit and from which there is simply no escape.
Invest in Somalia’s future
Somali entrepreneurs run some of the most successful businesses in East Africa, including telephony, internet services, commerce, banking and money transfers. Remittance and investment inflows into Somalia from Somalis abroad runs into billions of dollars every year, creating a wider shared interest in the country’s recovery and economic growth. Creating a stable country capable of achieving its potential will of course not be possible if there is no sustainable and substantial contribution from those that are exploiting the country’s opportunities, as well as those that are in a position to do more to help.
The need to pay for Somalia’s reconstruction and development
As this report shows, the government’s budget is still heavily reliant on donor grants and a handful of domestic sources. Expanding the tax base remains an aspiration, rather than reality. Indeed, it is hard to see how tax reforms can be possible without the development of the necessary enabling conditions first, including tacking corruption and implementing properly functioning accountability structures. As the analyses in this report show, the government’s budget is still far from sufficient and can barely cope with recurrent pressures, such as civil service salaries. This leaves no scope for the transformation needed to support economic growth through investments in job creation and reconstruction – a scenario that is likely to prevail for many more decades. Tackling these considerable economic problems means identifying and exploring sustainable funding opportunities and getting a grip on mismanagement and corruption. If these two pillars do not become the central overriding priority soon, the current embryonic economic recovery will not endure.
This report analyses Somalia key economic indicators and sets out a new investment initiative funded by a remittance levy. The money collected through the levy can be used for the country’s reconstruction to create jobs and provide a lifeline to the many millions of young Somalis without a future. It is a scheme that is intended to help pay for Somalia’s reconstruction and support wider economic development.
Building accountability structures is paramount
Despite the many billions of dollars that were ploughed into Somalia over the years, key accountability pillars are either too weak or non-existent. The country’s economy cannot be fixed independently of the root causes of its underlying problems: mismanagement, poor economic stewardship and corruption. This is why Somalia continues to be at the bottom of all international measures of good governance as progress is impossible without robust and credible institutions. The continued absence of strong accountability structures therefore means economic progress will continue to be impaired – effectively for many more decades to come. The current status quo should not be an option.
Not the time to don the blindfolds and look away
These observations make most people very wary indeed. However, this is not the time to don the blindfolds and view any progress the country makes with distrust or hostility. It is important to be intolerant of the pessimism bias in our assumptions that nothing will ever change in Somalia. Indeed, if we were all to indulge in that view, the country would saunter into oblivion without our noticing.
Somalia is slowly recovering and that itself is progress. One has to be wary of the risks and issues – political, economic and societal - that continue to bedevil the country’s recovery, but should not be held hostage by them. Do not sit back. Every little effort helps.
This report therefore focuses on the economic work that needs to be done and the role Somalis can play in their country’s reconstruction. If we can find ways of supporting economic growth by getting people into jobs while showing a genuine enthusiasm for Somalia’s progress, we shall see the most powerful result: transformation.
The remittance levy proposal in this paper is thus one way of making Somalia’s reconstruction every Somali’s business.
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