Since 2017 there has been a strategic shift in the engagement of international actors in the following ways.

1. While humanitarian assistance has always been, and will continue to be, vital, with the ongoing risk of recurring natural disasters and resurfacing active conflicts, development (and some humanitarian) actors are beginning to address the underlying and structural causes of crises, though opportunities for this vary by state.
2. Development actors are beginning to expand beyond their historical focus on establishing legitimate and capable federal and state institutions to include service delivery. Where government structures are weak or absent, they support the establishment of nationally led programmes, on safety nets for example, as crucial for building state legitimacy and addressing medium- to long-term risk reduction, prevention and recovery. They deliver through the UN and international NGOs, historically the main channels for humanitarian service delivery, until government capacities are strong enough to take over.
3. Development partners, especially IFIs, are beginning to work with and through government systems as capacities and trust is developed. Somalia reaching the decision point of the HIPC Initiative in March 2020 is described as a game-changer, restoring access to regular concessional financing and enabling Somalia to build capacity for government-led development.

National development frameworks provide a common strategy for targeting vulnerable populations, though implementation is undermined by limited access, weak capacity and political tensions.

The NDP9 sets out a common vision for addressing the risk and vulnerability of crisis-affected populations in Somalia. It explicitly focuses on strengthening the role of development actors in crises and the interface between humanitarian and development planning, addressing the root causes of poverty and aiming to improve the impacts of poverty experienced by affected populations.

There is buy-in from development partners and alignment of priorities. The New Partnership for Somalia sets out how Somalia and the international community will work together to deliver NDP9. A mutual accountability framework outlines joint priorities and benchmarks for cooperation (with the most recent framework agreed in December 2020). Most international agencies seek sign-off from relevant government ministries on their strategic priorities, and this is a requirement for UN agencies. Similarly, local NGOs generally work closely with member state authorities, and in alignment with their priorities, as is necessary for gaining access and international funding.

Implementation is, however, undermined by the nascent formation of government and its limited capacity to deliver, lack of political consensus between federal and state governments and limited access to areas not under the control of the AU Mission in Somalia.^[1] In addition, interviewees report that political ambitions behind federal and member state requests to focus on particular geographical areas or sectors continue to undermine aid neutrality and needs-based resource allocation. This remains a critical barrier in building capacity for more government-led development.

A slow shift towards use of government systems, with some hesitance from bilateral donors

Given the nascency of the federal government, the weakness of public financial management systems and associated risks, stringent financial controls are put in place by development partners; however, many donors are still hesitant to provide financing on budget or through government systems. Recently there has been increasing encouragement from the UN to ensure that government support is channelled through the FGS treasury rather than to individual ministries. The 2019 Public Financial Management Act also requires funding to ministries to be aligned with country budgeting systems and disbursed through the FGS treasury.

Some bilateral donors have channelled funding for country systems through the World Bank’s MPF. Established in 2014 with the support of 10 donors, the World Bank’s MPF has tested and incrementally expanded finance through government systems, including those of federal member states. It also provides technical support to strengthen public financial management systems and develop a mutual accountability framework. The use of pooled resources to scale support aligned with country budgeting systems, linked with performance-based benchmarks, monitoring and accountability mechanisms, is expected to increase substantially.

Bilateral donors interviewed generally consider the FGS to be over-optimistic about what it can deliver, pointing to its difficulty managing recurring costs with little experience in managing financial flows.^[2] Corruption continues to pose a real risk, and interviewees report examples of where funds have been misappropriated, for example, recently from the World Bank. There are also conflict risks, such as the potential to create political competition over aid resources or to contribute to inequalities that lead to grievances. Government representatives, however, contest this and emphasise the need to change this donor perception of risk, arguing that the Auditor General within the Treasury acts as an accountability mechanism for financial flows, identifying and responding to cases of corruption promptly. The sentencing in August 2020 of four senior health officials over corruption and theft of public money is seen by some as an indication of a growing commitment by the government and judiciary to tackle corruption.

One donor stated that “there is a delicate dance between international donors, banks, and the government as to what is appropriate regarding the risk of putting money through government systems”.

Before 2015, a very small proportion of ODA was channelled through public institutions (4.5% in 2014), with most funds allocated through multilateral institutions as a way of minimising risk (51.6% in 2014) (Figure 9). Data from the OECD DAC CRS shows a sharp increase in the proportion of ODA channelled through public institutions in 2015 (27.9%). This mainly comprised ODA grants from Turkey channelled through its own government – a total of US$281.6 million in 2015, accounting for 82% of all funding to public institutions that year and falling to 25% of funding by the following year. In 2018, the proportion of ODA to public institutions followed a downward trend to 12.8%, a total of US$193.3 million. While CRS data for 2019 is not yet available, significant increases in ODA to public sector institutions have been reported in Somalia since 2018, including an EU financing agreement of €100 million to support Somalia's state and resilience building efforts.^[3]

Since 2017, building on historical investments in state-building and in line with aid effectiveness principles, the ambition of development partners has been to increase funding channelled through the government as their capacity strengthens and trust builds. The mutual accountability framework sets out a target for channelling 15% of development funds through the treasury as a minimum as the government progresses in public financial management reforms.^[4] The proportion of ODA reported to the OECD DAC CRS as channelled through public sector institutions in Somalia increased from below 5% between 2009 and 2014 to 27.9% in 2015, and then it decreased to 12.8% in 2018. This can be explained by a one-off injection of ODA from non-DAC donors in 2015, particularly funding from Turkey channelled through its own government. Data from the Somalia Aid Information Management System, however, shows a gradual increase year on year since 2017 in disbursements channelled through the FGS and local governments, from US$73.7 million in actual disbursements in 2017 increasing to US$75.8 million in 2019.^[5] Funding through the government is set to increase now that Somalia has reached the decision point of the HIPC Initiative.

Moving away from project-based interventions and reimbursement of payments to minimise risk, the World Bank, International Monetary Fund and EU are increasingly providing funding aligned with national budgeting systems and taking on more risk than bilateral donors by working through government systems. This aligns with their mandate to provide financial support and capacity building for governments, reportedly viewing setbacks and a level of corruption as an inherent part of making gains in the longer term. The EU led initially on this, and this encouraged others to do the same with the Somalia State Building and Resilience Contract.^[6] The World Bank recently approved their first budget support Development Policy Operation, supporting the FGS to put measures in place as a precondition for receiving budget support. This is the third phase in a multi-year process to support the government, with the first phase a robust analytical programme to identify key challenges and priorities and the second phase development of a technical assistance framework to build capacities and strengthen outputs. A high level of risk tolerance among IFIs is associated with the pressure to succeed in supporting the government to function, especially given the strategic relevance of Somalia to national and international political and stability priorities.^[7]

Donors interviewed expressed a preference for IFIs to set more ambitious controls and policy benchmarks, with a greater focus on social outcomes and vulnerability. The World Bank has made progress over recent years, in terms of both global crisis financing targeting Somalia and its Country Partnership Framework (which includes allocation criteria on inclusion and social outcomes) and policy action for the government to develop a social registry as a prerequisite for developing social protection programmes. The World Bank’s country partnership frameworks are based on country policy and institutional assessments undertaken annually, which include a focus on social inclusion (gender, social protection, environment, equity of public resource use) and public sector management (governance, financial management and public administration). This system is used for unearmarked country allocations that are aligned with the frameworks. Clear policy and outcome-related benchmarks, combined with ongoing political and policy dialogue reflecting collective positions of donors and technical assistance, can impact on the actions of the government and build capacity over time.

Building government capacity is a long-term process, particularly in areas that are experiencing, or have recently experienced, conflict. Donors should continue to focus on addressing the immediate needs of vulnerable people in parallel to capacity-building efforts. World Bank financing of government-managed projects, with service contracts to UN agencies where capacity is lacking, is an example of how this could be achieved.

Where risks are high, secondments and in-kind support to the government are used

Where development partners consider the risks of providing direct financial support to the government as too high, they have often taken the approach of embedding staff within key government ministries and bodies, directly paying the salaries of government staff and providing in-kind support. For example, the International Organization for Migration (IOM) funds the Special Advisor to the Director General of the Institute for Management Development, and the UNHCR has embedded Comprehensive Refugee Response Framework Officers into the Office of the Prime Minister to advance this agenda. The UNHCR has also embedded positions with the MoPIED and the National High Commission for Refugees and IDPs within the National Displacement and Refugee Agency. There are also secondments at the state level, such as the Enhancing Integration of Displacement Affected Communities in Somalia secondment to the South West State Ministry of Planning Monitoring and Evaluation department.^[8] The government has requested that international actors go beyond capacity development and secondments to institution building through mentorship and peer support, and technical assistance on planning and budgets.^[9]

Interviewees also highlighted the need for greater transparency between international agencies on the in-kind support provided to governments as necessary for greater coordination in engaging with the government. A capacity injection tool exists to keep track of declarations of support, but according to interviewees this is not used by all agencies, limiting its ability to improve transparency.

The government’s role in crisis response and service delivery is a vital part of building state legitimacy

Prior to 2017 the government had no role in humanitarian responses, given the clear risks posed to humanitarian principles. The focus of development and security actors was establishing legitimate government institutions and consolidating their control over internal security. More recently, growing international recognition of the FGS has opened doors for stronger collaboration between humanitarian and development actors and strengthened partnerships with the government in service delivery.

Humanitarian actors have reportedly started to engage in more depth with the government, such as in the development of national strategies on social protection, health and education. However, according to interviewees, the government remains frustrated with the low level of engagement and coordination by humanitarian actors, especially concerning durable solutions programming.^[10] While it is vital to safeguard humanitarian principles, as a minimum information-sharing, coordination and complementarity is possible.

Many interviewees argue that development partners’ historical focus on state-building, security and top-level reforms, while necessary, should be balanced with social development and service delivery priorities, which are crucial for addressing poverty and vulnerability. Development actors have supported a range of stabilisation initiatives in areas captured from or at risk of al-Shabaab control, aimed at strengthening the legitimacy of state and local authorities through social and economic recovery activities. However, federal and state systems remain critically weak. For example, the Covid-19 pandemic has exposed the absence of a public health system as a critical challenge, with most health services provided by humanitarian actors.

While it may take many years for the government to develop the capacity to deliver services, over time it could play a stronger role in decision-making and be a lead partner in crisis response and resilience programmes. This is crucial for a durable approach, reducing dependency on humanitarian assistance and building a social contract between the state and society – although this remains challenging in the absence of a genuinely inclusive electoral process.

Development partners have already begun to take steps towards supporting the government to take a stronger leadership in crisis management, response and resilience. The World Bank’s Country Partnership Framework (2019–2022) prioritises strengthening institutional capacity for service delivery and restoring economic resilience as its two focus areas, and the EU prioritises governance and security, food security and resilience, and education as the focus areas of its 2014–2020 National Indicative Programme. Positive programming examples include the following.

• The World Bank’s Somali Crisis Recovery Project (US$137 million from IDA), approved in May 2020, supports a government-led response to the areas hardest hit by multiple shocks, specifically Covid-19, locusts and flooding. The project provides basic services and livelihood support, including a cash-for-work scheme for vulnerable households, desert locust population controls, restoring and protecting agricultural production capacity, promoting household hygiene and treatment, and the government’s systems and capacity for disaster preparedness and integrated flood and drought preparedness and risk management. A national emergency operations centre will be established under the leadership of the Office of the Prime Minister.
• The World Bank’s Shock Responsive Safety Net for Human Capital Project, known in Somali as the ‘Baxnaano’ Programme (US$65 million), supports institutional capacity-building towards a government-led safety net programme, while at the same time supporting the UN World Food Programme (WFP) and UN International Children’s Emergency Fund (UNICEF) to deliver a cash transfer programme.
• The Building Resilient Communities in Somalia (BRCiS) consortium is discussing with the Ministry of Finance the potential to scale-up community-level resilience pilots into a government-led national shock responsive programme.
• International actors such as the EU, the UK, Denmark and the World Bank are building government capacity on durable solutions and supporting national leadership of this agenda. The government is also developing a five-year water resource management strategy with support from international actors.
• The government is establishing a new national emergency operations centre to coordinate disaster management and response and early warning systems.

Local NGOs can play a vital role in service delivery given their reach to, and relationships with, crisis-affected communities. Even in contexts where the government is capable of leading service delivery, local NGOs and the private sector are key partners complementing the government, for example by extending its reach in remote areas, developing market linkages, promoting accountability and advocating for community interests. Local NGOs can also implement programmes at lower cost than international agencies and can often access areas or respond quicker in contexts where international agencies face bureaucratic hurdles or security-related restrictions. In the case of the Covid-19 response, the international presence on the ground has been diminished as a result of restrictions. Local NGOs typically have a long-term outlook and work across the continuum of immediate response and longer term preparedness, resilience and recovery, and so strengthening the nexus can be an inherent by-product of supporting a localised response.

Compared with other crisis-affected countries, Somali NGOs play a substantial role in aid delivery, for several reasons. Firstly, most international agencies have historically managed their programmes from outside the country due to security concerns, and they have therefore relied heavily on Somali partners for operations on the ground. As a consequence, local partners conduct vulnerability assessments, identifying target beneficiaries, and lead the distribution of aid, including planning and evaluation. Secondly, as federal and local governments are building their capacity, development and peacebuilding actors have placed a strong emphasis on working with non-state actors. This has included developing representative platforms for civil society and the private sector to voice concerns that transcend narrower clan or political interests. Somali NGOs are well-established advocacy actors on a range of issues, including the localisation agenda, nationally and internationally.

As shown in Figure 9, NGOs and civil society organisations have consistently received a significant proportion of ODA funding over the last decade, constituting 29% of ODA to Somalia in 2009 and 23% in 2018, with marginal rises and falls in between. Nonetheless, the total proportion of funding directly channelled to Somali NGOs continues to be small.

While there are clear benefits, there are also risks associated with channelling aid to local NGOs. For example, local NGOs may not be politically neutral (i.e. they may have interests linked to particular political interests, clans or communities), particularly in urban areas, or they may have weaker governance and financial controls than international agencies. Interviewees report instances of governments requesting development agencies comply with state-level regulations regarding NGOs, in effect requiring agencies to use government-affiliated NGOs. Some donors are making progress in funding Somali NGOs focusing on resilience and durable solutions through consortia, as a way of managing risks and reducing management costs (see Box 2). NGO consortia, such as BRCiS, have reportedly made progress in developing early warning systems to monitor indicators, contingency planning and establishing systems for rapid decision-making. However, Somali NGOs report that they have not received funding on par with international NGOs through these consortia. They are often led by international humanitarian agencies; there is a need to shift leadership to Somali NGOs for greater sustainability and ownership. The BRCiS consortium has expanded membership to include three Somali NGOs in recent years. Ensuring local NGOs are included and have decision-making power should be addressed from the outset of NGO consortia design.

Some donors are developing third-party monitoring frameworks for Somali NGOs receiving funds as a way of managing risks, which could be widely used. For example, The Swiss Agency for Development and Cooperation is developing a framework for third-party monitoring in partnership with the Heritage Institute for Policy Studies. The planned formation of a national NGO office and code of conduct will also support monitoring and accountability.

Localising the response requires a holistic approach including capacity building, local government and private partners

Localising the response needs not only funding to local and national NGOs but also involvement of local authorities and private actors. This should be beyond financing and the targets set at the World Humanitarian Summit (i.e. for 25% of humanitarian funding to be directly targeted to local and national NGOs) and include ways of working, capacity building and approaches to delivery.

“The whole debate is skewed towards financing rather than actual delivery, ownership and effectiveness. But we need to broaden the localisation discussion to include local government, CSOs etc to look at what delivery actually means at the local level, and what is in the best interest of the people they are serving.”

Coordination and ownership by diverse actors at the local level has been enabled by a shift from a sector to a community-led, area-based prioritisation approach.^[14] For example, the BRCiS consortium has developed a community-led process for identifying resilience-related challenges and prioritising strategies for managing shocks; the UN and NGOs have worked together to help the government establish technical durable solutions working groups in Baidoa and Kismayo towns to develop capacity and support local authorities to form urban strategies and plans.^[15]

Strong examples of localised responses and involvement of private actors are established in cash and livelihood programming. The FAO works through local traders in southern Somalia, where security is an issue, to support farmers by sourcing quality inputs such as local seed varieties through a network of 300 agro-dealers. The FAO provides cash and livelihood inputs to rural communities digitally, through their e-Platform for Mobile Money and Livelihood Assistance, where cash and electronic vouchers for livelihood assistance reach people in need by SMS. As of October 2020, nearly 435,000 rural households (comprising 2.6 million people) are registered on the e-Platform.