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The Annual Budget
The annual budget is a disclosure blue print of the nation’s finances. The consolidated balance sheet should indicate a breakdown of the tax revenues on a regional basis, the corresponding expenditure outlays, and the audited accounts of the preceding fiscal year. Failure to meet any of these minimum mandatory metrics is a legitimate cause to vote down the budget in accordance with the laws of the land. Due to the externally imposed economic blockade, our tax revenues are entirely dependent on customs duties and other levies. In this regard, our ministry of finance did a dismal job because the high tariff rates basically rendered the port of Berbera uncompetitive with other ports in the region and hence a substantial amount of revenue is lost. On top of that the investigation of the Finance Committee exposed very disturbing discrepancies and inaccuracies in the revenue collection side. All revenue diversion/siphoning loopholes or practices should be closed immediately. This nation simply cannot afford this epidemic practice any longer.
Any budget document should meet two basic criteria:
1- A clearly defined fiscal policy tailored to the development goals of the country;
2- The audited accounts of the previous year financial year.
The budget debate is now over with a resounding majority [61 versus 2] voting in favor of the document without any reasonable justification. Probably, the absence of any enforceable financial rules and regulations forced the parliament to take this distasteful decision.
However, with over US$50.00 million unaccounted for in the combined fiscal years 2002 through to 2005; another US$15.00 million deliberately underreported in the revenue of the current financial year; a two-tier exchange system in place for years; the least agreement with Total company nowhere to be found; and a forecasting methodology second to the devil’s creation, the amendments attached to the budget are not sufficient enough to forestall the current fraud. The constitution of the Republic of Somaliland needs a complete facelift- fine-tuning from A to Z to eliminate the dangers of abuse or the possibility of contradictions. It is not an easy task but the alternative is even worst- a dysfunctional state spiraling to its own destruction.
To establish some semblance of normalcy to the finances of the state, the new legislature should institute a quarterly review of the revenues and the expenditures.
In this case, any anomalies in the forecasts could become apparent and the necessary adjustments could be made accordingly early on in the process. It is only a temporary measure for a short time.
Without a transparent fiscal policy tailored to the needs of the country, the prospect of the Republic of Somaliland ever joining the international community is as remote as it has ever been. This prerequisite is as crucial as any other criteria that might qualify us for recognition. External budgetary support was an accepted feature of post independence civilian governments of Somalia and the incorporation of such assumption in our future budget forecasts is an unpalatable anathema.
Granted the previous parliament had legislated the financial laws of the land, there would have been only one course of action available to the Honorable members of the House of Representatives of Somaliland: Return the document to the Ministry of Finance with the following demands:
Unfortunately, none of these measures, except the last one, could be applied because the appropriate laws are not in place yet.
The law of the land assigned the House of Representatives the sole responsibility to analyze thoroughly the contents of any budget submitted for approval. If the budget fails to meet the guidelines set forth in the constitution, then the parliament has a national obligation to rectify the shady and gray areas before the final approval of the budget. In that regard, there should be no compromises, no behind closed-door trade-offs, and definitely no expediency at the expense of the national interest.
The overwhelming consensus among the electorate throughout the budget debate has been: the new parliament is in this business out of genuine and honest desire to effect sustainable change in our system of governance. A true sense of civic duty, not impulses to the false lure of material gain. The parliamentary elections of September 29, 2005 attest to that.
International investors certainly will not commit their resources under a pandemic of institutionalized corruption. The African continent is replete with the unfortunate casualties of economic mismanagement. The rampant and often accepted culture of misappropriation of the national treasuries retarded the growth potential of every country in the continent, perhaps with the exception of the Republic of South Africa and Botswana. To attract international investment, we should create a conducive environment.
In the case of Botswana, a sound fiscal policy coupled with a visionary national development programme earned it the admiration of other nations. The economic planners of Botswana utilize a balanced pragmatic approach in allocating development dollars with major emphasis on the basic infrastructure such telecommunications, roads and highways linking this landlocked nation to the ports of its neighbors. Education, health, human resources development and other social programmes are not overlooked or neglected.
In terms of foreign investment and risks associated with it, Botswana has the highest credit rating in Africa. Throughout its post independence history, Botswana registered a robust economic growth unheard of in Southern Africa despite the fact that the economy is heavily dependent on mining. The capital, Gaborone, is the headquarters of major international and regional organizations.
There is striking similarity between Somaliland and Botswana in the filed of governance. Like Somaliland, the traditional leadership [the tribal Chieftaincy] plays a prominent role in shaping the direction of the national politics. There is a lot to be learned from the Botswananian experience.
The failed Somali state deservedly earned the infamy: "The grave yard of international aid." Do we fare any better on this score? Absolutely not. A nation of crooks and the crooked is a befitting name in our case unless a culture of transparency and accountability is re-instituted. The question is: Can we afford to join the ranks of the economic disaster states of Africa?
Unless our nation's fiscal policy is put on the right track, this horrendous siphoning of the national coffers will always be distinct feature of our heritage. Perhaps Abdille Hassan's curse holds true: "Corruption is a generic trait of the Somali creed."
In deed the budget submitted for approval contains fundamental flaws that do not conform to the universally accepted principles and practices of finance and accounting. The Finance Committee unearthed the magnitude of this rampant, chronic corruption that permeated every echelon of the revenue collection agencies as well as every other institution of our government. The Chairman of the Finance Committee has highlighted the inherent shortcomings intentionally built into the current budget and certainly into the budgets of the previous five years. Without the honest and unconditional cooperation of the Minister of finance and the Auditor General, the Finance Committee's performance is very limited because the referee on such contentious issues of law is non-functional.
The Minister of Finance or any other Minister for that matter should answer any legitimate questions if and when called to the chambers of the parliament without ever resorting to evasive tactics. On two separate occasions, the Minister of Finance was not cooperative at all. The answers of the minister were irrelevant and more often than not, he went on an ill-advised sarcasm. According to the ministry of finance, “It is a disgrace that the three month old legislature shouldn’t approve the budget.” Or else, chaos and uncertainty will strike, the stability of the country will be compromised, things will fall apart and so and so forth. Fear mongering has become a handy tool in our political culture. It is working wonders indeed. That is our fiscal policy and it is not a shame.
However, in a Republican form of government like ours, political appointees and party bagmen are a natural liability. At the instant the administrations change hands, the principle of the spoils belongs to the victor takes effect- a clean sweep of the ranks of the old guard.
To avoid the repetition of the events that currently transpired, drastic changes should be made throughout the institutions that directly or indirectly contribute to our national economy. The ministry of finance, the Auditor General, the accountant [Receiver] General, and the Central Bank are prime candidates for this structural/organizational surgery. The effect is to eliminate all possibilities of conflict of interest or backroom collaboration. Unless this four are immediately dealt with, an unholy alliance of this Bermuda Quadrangle will always operate with immunity. Let us face it; the real problem is right there and the therapy is at the disposition of the combined two Houses of parliament-The House of Representatives and the House of Elders [Guurti]. The volume of laws to be enacted is tremendous and most likely will not be complete during the term of the current parliament.
That being the cast, the performance of the incumbents will be measured in terms of the voting pattern of each and every member on the vital national issues that pass through the legislature. In four-and-a-half years time, the electorate will be out to vote for the second time. Come election time next time around, the record will be the final deciding factor: “Kafa bi nafsika alyuma xasiibaa” = “ Judge thy self today.”
The rodent family develops an intricate network of underground burrows as part of its survival strategy. In a severe drought season a family of rats ran out of food. Emaciated and barely able to crawl, the family finally managed to reach a small village. At night, the head of the family sneaked into a house, attracted by the scent of ghee. He made a tinny hole about the diameter of his tail at the side of a gourd containing a mixture of honey and ghee. He put his tail through the hole and filled his stomach. He went back to his family and led them to the newfound bounty.
In a few weeks time, the rats regained their weight and went on singing, dancing, and playing all night in their under ground burrows. A lonely rat on the verge of death heard the commotion and used his remaining energy to reach it. Surprised at their physical health and the festive mood, he asked them, “Can you show me the bounty and spare my life?” “I may not survive for too long,” continued the starving rat.
“Very well, as long as you remain in this group” said the family head.
He took the hungry rat to the gourd. The famished rat was thankful to his new friend. He too grew in size. One night he went alone to fill his stomach. He put his tail as usual into the tinny hole at the side of the gourd but he failed to pull it out. Struggling frantically to extricate himself, the rat lost his tail inside the gourd. Unable to feed himself, the tailless rat succumbed to starvation.
Finally, oil exploration and drilling and mineral prospecting is beyond the financial wherewithal of amateur individuals with nothing more than a briefcase and a handful of business cards. Somaliland experts in the field have warned against and in fact exposed the story of a shadowy company and private individuals vying to obtain oil exploration leases in Somaliland. The government of Siyad Barre granted exploration rights to major international oil companies. The leases are still valid and the future governments of Somaliland and Somalia are liable to honor these agreements because the suspension of the exploration activities was beyond the control of the oil companies. Any new overlapping concessions are null and void.
Any agreement with foreign governments or private corporations for the purpose of the development of our natural resources should be conducted through proper channels subject to the final approval of parliament. In recent years it has become a common practice that government ministers and in some cases junior civil servants are in a race against time signing agreements and contracts in secrecy.
The country is not a piece of prime real estate on the international auction market; and the natural resources of the nation should not be squandered recklessly. Case in point: The Egyptian fishing fleet in our territorial waters employs techniques that had been banned by the international community. The use of depth charges destroys the natural balance of the pristine undersea environment and these changes are irreversible. This is a serious issue that needs to be addressed because the livelihood of local fishermen is jeopardized. The rules of international law grant us certain exclusive rights to exploit the natural resources in our territorial waters, the continental shelf included. The governments of Egypt, Yemen, and a host of other nations depleted the fish stocks of our territorial waters and our country looses hundreds of millions of dollars each year. The government of Yemen shares the proceeds of this loot with the bankrupt administration of Majertenia.
God bless Somaliland,