MOGADISHU, Somalia | The Somali government is expected to reduce costs incurred in several departments; Auditor General Mohamed Ali Afgoe has warned, in yet another tax strategy aimed at increasing the financial fortunes of the Horn of Africa nation, which is embroiled in a host of challenges.
For decades, Mogadishu, which does not yet have a stable government, relied almost entirely on the international community for its financial survival, given the low revenues generated by national taxes. The country has implemented local income improvement strategies for some time.
In a statement that appears to allude to a possible government financial slowdown, the Auditor General, through his office, called on Finance Minister Abdirahman Baileh to immediately reduce percentages of government spending by lowering the costs incurred by some agencies and also imposing a moratorium on the costs of specific establishments.
This is one of the major red flags in terms of Somalia’s tax spending, which comes as the country heads for elections. International partners, including the United States, are paying the bills for polls to promote stability in the country.
Due to the budget deficit, allocations to the Chamber of Commerce and the Trade Development Bank were placed under a moratorium. In contrast, the budget of the Central Bank of Somalia was cut by 0.5%, in the latest strategy to cut spending and waste in government.
In addition, the regional administration of Banadir, which houses the capital Mogadishu, has seen its budget cut by 10% for the same reasons of budget deficit. This is the first time that the Auditor General has raised serious concerns about government spending.
Previously, the office had recommended prosecuting senior government officials for theft of government money, the most recent having taken place in 2020, when several officials from the Ministry of Finance and Health were indicted in court. A number of them have been jailed for stealing donor money.
But despite the goodwill to fight corruption within government, Somalia is ranked among the countries where corruption has almost been “normalized” by government institutions. Several donors have cut funding to the country to pave the way for tangible accountability reforms.
Funding of the Somali National Army [SNA] was almost stopped by the United States, who had to wait until the biometric check of all agents was completed. The United States had alleged that the main generals were paying ghost soldiers for their selfish gains.
Earlier this year, Baileh, who has been at the forefront of pushing for Somalia’s debt relief, openly called on Somalis in the diaspora to contribute funds for essential government work. An online kitty has been set up to resolve the deadlock even as the finance boss admitted to a financial crisis in the country.
Local revenues have declined over time due to the opacity of government operations including, but not limited to, the lack of digital revenue collection mechanisms. In addition, Al-Shabaab militants have taken over key cities to generate more revenue than the government.
The country relies too much on foreign aid, which triggers deficits due to delays in disbursement. In the area of development, international partners, Turkey, Qatar, the United States and even China, have helped the government directly and, sometimes, indirectly.