Somali presidential candidate 2012; don’t sell the leather of the tiger before you kill it.

Somalia is a nation which has been affected by both visible and invisible sides of the civil war which has lasted for more than 20 years, the most remarkable thing is the invisible war is causing the visible war causes, for example bacteria is a visible microorganisms which are visible where as viruses are simultaneously invisible it is the bacteria which are causing the viruses. What I mean by this is that Somalia has been hit by a political and economical war: the political war had caused the economical war.

Today Somalia is one of the poorest countries in the world. During 1991-2011 Somalia experienced stagnant per capita output, along with the deterioration of the physical infrastructure, a decline in the quality of public services, severe macro-economic imbalances and negative growth during the 1991-2011 periods. The incidence of poverty is very high, 90 percent of the population lives below
extreme poverty of $ 1 per day at purchasing power parity (PPP). The warlord and governing of TFG, money creation, and bank financing of budget deficits. The final collapse of the central bank, and the loss of depositor’s money, worsening public confidence in the TFG of Somalia and the central bank. The tax was generally distorting and difficult were weak, tax administration and state revenues were only 5 to 7 percent of gross domestic product (GDP) between 1991 and 2011, was one of the lowest levels in Africa. In Somalia, 85 percent of the labor population is unemployed today. Total external debt Somalia has reached is a record 4 billion US dollars. This threatens to default and we can expect citizens to share the total debt of all working-age Somalis, it turns out that everyone should be indebted approximately 1.2 Million U.S. dollars.

A complete change has taken place in politicians and the civil societies mentalities in Somalia. Now, after more than 20 years of civil war and conflicts, has put people suddenly away their arms and accept each other as Somalis as a nation. Since traditional clan elders elected a new parliament which represented by 275 trust traditional clan elders elected politicians, but the question is they are representing a nation which has behind it a variety of crises and the 275 trust traditional clan elders elected politicians which have made sworn and promised that they shall draw out the Somali nation from these crises’. I am one of the independent scholars in the political and economic conflicts in Somalia for the past 12 years I have come up in my research that we should consider the basic fundamental problems and I am attempting to explain factors which I think are behind Somalia’s problems and conclude the suggestion of how to solve it. My research reveals also a cause to polarization is institution. The designates of this institution are political

, economical, social, cultural and legal factors. Institutions are the same as rules of play in the society. I note; that there are types of political and types of economies that normally do the following list:

Population growth in Somalia

The birth-rate in Somalia rise sharply during the middle of and 2000s and since then it has not fallen. Population growth has estimated up to 3.2 % at the same time as the mortality rate is calculated up to 2 %. This means that a drastic population growth is taking place in the country.

Definition of Population: This entry gives an estimate from the sample surveys pertaining to the recent past and on assumptions about future trends. The total population presents one overall measure of the potential impact of the country and within its region.

Foreign debts in Somalia

The Somali foreign debt total external debt Somalia has reached a record 4 billion US dollars. It is a threat to standard and then expects that the citizens share the total debt of all working-age Somalian’s, it turns out that all shall be indebted around 1.2 Million US dollars.

Definition of Debt – external: This entry gives the total public and private debt owed to nonresidents repayable in foreign currency, goods, or services. These figures are calculated on an exchange rate basis, i.e., not in purchasing power parity (PPP) terms.

Inflation in Somalia

If we are talking about the inflation to exist there should be an increase in the general price level, i.e., all prices in the economy will increase. Somalia has an extremely high and irregular inflation around, 99 %, so doing the planning for the future will be more difficult.

Definition of Inflation rate (consumer prices): This entry furnishes the annual percent change in consumer prices compared with the previous year’s consumer prices.

Unemployment in Somalia

Unemployment is one of the main problems in Somalia. Unemployment is defined as the proportion of the labor force of working age (between 16 and 64) that are unemployed; it is about, 85%. The labor force consists of people employed and unemployed which are a total of 3.44 million people. People who do not want to work or can’t work do not belong to the labor force. Unemployment is a problem because it causes production, leading to human capital destroyed and it provides social and health problems.

Definition of Unemployment rate: This entry contains the percent of the labor force that is without jobs. Substantial underemployment might be noted.

Drought in Somalia

Traditionally, Somalis used to compete for scarce resources, such as water and pasture, which lead to internal conflict, in order to survive and create decent lives. After independence in 1960, the availability of water has become a political issue. Neither clan feud, clan structure or other hostilities is the real cause of the long intractable conflicts in Somalia. Clan system is a means to get there, not the cause itself. One of the main reasons for the current hostilities may be the scarcity of natural resources and these very low developments. Lack of funds for natural resources play an important but invisible part of the Somali conflict. Poverty and injustice in the society has been defined as the root causes of the Somali conflict, which don’t blame the clan system.

Famine from thousands of Somali refugees

The refugee crisis in Somalia is the worst humanitarian disaster in the world today. They need space and continue efforts to save their lives and the distribution of relief supplies to refugees. Those who are already abroad need help to improve conditions in refugee camps in Kenya and Ethiopia, and to provide shelter, food and water to thousands of people forced to flee because of drought and conflict in Somalia.

Refugees and internally displaced people

1.36 million (Civil war since 1991, clan-based competition for resources; 2011 famine; insecurity because of fighting between “al-Shabaab” and the TFG allied forces 2011).

Definition of Net migration rate: This entry includes the figure for the difference between the number of persons entering and leaving a country during the year per 1,000 persons (based on midyear population).

The Monetary Policy.

After the political crisis in Somalia, collapsed old banking system, including central bank the Somali law to be the sole and exclusive the issuer of the Somali banknotes and coins, and as of today, not the formal commercial banking activities in connection with the monetary policy does not exist, and banknotes issued by various the warlords and businessmen have printed Somali shilling banknotes. Central bank Somalia resume its role as the sole and exclusive right to issue banknotes and coins as a first step to take control of monetary policy.

The Fiscal Policy

Somalia despite inadequate resources, managed to obtain revenue worth USD 300 million per year in its exports. The top export goods was: Live animals 33.6 % pearls, precious stones and metals 19.4 % Raw hides, skins and leather 7.6 % meat 7.2 % oilseeds, cereals, seeds and fruit 5.1 %, but this is not to private-owned in the Treasury. The private investment in commercial ventures, including in trade and marketing, money transfers, transportation, communications, airlines, telecommunications, other services such as construction and hotels, education and health, and fishing equipment. This private investment has been largely funded by transfers from the Diaspora will be approximately 1.6 billion USD per year today.

Definition of Exports: This entry provides the total US dollar amount of merchandise exports on an f.o.b. (free on board) basis. These figures are calculated on an exchange rate basis, i.e., not in purchasing power parity (PPP) terms.

Definition of Imports: This entry provides the total US dollar amount of merchandise imports on a c.i.f. (cost, insurance, and freight) or f.o.b. (free on board) basis. These figures are calculated on an exchange rate basis, i.e., not in purchasing power parity (PPP) terms.

Somali Diaspora remittances

Remittances of up to $ 1.6 bn a year from Somalis living abroad would suggest the Diaspora is crucial to the country’s survival.

The Development Assistance Committee

The latest value for Net bilateral aid that flows from DAC donors, Total (current US$) in Somalia was $435,470,000 as of 2010. Over the past 50 years, the value for this indicator has fluctuated between $728,730,000 in 1993 and $12,240,000 in 1967. DAC members are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Republic of Korea, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, United States, and European Union Institutions.

The latest value for Net bilateral aid flows from DAC donors, Total (current US$) in Somalia was $435,470,000 as of 2010. Over the past 50 years, the value for this indicator has fluctuated between $728,730,000 in 1993 and $12,240,000 in 1967.

The latest value for net aid per capita flows from DAC donors, total (current US dollar) in Somalia was $85 until of 2008 over the past 4 years.

Proposal

The basic reason for the failure of well-functioning government in Somalia is that democratic structures are too weak in the country. The only long term way to combat the failure are of both the Development Assistance Committee, Diaspora remittances and the country’s own resources, to make a contribution to the building of democratic structures so that people can make their voices heard and demand accountability.

In the case of the macro-economic policy, the proposed key short to medium-term objectives is to:

Establish and maintain macroeconomic stability.
Develop a stable currency and a healthy and growing government revenue base.
Establishes the basic public administration institutions, together with responsible budget processes, public finance management, and system revenue.
Restoration of financial services. Furthermore, it is important to determine the data.

Macroeconomic stability

The main instruments for maintaining macroeconomic stability is to avoid budget deficits at all levels and to include the supply of local currency. To restore public confidence, governments at all levels, federal, state, regional and local should avoid spending more than its revenue base, which is expected to be a mixture of local revenues and aid. It is suggested that this commitment to fiscal discipline will be supported by a “non-overdraft” rule and a budget document that excludes unfunded commitments. Given the widespread level of dollarization of the economy, the total money supply is not carefully controlled. But includes the supply of local currency will still be important in maintaining stable local currency prices.

Macroeconomic policy

A macroeconomic policy department of the Ministry of Finance and the Monetary Policy Department of the Central Bank should eventually formulate and implement macroeconomic policies. But during the first year would be small units which should be sufficient to perform this function and this would be in line with the limited availability of public funds. Macroeconomic policy department or unit in the Ministry of Finance would be responsible for formulating tax policy changes, as revenue forecasts for the annual budget, monitoring monthly revenue collections and make at least quarterly revisions of annual revenue forecasts. The staff must be recruited and trained in accounting and budgeting as a matter of urgency. These federal entities with state and local government entities must prepare preliminary local administrative budgets for next year. In the medium term, such entities should strengthen budgeting and decision-making capabilities through on-the-job training.

Mobilizing public revenue

Provide policy advice to governments at all levels in country and abroad mission is to assist the governments in becoming equitable, accountable and efficient through:

Equal access to public services.
Management of public finance on behalf and in the interest of the people.
Maintaining competitive environment in relations between government and businesses.

Translate the mission into the following achievements observe across the government system:

Adopting clearer rules in the area of intergovernmental fiscal relations.
Improved transparency and efficiency of public spending, and multi-year budgeting.
Performance oriented budgeting in education, healthcare, social protection and other sectors of government activities.
Institutionalizing the quality of public services monitoring systems.
Transition to program budgeting.

Establishing sound public finance systems

A third priority is fixing public finances and responsible budget process.

All levels of government need an effective and sustainable financial management system that provides relevant, accurate and reliable financial information to management at each decentralized level, in time, not only to ensure that resources are well used for the intended purposes, but also to restore public confidence. It is also important to ensure development partners have confidence in the government to support these developments. Domestically, it is important to have a transparent budget processes and participation in order to further enhance public confidence and support, thus helping to improve revenue mobilization efforts as taxpayers wants to ensure that their contributions are well used. Currently, the government lacks both financial and human capacity to effectively establish the necessary financial management at the federal level as well as in south-central Somalia, regional stats have both limited capacity needs strengthening.

The most important immediate government priority for the federal government is to:

Rent a small number of professional staff to provide political leadership and advisory unit for the President, Prime Minister and Cabinet.

The complete creation of a public service commission to help staff the federal public administration along professional lines and also give advice on the relationship between federal, state, regional and local civil services.

Determine the costs and financial responsibility system so that budgets can be prepared, executed, and reported in an efficient and transparent manner.

The capacity of revenue mobilization. A longer-term challenge of gradually building up its role and meet the needs of service delivery to the poor in the south. The recruitment of public sector staff can be potentially a major source of conflict. Recruitment will require clear and consistent policies that apply across government and NGO / aid sector. Although the focus will be on objective merit to establish a professional public administration, will be to ensure equal access for women.

It is time to take responsibility for your own interest not a single person’s interest which can put you in dept and takes away your rights, take great care of the country’s nature. I should now, with a paraphrase of my well-known words, loud and clear to say to all Members of Somali federal parliament, if anyone of you cannot establish central administration with a fundamental build up of political macroeconomic and monetary policy in Somalia, it doesn’t mean that no one else can do it: as I have mentioned the facts behind the crisis above and I have also included suggestions on how to solve these problems. Therefore if I am not participating in the elections today it doesn’t mean that I am not willing to be part of solving our beloved country’s problems.

National economist (cilmiga dhaqaallaha siyaasadda)
Haji Awes, Abdikader
haji.awes@gmail.com