By Rasna Warah

Since the mid-1990s, donor aid to Somalia has been mostly directed through UN agencies and international humanitarian organisations, which implemented projects on behalf of the various donors, including the European Union.

This system had its flaws, and was subject to abuse by various corrupt vested interests, with the result that little development has taken place in the country in the last 20 years.

The recent pledge of 1.8 billion euro by international donors to Somalia as part of a “New Deal” for the reconstruction of the war-torn country is a welcome step, but the Somali Government and the international community need to ensure that a system is in place so that funds do not go astray.

The aim of the New Deal Compact signed in Brussels last month is to foster dialogue, promote political reconciliation, and improve justice and security in Somalia.

However, before we place too much faith in the Compact, let us be aware that a large proportion of aid never reaches the recipient country, but stays with the donors in the form of technical assistance and contracts given to companies based in the donor country.

ActionAid calls this form of assistance “phantom aid” — aid that is siphoned off or spent by the donor before it reaches the recipient country.

For instance, an assessment of aid to Afghanistan that was later confirmed by Peter Bergen, a senior fellow at the New American Foundation found that 86 per cent of US aid to that country was “phantom”, in that it never reached the Afghanis.

While there is no doubt that a large chunk of the 1.8 billion euro will end up with European and North American contractors and technical experts, the Compact promises to radically change the way donor funds are disbursed within the Somalia.

This is a positive development because this time, the funds will be managed by both the donors and the government through the creation of a Somalia Development and Reconstruction Facility, tasked with aligning international financing and government priorities, reducing fragmentation of aid, and increasing Somali ownership and leadership in the development process.

Aid to the Somali government will also, for the first time in 20 years, be in line with government budget cycles and distributed through preferred instruments of the government.

Importantly, the aid will be used to strengthen the Somali government’s public financial management systems, which have been heavily criticised in the past for being non-transparent.

Observers note that the replacement of Somalia’s Central Bank governor last month is part of the government’s ongoing efforts to gain donors’ trust and to rebuild the economy.

However, it is important to recognise that increased aid and better public financial management will not automatically solve some of the deep-rooted problems that plague this war-torn country.

Somalia is still divided, with some clans and regions demanding autonomy from the central government. Al-Shabaab continues to rear its ugly head, disrupting reconstruction efforts, particularly in Mogadishu.

Vested powerful interests are still present in Somalia and may divert or misuse aid for their own benefit. This is a problem that not only affects Somalia, but many other failed states.

In fact, it would not be improbable to imagine that many “phantom projects” will be created to ensure that some of the donor funds line certain pockets. In addition, former warlords and other destructive forces, including Al-Shabaab, may view the aid as yet another resource over which they need to take control, thereby fuelling further conflict.

Sceptics say that this new aid package may be like the many others given to Somalia that have only resulted in many expensive conferences, and that have had little or no impact on the country’s development. I hope this won’t be the case.

However, Somalia needs to learn some lessons from Afghanistan, another war-torn country, where large amounts of aid fuelled corruption at various levels of government, and failed to bring about much-needed security.

Afghanistan is still not out of the woods, despite the billions of dollars in aid that have been poured into the country in the last decade.

rasna.warah@gmail.com

Source: Daily Nation