Review of Somalia’s 2018 budget for public services and economic development

Review of Somalia’s 2018 budget for public services and economic development

Budgets are a reflection of government priorities for each fiscal year. How does the 2018 Federal Government Somalia’s (FGS)’s budget reflect its prioritization of public services and economic development?

The approved federal government budget for 2018 is $274 million which may seem low — less than $300 million annual budget for a government facing so many critical challenges. Yet it is $14 million higher than the last year’s budget, so Somali citizens are seeing a gradual improvement compared to the past several years.

$120 million — the majority (or 43.6 percent of the budget) — goes on recurrent administrative expenses; salaries of the government servants including, but not limited to, members of the parliament, the council of ministers, the presidency, civil servants, and independent commissions. Another significant budget portion (32.7 percent or $90 million) also goes to the security sector institutions. An aggregate sum of $39 million (or 14.3 percent) is apportioned to all public services and economic development schemes.

Investment in public services

The $19 million allocated to public services could be seen as trivial, in comparison to the recurrent administrative expenses and security. Most citizens (and would-be tax-payers) want good quality and accessible public education and healthcare, which are currently largely offered by private institutions. The budget allocations for public hospitals and education provision are poor, and are unlikely to improve the access to and regulations of these sectors.

The 2018 budget allocates the Ministry of Health $4.4 million though it makes no specific provision for public hospitals. The implication of this meager allocation to the entire health sector is that the government has other more important priorities. Arguably access to health care from government-funded hospitals should be as important as security. Public investment in the health sector is long overdue.

The 2018 Ministry of Education budget is $7.1 million, with an additional $2.3 million allocation to the Somali National University. Surprisingly, no budget was allotted for basic primary and secondary schools provision. Access to formal education at primary, intermediate and secondary levels is vital for the country’s future workforce and human capital development. Given the present overwhelmingly privatized education sector and the country’s low literacy rate, the 2018 education budget is a missed opportunity for the FGS. It is imperative that formal, accessible and free primary education is re-established for the children of disadvantaged and poor families who are not able to pay tuition fees for private schools.

Furthermore, an aggregate of $3 million budget goes to the ministries of labor and social affairs, sports and youth, and women and human rights. Youth are the majority of the country, and women are about half of the population, a significant demographic which such a small stretched budget cannot hope to provide with meaningful and tangible services.

The overall $19 million (or 6.9 percent of the budget) is simply insufficient to meet the myriad demand for basic education, health care, and other vital social services. Nevertheless, it more than doubles last year’s provision of $8.3 million (3.2 percent of that budget). Equally Ministry of Education’s 2018 ($7.1 million) budget saw a threefold increased from $2.2 million last year, and the Somali National University ($2.3 million) increased from $1.5 million in 2017. Still, public hospitals and primary and secondary schools deserve greater investment.

Revenue generation

Increased budgetary provision for social services depends on the government’s internal revenue generation — tax. Faced with the huge budget deficit of $118.6 million (43% of 2018 budget), improving domestic revenue should be a government priority, which in turn, needs an investment in economic growth. The 2018 federal government budget allocates $20.3 million (7.4 percent) to the economic development institutions and projects, which represent a small increase to last year’s $17.4 million allocation, but still falls short of the investment needed that could reduce the deficit and increase internal revenues.

Slightly more than $3 million was allotted to the ministries of energy and water resources; agriculture; and livestock, forest and range. Less than $2 million was budgeted to the entire marine industry. Further, the ministries of commerce and industry ($2 million), telecommunication and posts ($2.4 million including the National Telecommunication Authority), public works and reconstruction ($1.2 million), air transport ($2.5 million), sea transport and ports ($1.3 million) were not allocated significant sums — as most of the budget will go towards recurrent expenditure, not investment.

Somalia’s private business has famously continued to develop and expand since the collapse of the central government in 1991. Public institutions, however, mandated to oversee and improve the quality of the service and products have remained poorly resource. More investment in public economic institutions will not only help generate employment and ensure better quality services and products, it will also significantly increase the tax, and help reduce the budget deficit.

The road ahead

Despite the small allocation for vital social services, the very fact that there is provision that is slightly increasing represents a big step forward for a country which several years ago had no approved annual budget. In 2013, the government’s annual budget was a mere $114 million. The $160 million increase in five years, ($114 million in 2013; $118 million in 2014; $ 135 million in 2015; $171 million in 2016; $260 million in 2017; and $274 million in 2018) is slow but recognizable progress, given Somalia’s challenging context.

To consolidate and expand this progress, the government’s budgetary priority must be to improve access to government services, investments to revive the economy and increase internal revenues. The budget increase for the public service and economic development could also make a significant contribution to addressing the many drivers of Somalia’s conflict and insecurity. It could also reduce the high levels of unemployment that drive individuals into migration and arms of extremism.

The Somali Public Agenda (SOPA)
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