Somalia - Technical Assistance in Aid Coordination Project

AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUNDFRAGILE STATES DepartmentFEDERAL REPUBLIC OFSOMALIATechnical Assistance inAidCoordination ProjectDETAILED REPORTPrepared byFragile States Department ORFS April 2014GRANT INFORMATION :ORFS TECHNICAL ASSISTANCE INAID COORDINATIONPROJECTClient 'sinformationFederal Government ofSomaliaMinistry ofFinanceGRANT RECIPIENT :EXECUTING AGENCY :Financing Plan for2013-2015Amount UA Instrument SourceUA90,577US140,000Grant ADF FSFPillar IIIUA90,577US140 ,000Grant TOTAL COSTusing exchange ofApril 20141UA=1.54563 USADB ADF keyfinancing informationUSD Grant currencyProgram Timeframe -Main stepping stones expected NotApplicableApril 2014April 2014May 2014June 2014Concept Note approvalAppraisalApprovalEffectivenessFirst DisbursementMay 2015 CompletionLast repayment NASOMALIA :PROPOSAL FOR AGRANT OFUSD 140.000 OJA 90.577 DRAWN FROMSOMALIA 'SFSF PILLAR HIOFADF 12ALLOCATION TOFINANCE TECHNICALASSISTANCE INAID COORDINATION PROEJCT1. Introduction1 . 1 The RequestThe government oftheFederal Republic Somalia hasrequested theBank through itsletter dated 20March 2014 tosupport thecapacity oftheMinistry ofFinance byfinancingtheservices ofTechnical Assistance TAexpert fortheMinistry foraperiod oftwelvemonths .Government requested thattheTAshould befunded from itsallocation ofPillar IIIunder ADF 12.1.2 Country Context1.2.1The twodecades -long political andeconomic crisis experienced bySomalia iswellcaptured invarious Bank Group documents ,including theSomalia Country Brief.Presently ,Somalia shows signs ofrecovery after theestablishment ofthepresent federal government ,andtangible actions aimed attheimprovement ofthesecurity andpolitical situation thatwilleventually lead toeconomic recovery ofthecountry have been taken .1.2.2Since theestablishment oftheFederal Government ofSomalia FGSinSeptember2012 ,thecountry 'seconomy hasstarted toshow signs ofrecovery ,with therealGDP growthestimated tohave reached 2.6in2012 13andthisisexpected toexpand further to5in2014 15.There isalready substantial increase inthe2014 budget with most oftheresourcesexpected tobelocal generated .1.2 Effect oftheCrisis onInstitutional and Human Capacity Development1.2.1Amajor effect ofthewarinSomalia wasthesystematic economic collapse andthesystemic weakening ofthepublic andprivate sector institutions caused bytheunprecedentedlong-drawn warandtheresultant brain-drain from thecivil service totheprivate sector andtheeventual emigration ofanestimated 2million Somalis over 20ofthepopulation .Consequently ,public sector institutions suffer from extremely weak human resourcecapacity ,with many posts filled with less qualified and inexperienced staff andalargenumber ofunfilled vacancies remain inthesystem .Absence ofworking equipment ,combined with lack ofcountry systems andsalary scales thatfallbelow thecost ofliving ,further compound theproblem .Combined ,these factors have contributed tothesignificantdeterioration intheproductive capacity ofboth thepublic andprivate sector institutions andcontinue toseriously hamper thecountry 'sability torecover .1.2.2Thelack ofhuman capacity isparticularly acute inthepublic institutions responsiblefortheeconomic management ofthecountry such astheministries offinance andplanning .Concerted efforts bytheGovernment anditsdevelopment partners ,including theBank aretherefore required torebuild Somalia 'sinstitutions and human capacity tothepre-crisisstandards .Theon-going andplanned donor -supported institutional support operations arestillfarinadequate toaddress thedemonstrated capacity building andhuman development needsinSomalia .12. Rationale fortheProjectThe Ministry ofFinance isthefocal institution thatischarged with themandate offinancial andeconomic reforms oftheFederal Government ofSomalia andisitworking onanumber ofimportant programs aimed atestablishing sound economic management financialgovernance regime forthecountry .The most important ofthese programs istheongoingPublic Finance Management Reform program including Tax,Accounting ,andProcurement ,Budget andAudit reforms .These reforms require theassistance andclose collaboration withthedonor community with which itneeds tore-engage inorder tonormalize itsrelations withthe International Financial Institutions tofacilitate Somalia re-integration with theinternational financial community .Besides ,theeconomic and financial reform programs ,development partners arebecoming increasingly engaged inproviding support inothersectors including health ,education ,infrastructure and agriculture toassist Somalia initseconomic recovery efforts .However ,theMinistry ofFinance faces acute human capacityconstraint thatprevents itfrom carrying itsconstitutional mandate andputthecountry onthepath ofjoining theinternational financial community .Presently ,sufficient local expertise tosupport government initsefforts toinstitute sound economic management ispresently inshort supply inSomalia .2.1Addressing these capacity shortage would require theextension ofurgent support totheMinistry ofFinance intheform of technical expertise toplan and initiate theimplementation ofthese reform programs especially intheareas of public financialmanagement reform ,debt management ,aidcoordination and engagement thedonors ,particularly with theAfDB .Asthecountry continues onthepath tostabilization ,manydonors have started toprovide assistance invarious sectors andatdifferent levels such thatissues ofcountry ownership andalignment ofaidtoSomalia 'spriorities arebecoming amajor concern fortheGovernment .Other problems including harmonization ofaidwithdonors ,effective management forresults andassurance ofaccountability andtransparencyarealso coming tothefore asthere aninflux ofaidfrom donors asmore developmentpartners 'perception ofSomalia isslowly changing .2.2While donors including theBank aresupporting thegovernment inthefinancial andeconomic governance aswell assectors ,awide gap isemerging inthearea ofAidCoordination and Engagement with thedonor community toassure thesuccess ofdonorassistance .The Bank hasbeen providing support inthisarea forthelastoneyear onadhocbasis butthissupport willcease duetotermination oftheprogram under which theexpertisewas being financed .There istherefore anurgent need tocontinue thissupport inorder todeepen thecapacity theBank hasbeen building inthisareawithin theMinistry .2.33. Proposed Bank SupportThe Federal Government ofSomalia isplanning tostrengthen theaidcoordinationfunction inthecountry inlinewith theinternational declaration onaideffectiveness andhasrequested theBank assistance inthisendeavor .3.1 Project ObjectivesThe project aims toprovide policy advice and technical support related toaidmanagement .TheTechnical Assistance will,within thebroader framework oftheMDGs andtheParis Declaration onAidEffectiveness ,support thedevelopment andstrengthening of2capacity intheMinistry ofFinance inallaspects ofthedesign ,implementation andmonitoring ofnational aid management strategies ,aswell aspromoting linkages andalignment with national priorities andsystems .3.2 Project DescriptionTheproject willprovide oneTechnical Assistant TAforaperiod oftwelve monthstosupport theMinistry insetting upandmanaging proper aidcoordination systems andre-engagement mechanisms with thecountry 'sdonors .The Technical Assistance involves theimplementation ofcapacity development measures andtheprovision ofpolicy advice onaidcoordination .The policy advisory andtechnical oftheTAsupport services include :iaidcoordination and management capacity needs assessment ;iisupport toformulating aidpolicies and aidmanagement strategies ;iiipractical guidance onhow toimprove aideffectives Somalia inaccordance with international declarations ;ivsupport toestablishingaid information management systems onaid flows ;vadvice onestablishing andmaintaining effective dialogue andre-engagement mechanisms with thedonor community ;viadvice onintegrating donor assistance inSomalia 'sbudgets ;and viiproviding oftechnical advice ontheimplementation ofthePublic Financial Management .3.3 Project Costs3.2.1Table 1below provides estimates ofcosts required forhiring theone1seasoned aidcoordination expert foraperiod oftwelve months .Thetotal cost oftheoperation amounts toUnit ofAccount UA90,577orUS140,000 andcomprise :itheconsultant fortwelvemonths foroneAidCoordination expert ;andiicommunication andmiscellaneous expensesoftheexpert.Tabic 1:Estimated Costs oftheTechnical Assistance totheMinistry ofFinance USS Unitmonth MonthlyCosts-USDUA Annual Costs ItemSalary of hiring one AidCoordination TAExpert for12months10,000 120,000 77,638 12and CommunicationMiscellaneous Costs-LumpSum12,939 20,00090,577 140,000 Total CostApril 2014 exchange rate1UA=1.54563 USD 3.4 Implementation andSupervision3.4.1Implementation :The Federal Government ofSomalia hasalready identified andrecommended ,Mr.ABDIRAHIMAN Sharif ,theconsultant astheexpert foraidcoordination .The Government provided justification intheletter dated 05thFebruary ,2014 from theMinister ofFinance andPlanning thatMr.Sharif isthecoordinator andthefocal point oftheBank 'sactivities intheMinistry ofFinance oftheFederal Government ofSomalia .Abdirahman has been supporting theMinistry onanumber ofissues including PublicFinance Management Reform ,re-engaging with theInternational Financial Institutions ,the3Finance Management Reform ,re-engaging with theInternational Financial Institutions ,thedesigning ofMulti Partner Fund ,thenew deal process ,theDrought resilient project andthedevelopment ofeconomic recovery plan.Given the specificity oftheservices oftheconcerned consultant ,wearetherefore oftheopinion that acompetitive process isnotpracticable .3.4.2The Federal Government ofSomalia will draw uptheterms ofreference fortheconsultant andsubmit these totheBank forno-objection .Thereafter ,aconsultancy contractwillbedrawn andsigned between theMinistry ofFinance andAidCoordination expert thatwilldetail theterms oftheconsultancy ,including themodalities ofpayment .3.4.3Supervision :TheTAConsultant will work under thesupervision oftheMinister ofFinance oftheFederal Government ofSomalia .Hewillprepare monthly progress reports ontheassignment fortheMinistry which will inturn submit thesame with comments totheBank together with theconsultant 'sapplication forpayment forhisservices .The Ministrywill evaluate theconsultant 'sperformance after theexpiry ofhiscontract andsubmit thesame totheBank 3.5 Expected Output oftheOperationTheexpected output oftheoperation isstrengthened Ministry ofFinance thatwill bemore effective inmanaging donor coordination assistance tothecountry andtofacilitate re-engagement with thedevelopment partners .These specifically include :itheformulation ofsuitable policies and strategies fordonor and coordination ;iisetting upofappropriateorganizational structure foraidcoordination ;iiiestablishment ofdatabase andinformationsystems fordonor activities and indifferent sectors ;and ivacapacitated ministry inmanaging theestablishment ofbetter economic governance .Conclusions and Recommendations 4.4.1 ConclusionsThe proposed project will assist theGovernment ofSomalia torestore thecountry 'scapacity fordonor coordination andeffective management ofdonor assistance .Itwill alsoassist inre-engaging thecountry with theinternational community .The output from theoperation shall also benefit Somalia 'spublic sector institutions involved inthemanagementofresources across allsectors .4.2 RecommendationORFS recommends theapproval ofagrant from theFSF Pillar IIIintheamount ofUnit ofAccount UA90,577orUS140,OOOto finance theTechnical Assistance inAidCoordination fortheMinistry ofFinance inSomalia .4

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