Early this year, I gave a lecture at the University of Mogadishu, Somalia to 4th year business students on Audit and Internal Controls. Going by the questions from the students, it was clear that the Transparency International’s (TI) 2013 Corruption Perceptions Index (CPI), was among their top concerns. The CPI, which ranks countries according to the perception of corruption, placed Somalia at the bottom of the index in 2013 for the seventh year running as the world’s most corrupt country.

Although the report brought much-needed attention to corruption, the response from donors have been unhelpful to Somalia as they re-directed their funding to UN agencies and NGOs, thereby depriving the Somali government of development resources.

Corruption, according to the TI, is the “abuse of entrusted power for private gain. TI measured the perception of corruption by using 13 data sources for its 2013 CPI report to capture and assess perceptions of corruption from citizens, business people and country experts. Much of the information focus on the experts’ assessment of the country’s governance and policy making; transparency in public expenditure; and the strength of its public institutions to fight corruption.

Consequently, a country’s financial and human resources to build strong public institutions and governance structures may be as important to its ranking as the level of actual corruption in the country. This could explain why the top ranking countries come from mostly developed economies with highly educated population. Also important in the ranking of a particular country in the annual CPI is the availability of country experts who are knowledgeable of and reside in the countries from which they report.

This could have disadvantaged the ranking position of countries that are experiencing insecurity as experts tend to live outside the country and they get most of their information from third party sources such as the media.

Twenty one years of military government and civil war resulted in the decimation of governance structures and public institutions in Somalia. Although in 2004, a Transitional Federal Government (TFG) was formed in Kenya, its inability to maintain the rule of law in Somalia led to the deployment of African Union (AU) forces in 2006. Nevertheless, neither the various TFG governments since 2004, nor the current permanent government has been able to rule over any territory outside the capital. Therefore, none of these governments had the ability to tax businesses and citizens in a way that brought about financial independence.

Furthermore, by relying on dubious corruption reports from UN Monitoring Group on Somalia and Eritrea, a body whose original mandate from the UN Security Council was to monitor the weapons embargo against Somalia, Western countries have directed their funding for Somalia to aid agencies who decided how the money was spent, which often did not help the Somali government. And due to insecurity, the Somali government has lacked the capacity to regulate businesses and attract international investors.

If TFG’s limited financial resources and inability to rule over most of the country could provide its leaders with little opportunity to carry out corruption level worthy of the distinction that has been bestowed by the TI’s annual CPI, then how do we explain the country’s consistently poor ranking in the CPI? The answer might be the dire state of the country’s public institutions with respect to governance, accountability and transparency of public financial management. In other words, weak corruption fighting capability is the same as high level corruption for the purpose of a country’s ranking in the CPI.

Therefore, the notion that the Somali government is too corrupt to be trusted with direct development funding is at best an intellectually lazy reading of the CPI, and at worst an attempt to perpetuate Somalia’s reliance on aid agencies. This is a complex issue that requires an honest and objective analysis by the international donors as well as direct engagement with the TFG.

To reverse this, in the short term, the TFG should – with the help of the international community –focus on implementing a robust financial management system that helps the government become accountable Due to the limited resources in Somalia, the TFG cannot afford a de-centralised financial management system where every ministry has its own finance department. Instead, TFG should establish a centralised agency responsible for all administrative tasks of the government.

This allows every ministry to focus on the specific services for which it was created. This model will help reduce corruption due to the in built separation of duties. TFG should also take a lesson from Singapore’s experience in fighting corruption by instituting a strong and independent anti-corruption agency and empowering the nation’s audit agency.

The international community’s commitment is crucial not only for its financial support but also recruiting the support of international organisations with expertise in good governance and public financial management such as the Organisation of Supreme Audit, World Bank, and IMF to provide help with training and knowledge transfer.

In short, while TI’s perception index report is an important instrument, when it comes to Somalia, the data it relied on and the conclusions it reached are questionable. Moreover, the report has had an unintended negative impact on the development of Somali’s institutions. That said, Somali government must come up with ways to strengthen its capacity and that begins with the formation of centralised financial management agency.

Mr Santur has almost 20 years of experience in audit and financial management. msantur@gmail.com

Source: Daily Monitor