The Strategy

The Government of Somaliland (GoSL) approved the Ministry of Finance (MoF’s) Somaliland Public Financial Management (PFM) Reform Strategy (2013-2017), which was designed to improve government’s capacity and systems to utilize public funds, towards meeting the National Development Plan goals and those of Vision 2030. The aim is to ensure that the Somalilnd Government spends with the highest possible efficiency, transparency and accountability in the allocation, management and use of public finances. The strategy also adopts a “comprehensive approach” to enable different PFM sub-systems to support each other rather than operate in isolation.

Reform Strategy Approach

  1. A PFM Reform Strategy is needed to improve government’s capacity and systems to utilize public funds towards meeting the NDP goals, and ultimately those of Vision 2030. It will require building human resource capacity; putting in place modern and effective systems and procedures for effective financial management and reporting; strengthening institutional frameworks for PFM in accordance with international best practices for a more efficient and transparent PFM System. This too will require mobilization of all areas of PFM in a holistic manner to become efficient, responsive and transparent.
  2. A “Whole Government Approach” or a “Comprehensive Approach” has been adopted by the Government rather than relying heavily on annual action plans in isolation of the strategic issues. The different PFM sub-systems need to support each other, rather than to operate in isolation.

Guiding Principles

The government is determined to focus and step-up PFM Reform efforts, which have been ongoing since 2006. The strategy is sequenced over a four-year period and is comprised of five Pillars comprising a total of 13 components. These are intended to work in parallel to strengthen the foundation of PFM, enhance PFM skills and competencies of MoF and Line Ministry staff, and ensure the availability and reliability of financial data.

The analysis of the current needs and lessons learned has led to the conclusion that PFM reform shall be:

  1. Comprehensive, including all the various reforms in PFM system as well as the cross-cutting issues to capacity building, service conditions and the legal framework.
  2. Sequenced to secure progress and manageable workload.
  3. Well managed with a management structure that involves the main stakeholders and enables consolidated efforts across government both horizontally and vertically, go-ordination and harmonization with and between donors, and
  4. Coordinated both logistically and conceptually, but with design and implementation of changes resting with the component leaders / institutions who are vested with the corresponding operational responsibility.

The strategy is sequenced over a four-year period and is comprised of 5 pillars and components which are intended to work in parallel to strengthen the foundations of PFM, enhance PFM skills and competencies of the MoF and Line Ministries staff, and ensure the availability and reliability of core financial data.

Through the development of PFM skills and capabilities, the goal is to establish MoF as the central coordinator and lead on PFM and equip Line Ministries to fully assume their PFM responsibilities while ensuring that they adhere to the laws and regulations of the GoSL.

Finally, proper PFM requires competent and empowered oversight. The strategy will address deficiencies in internal and external audit, and ensure parliament have the skills and support to strategically contribute to PFM.

Governance Structure

The PFM Reform Strategy is the result of concerted and consolidated efforts, consultation and dialogue within government and other stakeholders.

Somaliland PFM Reform Oversight Coordination and Implementation Structure

Joint PFM Reform Steering Committee

The Joint PFM Reform Steering Committee (JSC) is chaired by the Minister of Finance, and donors are in attendance. Current key donors are: DfID, the EU, USAID and World Bank. It includes all PFM stakeholders and donors. This is to ensure leadership and coordination of the Program as well as maintain momentum as the reforms cut across many stakeholders including government, private sector, civil society, donors and development partners. The JSC will report to the Council of Ministers through the Minister of Finance.

Joint PFM Technical Committee

The Joint PFM Technical Committee (JTC) supports the JSC and members comprise of donors, implementing partners as well and government stakeholders. The JTC will also look at options for better integration across the seven Sector Coordination Forums.

PFM Reform Working Groups 

PFM Reform objectives, outputs, strategies, activities and action plans have been identified and included in the PFM Reform Strategy. Strategies and activities are sequences in a coordinated manner to reflect government priorities over the medium-term period.

For the purposes of ownership, implementation will be mainstreamed with government activities, and for that reason, Component leaders are Government officials at Director level or equivalent. Component leaders are coordinated by the Pillar leaders under the supervision of the Director General of the Ministry of Finance.

Each Component leader establishes and heads a Component Working Group, bringing on board all stakeholders that are likely to be affected by the reforms. The Component leader submits regular feedback to the JSC, through the JTC.

PFM Reform Unit

A lean PFM Reform Unit, composed of experts with demonstrated expertise, supports the Minister of Finance. This Unit will be run and supported by long term international experts with demonstrated PFM and regional experience in development settings such as Somaliland. The PFM Reform Unit was established to facilitate implementation at Component level by facilitating coordination and coordination across all stakeholders.