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Federal Government of Somalia

Ministry of Finance Public Financial Management Reforms

Somalia PFM Capacity Strengthening Project 1&2 (P146006 & P151492) Annual Progress Report, FY2015

January, 2016

Public Financial Reform Coordination Unit (PFMRCU)

Mogadishu

Somalia

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TABLE OF CONTENTS

1. INTRODUCTION 3

2. PROGRESS OF THE PFM REFORMS AND KEY ACHIEVEMENTS. 6

2.1. INSTITUTING PFM FUNDAMENTALS FOR BUDGET CREDIBILITY 6

2.2. EFFECTIVE BUDGET EXECUTION AND FINANCIAL ACCOUNTABILITY 10

2.3. IMPROVED POLICY FORMULATION, PLANNING AND BUDGETING. 15

2.4. INSTITUTIONAL STRUCTURES, STRATEGIC HUMAN RESOURCE MANAGEMENT (SHRM),

FINANCIAL MANAGEMENT INFORMATION SYSTEM (FMIS) AND CROSS-CUTTING ISSUES 16

3. ANNEX 1: IMPLEMNTATION STATUS OF THE PRIORITIZED AND SEQUENCED PFM REFORM

ACTION PLAN 48

5. ANNEX 2: DEVELOPMENT PARTNERS SUPPORT TO THE PFM REFORM STRATEGY AND

ACTION PLAN 59

ANNEX 3: PARTICIPANTS OF THE KAMPALA 2015 BUDGET WORKSHOP 61

ANNEX 4: TOT TRAINING SESSION IN KAMPALA 61

ANNEX 5: SUMMARY OF STUDENTS WHO HAVE COMPLETED CIPFA CERTIFICATE 62

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1. INTRODUCTION

The Federal Government of Somalia’s (FGS) Executive, Legislature and the Presidency have

all prioritized security, justice and PFM integrity at the top of the country’s development

agenda. This is driven by improved security, regaining of political legitimacy, and need to

build citizens’ confidence and relationship with Development Partners (DPs) that public

funds will be managed in a transparent, equitable and accountable manner. The Federal

Republic of Somalia PFM self-assessment noted that long-term impactful reforms are yet to

be undertaken. The Minister of Finance and Planning presented the PFM self-assessment

report and proposed PFM strengthening initiative (2013-2016) to Development Partners on

April 4 2013 - http://mofep.gov.so/wp-content/uploads/2013/04/Somalia-PFM-self-

assessment-report-strategy.pdf. The self-assessment report revealed amongst other issues

that budget execution and procurement processes lack adequate transparency and

efficiency and that the existing PFM legal framework is inadequate and requires

modernization. Human resource and logistics challenges are also a major issue. Combating

these weaknesses has been the main thrust behind the PFM reforms strategy being

implemented by FGS.

The PFM reform effort of the government is currently underpinned by the Somalia PFM

Self-assessment report strategy with the following overall objective:

“… to improve the efficiency and effectiveness of public financial management processes,

and systems in order to provide timely, transparent and accurate financial information

across the public sector to underpin policy formulation and inform Government decision

making to support effective service delivery”.

The specific aims to be achieved by the strategy are;

• Improve transparency and openness of the national budget process;

• Enhance fiscal discipline through internal and external controls;

• Focus public expenditure on priority areas of Government programs;

• Enhance efficiency and effectiveness of public expenditures; and

• Strengthen overall financial management and accountability

PFM Scope and strategy:

The PFM cycle below emanates from the 2013 PFM self-assessment mentioned above and is

specific to Somalia context.

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The PFM reform strategy is being implemented under 4 platforms and reinforced by 16

distinct but complementary components as follows;

No Platform Components

1. Platform I: Instituting PFM

fundamentals for budget credibility

Component 1.1: Resource the Office

of the Accountant General

Component 1.2: Strengthen Revenue

Departments to improve revenue

management

Component 1.3: Strengthening the

Central Bank of Somalia

2. Platform II: Effective budget

execution and financial

accountability

Component 2.1: Reorganize the

Office of the Auditor General

Component 2.2: Establish and

resource Internal Audit Unit

Component 2.3: Aid coordination

Component 2.4: Strengthening

Parliamentary oversight

Component 2.5: Public Procurement

and Concessions

3. Platform III: Improved policy

formulation, planning and budgeting.

Component 3.1: Macro fiscal

planning

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Component 3.2: Development

Planning

4. Platform IV: Institutional structures,

Strategic Human Resource

Management (SHRM), Financial

Management Information System

(FMIS) and cross-cutting issues.

The objective is to align the key PFM

institutions and to enhance employee

skills and competencies.

Component 4.1: PFM training

Component 4.2: Establish PFM

Training Centre

Component 4.3: establish Somali

Institute of Management and Public

Administration

Component 4.4: Reforming the

National Civil Service Commission

Component 4.5: develop professional

accounting body

Component 4.6: Implementation of

Somalia Financial Management

Information System

Component 4.7: Review of legal

framework

Component 4.8: re-establish and

operationalize PFM coordination

unit

Since the inception of the PFM reform strategy, the Development Partners have continued

to support the Federal Government of Somalia PFM reforms as reflected in a division of

labour exercise (see Annex 2). In particular, has been the USD 4.5 million World Bank

“Public Financial Management Capacity Strengthening Project (PFMCSP)”, with the area of

focus being to support to: (i) public financial management reform oversight; (ii) Somalia

Financial management system (SFMIS); and (iii) expenditure control, procurement,

accounting and reporting. Phase one of the PFMCSP is coming to an end in March 2016 and

the WB is already dovetailing it with Second Somalia PFMCSP which has become effective

in September 2015.

This report looks at the various accomplishments that have been made under the PFM reforms during the financial year 2015. It also provides an overview of the specific contribution of the PFMCS one project to the FGS’s PFM reforms initiative. The report also slightly touches progresses at procurement stage made so far by the Second Somalia PFMCSP.

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Second Somalia PFMCSP

Project Development Objective(s)

The Project Development Objective is to establish and strengthen institutional capacity for the

management of public funds in central finance agencies and targeted sectors.

.

Components

Component Name

Component 1: Revenue mobilization, planning and budget preparation

Component 2: Treasury management, budget execution, procurement, accounting and financial

reporting

Component 3: Strengthening the integrity pillars

Component 4: Public financial management professionalization

Component 5: Public financial management reform oversight, coordination and management

Component 6: Demand-driven just-in-time support (JIT) (Bank Executed)

Second Somalia PFMCS Project Beneficiaries

Unlike the first phase which laid the foundation at the FGS level only, the Second Somalia PFM

Capacity Strengthening Project, build on successes of PFM1 and extends its scope and scale to the

regional states of country. The direct beneficiaries of the Second Somalia PFMCSP are the central

finance agencies and selected line ministries in the Federal Government of Somalia, Puntland State

of Somalia and Government of Somaliland and its citizens.

2. PROGRESS OF THE PFM REFORMS AND KEY ACHIEVEMENTS.

Generally, there is a PFM action plan that was agreed with the DPs and with the exception

of the establishment of the internal audit function in government, the plan is well on track

(See Annex 1).

The achieved and ongoing PFM activities include:

2.1. Instituting PFM fundamentals for budget credibility

2.1.1. Strengthening the Accountant General’s department AGD).

The major accomplishments so far include;

Accounting and Bank Reconciliation:

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The Cash Basis International Public Sector Accounting Standard (Cash Basis IPSAS) has

been correctly implemented to recognize government revenues. The deferred method used

in FY2014 to recognize revenue is no longer in use.

The implementation of web-based SFMIS started in the first quarter of 2015 with additional

functions become operational in the second and third quarter as well. The projects’ bank

reconciliations now can be generated from the SFMIS directly. For the TSA reconciliation,

both manual and automatic systems are being used.

i. The Government has continued its adaptation of a Multi-dimensional chart of accounts comprising of 5 segments (Administration, Funding, Program, Location, Object) which permit multiple views or analyses of the government’s budget or its receipts/payments and these are: The uniform chart of accounts now enables government to: a. Address the financial reporting requirements of the users of the general purpose

financial statements, in accordance with International Standards (i.e. IPSAS), as well as those special requirements of specific interest groups such as Donor Projects, without the need to keep additional set of ledgers for the respective Projects.

b. Ensure consistency between budget allocations and the general ledger account codes. This is particularly important to be able to report on budget variances & analysis when preparing budget execution reports.

c. Ensure uniformity in accounting practice throughout General Government. This is particularly important to facilitate the preparation of the government wide consolidated financial statements.

d. Carry out performance/responsibility accounting by aggregation of costs on the basis of cost centres, government programmes and functions of government.

e. Facilitate benchmarking of government’s performance with similar governments, as the proposed Chart of Accounts is consistent with IMF’s GFS system already adopted by many governments world-wide.

ii. Implementation of the ministerial order on the operationalization of the Treasury Single Account (TSA) had continued at the Central Bank of Somalia and with effect from the 2015 financial year, the following procedures had been exercised.

a. Transfers of sums of money to sub-bank accounts of the MDAs as has been the

case, had cease or substantially reduced. UNDER THE EXCERSICE, each MDA would have had a dedicated TSA sub-ledger allotment account in the SFMIS to which periodical allotments (Expenditure warrants) would be made and ring-fenced for exclusive use by the MDA. This would give full control to the MDA to use the allocations exclusively to process its payment claims through the SFMIS that will generate the payment to beneficiaries whose details are verified in a Vendor Database. The Ministerial Order would continuously be effected though out the years until full implementation is realized.

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b. Suppliers and Contractors (Vendors) were being paid directly through the Payment Instruction or through transfers into their bank accounts held in financial institutions registered by CBS upon verification of their details in the SFMIS vendor database. This was being implemented incrementally.

iii. Through the PFMRCU, a number of activities have been embarked on with some key achievements realized so far, including; a. The development of formats for cash basis IPSAS compliant government financial

statements. Technical support has been provided to the government counterpart staff in the preparation of the government accounts using the new format that has been communicated under a Treasury accounting instruction issued by the Accountant General.

b. The training of staff of the Ministry of Finance, Accountant General’s Department and the Auditor General’s Office on the effective use of the government standard chart of accounts. This has culminated into the earlier setting up of a core team of government staff that will be able to rollout the CoA training to the rest of the MDAs on an on-going basis.

c. Technical support has been provided to the AGD in closure of the 2014 accounts using internationally acceptable procedures. Development of year-end Financial Statements for both donor funded and the government accounts and orderly submission to the OAG have been achieved through the PFMRCU.

iv. Significant efforts have been made towards increasing public access to fiscal data, with the Ministry of Finance website (http://www.mof.gov.so) being utilized to disseminate information (e.g. budget execution data is posted on a quarterly basis).

2.1.2. Revenue mobilization.

i. Revenue mobilization has taken shape with emphasis on Inland Revenue taxation.

Revenue Mobilization Strategy had been put in place from the beginning of the year with a plans of 31% increase in overall revenue outturns compared to the 2014 figure. The improved cargo handling capability and better Ports Management combined with improved monitoring and revenue controls, enhanced tax administration as well as the use of the TSA for all government revenues were all meant to help in the planned revenue increase and probity. However, fledgling external donor support has dented the plan.

ii. FGS has made revenue mobilization a priority activity during the coming financial year of 2016 where a lot of investment will be made in setting up appropriate tax collecting systems, extensive training programs and providing the necessary logistical support towards revenue collection. Major Technical Assistance work on

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both customs and IR is expected to commence at various intervals in 2016 through the existing PFM scaled-up project as well as new entrants from DFID and AfDB.

2.1.3. Strengthening the Central Bank of Somalia (CBS).

Significant progress has been made towards the strengthening of the CBS and ensuring that effective banking arrangements and supervision and efficient monitoring systems are in place. Central Bank of Somalia has made a significant progress in both its capacity and developing

legal framework and examination regime. Key regulations for banking and MTBs were

developed and adapted. These include AML operations regulation, customer registration

and verification regulation, internal audit regulation, external audit regulation, capital

adequacy regulation, liquidity risk management regulation, related persons transactions

regulation, and Board of Directors regulation. CBS supervision staff has completed over 10

capacity building missions including CAMELS approach to examination, risk based

examination, off-site and on-site examinations techniques, writing examination reports and

developing regulations training. The Department just completed licensing renewals for 2016

for both banks and MTBs. CBS has upgraded the professional banking license of 6 financial

institutions to a full license which would immensely contribute to the formalization and

development of the Somali financial sector. CBS held several consultative meetings with the

financial industry including banks and MTBs. CBS is also assisting the newly licensed banks

and MTBs to form Bankers Association.

Issues relating to international remittances to Somalia are still of major concern to the global

financial institutions and a priority to CBS. The Government is working to establish a multi-

agency Special Task Force on Remittances (STFR) to support government efforts to protect

Somali remittances. Central Bank Governor co-chairs the newly established Remittance

Stakeholders Advisory Council members include US State Department, US Treasury, UK

Government, DFID, WB, IMF, AfDB, IGAD, and Central Bank of Kenya.

Some of the other major initiatives undertaken so far include;

I. Despite daunting challenges, CBS has made progress. The Board has approved a first

set of by-laws for the CBS and key CBS positions have been filled. II. CBS management has added additional staff to the supervision department

including two AML/CFT certified professionals and five examination officers. III. The CBS has taken the lead role in formulating and implementing the strategy for

payments system modernization. As the sole fiscal and monetary agent of the Federal Republic of Somalia, the CBS is in the process of creating a comprehensive vision of the country’s national payment system. CBS has made a tremendous improvement to its payment procedures and processes and possesses a reliable capacity to carry out its financial agent role. CBS is in the process of constituting regional branches in

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the federal member states, and actively working with licensed banks and Hawala system networks to strengthen in-country payment systems and mechanisms

IV. AML/CFT progress: The Bill has been enacted. Subsequently, AML/CFT committee was established to lay ground for the establishment of the Financial Reporting Center (FRC) also known as Financial Intelligence Unit (FIU). CBS has also formally requested membership to the East and Southern Africa Anti-Money Laundering Group (ESAAMLG).

V. CBS has received assistance from international partners including IMF, WB, US Treasury Department, and US State Department in the areas of regulations development, examinations for banks and MTBs, examinations policies and procedures, examination report writing, and AML/CFT regime.

VI. The CBS has taken step to strengthen its accounting systems and internal controls. International auditors have been appointed for the 2014 financial statements. Auditors completed the audit process and will release the audit report shortly.

VII. An MOU with the Central Bank of Kenya, which enables placement of key staff in CBK for mentoring purposes, has been activated. CBS will send first team of trainees beginning March 2016.

2.2. Effective Budget Execution and Financial Accountability

2.2.1. Reorganization of the Office of the Auditor General:

The qualified Auditor General appointed in 2014 had continues to provide the needed direction of the planned initiatives in strengthening the office of the Auditor General; This has certainly meant improved systems and procedures for better accountability and transparency as well as timely and accurate financial reporting.

The 2014 year-end audit was the main focus of activity in the second quarter of 2015. The

audit started on 11 April and the management letter response was completed on 28th June.

Three projects: PFM, RCRF and ICT were audited and all received unqualified opinions.

It is important to note that the Ministry of Finance has made substantial advances in its

capture, controls and reporting in financial management. Taken in the context of a newly

formed government operating within a fragile state, the shortcomings that have been

identified can be seen as important lessons learned and milestones for ongoing future

improvements.

Other key accomplishments include:

i. 2014 Government financial statements were submitted to the Auditor General in

April 2015 and after auditing and approving the accounts, the OAG through the Minister of Finance submitted his audit report to the Parliament in June 2105 thereby ensuring that the statutory timelines for the preparation, audit and submission of the government accounts are met.

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ii. Members of the OAG staff have been practically trained and handheld on carrying

out audit on the 2014 annual FS of the WB funded PFM, ICT and RCRF projects. iii. The first unqualified audit report in recent Somalia history conducted jointly by the

OAG and an external Independent firm came out in June 2015 in regards to the above mentioned three projects.

iv. During the later quarters of the year, project management and teams commenced practical implementations of all points recommended in the audit findings.

2.2.2. Aid Coordination unit: The Aid Management Unit is now placed under the Office of the Prime Minister and continued to improve the aid coordination by Donors and has industriously exercised its activities through the various PSGs and their sub-working groups. The Unit has continued its effort during the year to secure and implement a Donor Assistance Database (DAD). Debt Management Unit (DMU) had also been established within the Ministry of Finance (MoF) assisted remotely by Arrears Experts under the IFGP of the AfDB. 2.2.3. Strengthening parliamentary oversight: The Somali Federal Parliament is the key institution for re-building of Somalia that has the capacity to stand on its own feet. Parliament has the role of reviving and updating all the government policies, procedures and systems as well as development of new policies and procedures as required. They also have the role of monitoring and supervising all government institutions to ensure the effective implementation of the policies and procedures. For this to happen, Parliament members require capacity building that enables them to perform their duties and responsibilities. Capacitating the parliament means the re-building of new Somalia that has the capacity to compete and keep pace with the other countries of the world. The Finance, planning, accountability and oversight committee of the parliament is one of the key committees of the parliament since it is responsible for the development and updating of all the financial regulations of the country as well as the over sight and regular control of the financial management Members of the Finance and Planning Committee, attended a 2-days workshop in Mogadishu sponsored by the PFRCU; they also had weeklong seminar in Nairobi, Kenya under the UNDP to develop their analytical skills in deliberating and processing the draft Public procurement, Concessions and Disposal of Assets Bill that laid before the Parliament for some time. They also acquired tools needed to A) undertake oversight functions on other draft legislations before them; and B) strengthened their capability for promoting effective and accountable utilization of public resources.

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Both the Public procurement, Concessions and Disposal of Assets Bill as well as the Audit Bill have been passed by the Parliament during the FY 2015 and submitted for Presidential assent into law. It is envisaged that additional technical support will continue to be provided to the FPC members to facilitate the process of presenting the remaining PFM draft bill to Parliament for the necessary consideration and approval. 2.2.4. Strengthening the public procurement and concessions function of the government:

Procurement systems and practices:

The Project had from the start of the year recruited an experienced International

Procurement Technical Assistant for the PFMRCU under the EFGISP of the AfDB. The scope

of the new TA was to play a central part in (1) implementing a sustainable and robust

procurement system for the efficient and effective logistical and procurement support to all

Somalia donor funded programs (World Bank and AFDB); (2) identifying and introducing

new procurement procedures and strengthening current practices to ensure the efficient,

timely and compliant supply of all items, (2) overseeing the proper control and operation of

all the Procurement and Logistics requirements for all Somalia donor-funded Programs and

support services.

Operational procurements

From the get go, the TA had commenced sifting through the backlog of procurement

activities and below are the procurements activities initiated during the year:

Negotiation and finalization of the International Training Center of the

International Labor Organization (ITCLO) for PFM/Procurement training

services;

Finalization of contract amendment for the PFM Training tutor mentor

contract;

Negotiation and finalization of the Tacforce international for contract

extension of security, accommodation and logistics services;

Bid opening, evaluation supervision and submission of the evaluation report

to World Bank for no objection of the SFMIS Intranet Expansion contract;

Evaluation and finalization of the contract - Internet Connectivity for Puntland

and East Africa Universities.

Legal and Institutional Procurement

In the procurement area, a high level purchasing process has been designed to strengthen

the commitment controls. A comprehensive and modern procurement, concessions and

disposable bill is currently under consideration by Parliament. The Parliament committee

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on Finance has studied the provisions of the bill in two workshops held in Nairobi and

Mogadishu aimed at speeding up the passing of the bill.

The PFRCU played a central role in providing the necessary technical support towards the

strengthening of the legal and institutional framework by focusing on the following areas:

Review the Public Procurement Concession and Disposable Bill that is submitted to

the Parliament for approval; and support the Procurement Directorate of the

Ministry of Finance to conduct a comprehensive review of legal infrastructure and

development of additional guidance to support effective implementation of the new

PPDCA

Facilitate the establishment of Procurement Units/Committees within Ministry of

Finance, Office of President and Prime Minister Office in conformity with the

provisions of the draft Public Procurement Disposal and Concessions bill, which is

aimed at strengthening procurement activities throughout government. In this

regard, the Ministry of Finance has during the year formally appointed a

procurement unit of 13 members in accordance with the draft bill and the PFMRCU

played a central part in (1) providing technical support and technical supervision to

the newly appointed team in collaboration with the procurement Director and Project

Coordinator and (2) organizing the briefing of the new team on procurement

procedures.

Building the capacity of individuals and relevant institutions involved in the

procurement processes: identify the needs and ensure the on the job training and

capacity building for procurement team members in order to increase the level of

technical ability and skills within the department and organize and provide basic

training in procurement according to the needs.

Optimization of procurement processes: through continued development of

guidance notes, checklists, procurement manual and establishment of clear contract

administration procedures;

KEY FY2015 ACHIVEMENTS

Below is a summary of key project related procurement improvements in full progress or

completed FY2015:

Development of Procurement Plans and General Procurement Notices as required

and in accordance with the rules laid down in the procedures for Goods and

Works (May 2008 edition, revised in 2012);

Development of Procurement Implementation Plans (PIPs) which incorporates and

tracks progress of all related procurement improvement projects and includes

detailed timelines to ensure smooth implementation of all projects. The PIPs

are updated on a monthly basis;

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Implementation of Contract Prioritization: Project procurement TA has met with

some user departments to review their FY2015 contracts needs and to establish

target dates for the advertisement of bids and Request for Proposals to those

contracts. The result is a comprehensive solicitation schedule for FY2015 of the

entire MOF. Regular meetings will be held with the user departments in FY16

to ensure agreed to timelines are met and new needs are continuously

addressed;

Completion – RFP, negotiation and contracting of the ITCILO for PFM E&T.

Completed - Dial UP and ACS – SFMIS Intranet Network Expansion;

Completion – Recruitment of Individual Consultants - Technical Assistance for

Expenditure Controls, Cash Management, Accounting and Reporting as well

as Macro-Fiscal Expert for the Macro-economic Unit of the MoF.

Ongoing - Central Bank of Somalia - CBS Core Banking Solution and ERP

systems;

Ongoing shortlisting reports and RFP issuance for the following procurements

contracts:

o Support to Public Procurement Reform

o Revenue Mobilization and Tax Administration

o Treasury Management/SFMIS

o Strengthening the Integrity Pillar - SAI

Ongoing – RCRF2 and PFM2 Project Vehicles under Procurement Plan.

In order to enhance the rules for Government procurement processes, improve

transparency, accountability and streamline the procurement process, The PPFRCU has

introduced the following measures:

Decision to enter requisitions at the user department level (versus at the

procurement Department) which will create greater financial accountability;

Completion of SFMIS Purchasing Model Templates, which institutionalize stricter

commitment controls and also help in improving cash management.

Completion of a contract procurement register list for all donor-funded projects

which contains the description of the contract, reference number and date,

where applicable, the name of Supplier/Consultant, Contract document

reference/LPO number, total contract value, details of revisions and

variations;

Completion of a procurement shared folder, which contains standard bidding

documents (Goods, Works, Services and Consulting services) for AFDB and

World Bank-funded projects, guidance notes and model letters;

Implementation on the job training to the procurement staff. The TA

procurement provides training to procurement staff members to enhance their

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skills and competencies. The training is designed to educate the procurement

staff on policies and procedures, inform them of the availability of tools and

resources and teach them how to use the procurement documents.

In addition, the PFMRCU has been providing support to the World Bank-funded ICT Sector

Support and Capacity Injection projects by drafting/reviewing various documents for the

procurement of goods and services.

3.1.2 Policy

Adoption of the modern Public Procurement Disposal and Concessions Bill (PPDCA) was

initially delayed to allow for the parliament to review Somali version of the law. The

Parliament committee on Finance had also studied the provisions of the bill in two

workshops held in Nairobi and Mogadishu. The law was passed by parliament in December

2015. The PFMRCU continued to be actively engaged and provide the necessary technical

support towards the strengthening of the legal and institutional framework. Specifically, the

Unit helped with the:

Continue on job training Procurement Unit within Ministry of Finance has newly

appointed a procurement Director and Procurement Unit composed of 13

trainable Procurement Officers and Assistants;

Establishment of Procurement Committee within Ministry of Finance in

conformity with the provisions of the draft Public Procurement Disposal and

Concessions bill;

Review PPDCA Web Portal

2.3. Improved policy formulation, planning and budgeting.

During the year, training was conducted in Kampala, Uganda, on revenue forecasting and

budget formulation for mainly the Budget department staff from the Ministry of Finance of

the Federal Government of Somalia as well as representatives from the regional

administrations of Puntland and Benadir. Service and productive sectors of Health,

Education and Agriculture were also represented in the training which will also be repeated

one final time for the same group in January 2016.

DFID has also provided short-term TA to assist the budget department of the MoF with the annual budget formulation process. Arrangements has also been underway with the support from the African Development Bank’s Economic and Financial Governance Program (EFGP) Project, to take a holistic approach in improving the process of budgeting to ensure optimal allocation of state resources. Under this initiative, the following outcomes are expected:

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i. Annual budgets preceded and informed by policy formulation processes and development plans;

ii. Budgets linked to policy priorities; and iii. Improved expenditure effectiveness

2.4. Institutional structures, Strategic Human Resource Management (SHRM),

Financial Management Information System (FMIS) and cross-cutting issues

2.4.1. PFM Reform Coordination Unit (PFMRCU) and Governance arrangements:

Staffing: With the exception of the Internal Audit Technical Assistant (TA), all relevant key project technical staff and the Technical Assistance personnel were hired and continued to perform their duties during the year. Though at least two project TA and one SME had vacated their positions voluntarily during the 2015, the technical staff operating at the PFMRCU at one time or another during the year included; i. The PFM Reforms Coordinator - Subject Matter Expert ii. SFMIS Project Manager – Subject Matter Expert (left in Q1 and not yet replaced) iii. Procurement Specialist – International Consultant iv. 2 SFMIS System Developers and Analysts – International Consultant v. Expenditure Control, accounting and Financial Reporting TA – International

Consultant (One TAs has vacated this position in March and replacement also left in August. Final replacement for the position were recruited in late December)

vi. Two TAs were recruited under the EFGP of the AfDB during the year - Namely -Chief Economic Advisor for the CBS as well as a Macro-fiscal Expert for the Macro-Economic Unit of the MoF.

vii. Budget Expert for the budget department of the MoF has also been recruited under the EFGP but had unfortunately declined to take up the position for unknown reasons. Replacement effort is underway.

viii. Four SMEs were recruited under the EFGP for the Debt Management Unit DME of the MoF.

ix. Finally, Deputy Project Coordinator SME has been recruited for the PFM project under the second RCRF project.

It is envisaged that more technical assistance – both firms and individual consultants - will be provided under both the current EFGP and the new PFM scaled –up project which has become effective during the fourth quarter of the year 2015.

PFM Reform Institutional and implementation Arrangements: Supervision and monitoring of the PFM reforms is on-going through the established governance arrangements and the coordinating role of the PFM Reforms Coordinator.The PFM governance framework is underpinned by the following:

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i. A PFM Reform Oversight Committee (ROC) chaired by the Prime Minister. The ROC reports to the Office of the President that sets the political tone for the broad governance reform agenda and manage any resistance to the reforms.

ii. A PFM Technical Steering Committee (TSC)providing oversight of the project and comprises of Heads of the various PFM institutions and line ministries representing key front-line service delivery will be accountable for the success of projects to implement the reform strategy;

iii. Component Implementation Teams (CITs) consisting of representatives from units of MOF and other Government institutions to handle the day –to-day activities of the components; The CITS keep the TSC regularly informed at key points in the in the reform process.

PFM Reform Institutional and implementation Arrangements

Furthermore and on continuing basis, regular briefs are provided to the Hon Minister for Finance to keep him abreast of the progress of the PFM reform activities and also seek his intervention in addressing issues that cannot be addressed by the CITs.

External Assistance Fiduciary Section (EAFS):

An External Assistance Fiduciary Section (EAFS) was established in the Accountant General’s Department and is operational. The EAFS is designed to ensure harmonization, donor co-ordination, reduce duplication, fragmentation and proliferation of donor-specific financial management units. The basic functions of the EAFS include planning, budgeting, procurement, accounting and reporting of recipient-executed external assistance. This initiative is aimed at encouraging the use of country systems to reduce the administrative costs and also contribute to the strengthening and building of national capacity rather than fragmenting it through parallel systems that are normally dictated by the different donors.

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The EAFS is supported by a procurement specialist and an Expenditure Control and Cash Management TA who are required to ensure, as part of a sustainability strategy, that there is a deliberate effort to transfer the necessary skills and knowledge to their counterpart staff.

2.4.2 PFM Education and Training:

Overview:

Beyond availability of good laws, institutional structures and technical capacity, the

Government recognized that the PFM improvements will require capability at the level of

the PFM practitioners. This activity therefore is aimed at building capacity at the individual

level to obtain the required capability and targets government staff with financial

management responsibilities in planning, budgeting, procurement, accounting, internal and

external auditing.

The Somalia Public Financial Management (PFM) Education and Training Programme

funded by the World Bank under the PFMCS project, commenced on July 1, 2014 and is

being handled through a coordinated effort involving collaboration between the Federal

Government of Somalia, universities within Somalia and an international consortium led by

WYG International and including the Chartered Institute of Public Finance and Accounting

(CIPFA) and Michael Parry Consulting.

Further to this, the International Training Centre of the ILO (ITCILO) has been contracted

in the last quarter of 2015, to provide consultancy services for the development and

implementation of the procurement component for the PFM Education and Training

distance learning certification scheme. This scheme will be implemented in a dual manner,

i.e. by (1) a traditional distance learning program and (2) a parallel track as a self-learning

program with tutorial support. ITCILO will coordinate activities with the consortium of

WYG-International, Michael Parry consultants and the Chartered Institute of Public Finance

and Accountancy (CIPFA) –WYGI-C.

The activities and achievements of the programme during 2014/5 include;

Student management:

A student management system was developed and implemented during the year. An ODL

website is now being used to record students’ progress and mock exam results as well as

storing their personal information. Students are able to access their own individual results

and monitor their progress on the programme. .

A course manual was also developed in order to provide an overview of the programme

structure and guidance on course administration to students, tutors, university

administrators and officials. The standard course manual provides guidance on the

following areas:

19

a. Course content

b. Learning methodology

c. Assessment

d. Support for students

e. ODL website

The course manual has been made available in electronic format on the ODL website.

Student registration:

Despite a number of difficulties that were encountered in the registration process,

175students (as shown in the table below) were correctly registered on the ODL website and

for their CIPFA examinations by the 7th October 2014.

Course structure:

The ultimate course structure the PFM Education and training programme has been agreed

as provided in figure 1 and to-date, a total of 192 students have been registered (Table 1)

under the programme including 17 tutors. Included in the programme, is also a Self-study

introductory course that was agreed for registered students to help them get started on their

studies before the initiation of the online distance learning (ODL);

20

Activities in 2015:

Delivery of IPFM Course

The CIPFA International Public Financial Management (IPFM) course commenced in

September 2014 with the establishment of PFM academy on four universities below.

Learning materials and tutorial support were provided throughout the Financial

Accounting module and will continue for all future modules The Certificate level Financial

Accounting module was completed through the examinations in November 2014 with the

following results that were released in January 2015.

November 2014 IPFM Financial Accounting Examination Results Summary

University Registered Attempted Passed1

Mogadishu 51 40 1

SIMAD 50 32 -

1 A mark of 50+

21

Puntland State 48 43 2

East Africa 46 36 4

Totals 195 151 7

• Reasons for the low pass rate

– Late start

• No students studied Introductory Course

– Selection of students

• Lack of basic skills, English and/or motivation

– Tutors themselves students

• Video lectures received too late

– Weak English language skills

– Challenge of an international professional examination

22

• Possible course of action to improve the pass rate

– More ToT

• Course already increased 2 weeks

• Possible extra week for MA

– Qualified accountants to support tutors

• 1 for each university

– Webinars

• Regular webinars by international tutors

Building university capacity

An objective of the Programme has been to build the capacity of the Universities to deliver

high quality PFM education and training. So far this has involved four elements:

a. Evaluation and gap analysis –completed and identified the requirement for help

with infrastructure issues (including improving Internet links). Follow up is

being made by the project coordination unit.

b. PFM Academies - all universities have formed or are making progress towards

the formation of PFM Academies.

c. Protocol with CIPFA to act as training and exam centres - all four universities were accredited by CIPFA as examination centres and have conducted the first examinations (November 2014). Follow up is still being made so that the Universities can describe themselves as accredited CIPFA training centres.

d. Training of university tutors - a key element of the support to universities is to upgrade the capacity of the tutors to teach the courses. The first ToT took place in September 2014. This was successful, but did indicate that a more extensive programme of ToT was required. Hence was decided that the ToT for the Management Accounting module will be doubled in length to two weeks.

Budget Training Session II

Budget training was the second of a series of practical training workshops. The overall

objective was to improve the quality of the budgets prepared at Federal and regional levels.

The objective of this second course was to apply principles learned in Workshop 1 to FGS

and PSG budget preparation processes, particularly to draft contributions to the Budget

Framework Document.

Target Audience

23

Budget and Accounting staff of the Federal Government, Puntland Regional Government

and Banadir Regional Administration (BRA), and Sector Line Ministries from FGS.

Course Summary

The original Agenda for Workshop 2 (see attached) was ambitious. The following areas

were not explicitly covered due to time constraints:

Prepare Outline Budget Framework Document / Agree on Contents

Revenue Performance Monitoring

Key features of Budget Call Circular (or continue with Budget Framework if needs

be)

Preparation of Draft Competency Statement for Preparation and Approval of Budget

Framework Paper

As well as the direct capacity building, the following direct outputs were produced relating

to the Budget Framework Paper (for each of FGS and PSG):

Fiscal Performance Analysis for Main Revenue and Expenditure heads (Graphs and

Narrative)

Sector Expenditure Performance (Table and Narrative)

Revenue Forecasts for 2015-2018 (although this needs to be augmented with bilateral

and multilateral for FGS) – this should be augmented with narrative description of

each of the revenue items.

In addition, the Uganda MoFPED provided an afternoon of presentations covering:

1. A brief presentation of the Structure and Functions of the Macro-Economic Policy

Department;

2. A brief presentation of the Structure and Functions of the Budget Policy and

Evaluation Department;

3. A brief overview of GoU’s budget preparation process / calendar; and

4. An overview of the role, responsibilities, structure/content and process for

production of the Budget Framework Paper.

Furthermore, MoFPED hosted the participants for two hours in MoFPED offices in Kampala

and showed the team a segment of their Oracle FMIS.

Tests and exercise undertaken during course and results

No tests were undertaken as part of the course, although some participants were able to

take over the facilitator’s computer and projector to amend some of the MS Excel models

for changes in data availability.

Trainer’s Comments

24

All participants attended all sessions and there was good adherence to the start times for

each session.

The original session agenda was too full and following agendas should be more realistic.

Naturally, some officers were stronger with MS Excel and MS Word than others, but all

gained increased knowledge from basic to advanced levels in both packages over the course

of the week.

Both PSG and FGS officers were able to modify the standard MS excel forecasting models

based on availability of data – this is a good foundation for continued use of the models.

Participants from BRA were unable to obtain data to complete their own fiscal performance

and forecasts, but have undertaken to populate the models once they return to their offices.

The trainer is on hand by email to support this.

The involvement of MoFPED of UGANDA was very useful and a further and more detailed

session with them in future Workshops should be considered.

Lessons Learned

1. Standard statistical modelling techniques need modification for the Somali context

due to the lack of historical data – although PSG has more data than FGS.

2. The next workshop is tentatively scheduled for Q3 2015 with the intention of

finalising the Fiscal Strategy Paper and working on the Budget Call Circular. If might

also include some of the areas that were originally included in the Agenda for

Workshop 2 but were not covered because of :

a. Competency Framework for Fiscal Performance Assessment and Top Down

Budgeting

b. Revenue performance monitoring

c. Budget Call Circular

3. The involvement of MoFPED was positive and the next training session should

include a longer and more practical session.

TOT Training Session in Kampala

TOT training was conducted in Kampala during the beginning of the quarter for the 4

universities tutors detailed in ANNEX 4.

25

Course objectives

‘Public Financial Management (PFM) for Somalia’ is a new course. The course material is

based around five workbooks covering generic PFM topics and one workbook on topics

specific to Somalia, which has not yet been completed. All testing is through multiple choice

questions (MCQs).

The main objective of the course was to build capacity in the participants, who are all tutors

and/or finance practitioners, to enable them to understand and explain the topics in the five

generic workbooks.

A subsidiary objective was to note and evaluate any difficulties that the participants had

with understanding particular topics, so that adjustments and additions can be made to the

workbooks, course material and MCQs.

Target audience

Tutors and finance practitioners from the four participating universities: Mogadishu

University, SIMAD, Puntland State University and East Africa University.

These participants will need to be able to add ‘PFM for Somalia’ to their existing portfolio

of lecture topics. Some have experience of public sector financial management in Somalia,

but most spend the bulk of their lecturing time on economics and/or professional

accounting studies, which are mainly concerned with the private sector.

Participants 2, 4, 7 and 8 had previously attended the Training of Tutors course on CIPFA

IPFM Management Accounting.

Lessons learned

During the course it was possible to get a good understanding of what the participants

found easy to understand and what they found difficult. These will be included in the

review of the course material that Stewart Maugham is undertaking.

MCQs are a good method of teaching and testing this material.

Some longer case studies need to be developed, to act as ‘classwork’.

The bank of African experience examples needs to be expanded. Trainer provided a lot

on Nigeria, but other African experience was a bit light. The participants are not

particularly interested in Europe or Asia.

26

CIPFA IPFM June 2015 Examinations

The CIPFA International Public Financial Management (IPFM) course commenced in

September 2014. The first module was the Certificate Level Financial Accounting. The

Second set of CIPFA IPFM examinations took place in June 2015 and results were

announced on July 24.

The results of the CIPFA June 2015 examination indicate a considerable improvement over

the results of the first exam in November 2014. The results are analysed below, but in

summary:

1. 42 students passed or were exempt from either the Financial Accounting or Management Accounting papers, or both;

2. 28 students have now successfully completed the CIPFA certificate examinations and are eligible to proceed to the CIPFA Diploma level.

Results summary and analysis

This is a major success. It reflects a great effort on the part of the students and tutors, all of

whom should be congratulated. The success also indicates that strategies adopted to

University Result

Number % Number %

EAU Pass/exempt 16 70% 16 57%

Fail 3 13% 7 25%

Absent 4 17% 5 18%

Total 23 100% 28 100%

Mogadishu Pass 2 15% 3 10%

Fail 11 85% 10 32%

Absent 0% 18 58%

Total 13 100% 31 100%

PSU Pass 5 83% 7 32%

Fail 1 17% 12 55%

Absent 0 0% 3 14%

Total 6 100% 22 100%

SIMAD Pass 9 29% 6 19%

Fail 9 29% 11 35%

Absent 13 42% 14 45%

Total 31 100% 31 100%

Overall Pass/exempt 32 44% 32 29%

Fail 24 33% 40 36%

Absent 17 23% 40 36%

Total 73 100% 112 100%

Pass % for those who sat the exam (excluding absentees)57% 44%

Financial

Accounting

Management

Accounting

27

increase support to the students have proved effective. The task now is to build on this

success and achieve even better results in the future.

CIPFA November 2016 exam results

The results of the CIPFA November 2015 examination and also the examination for the additional paper

“PFM for Somalia” continued to reflect the improvements achieved in June 2015. A summary of the results is provided below and details of students shown in ANNEX 5.

28

Table 1: Summary of Results of November 2015 CIPFA Financial and Management Accounting and PFM for Somalia

PASS FAIL

Absent Total reg.

Pass rate (all)

Pass rate (sat) 80+ 70-79 60-69 TOTAL 41-59 21-40 0-20 TOTAL

FA

MU 5 11 8 24 11 1 0 12 11 47 51% 67%

SIMAD 0 9 7 16 15 0 0 15 7 38 42% 52%

PSU 4 13 12 29 9 0 0 9 3 41 71% 76%

EAU 2 5 7 14 6 0 0 6 3 23 61% 70%

Total - FA 11 38 34 83 41 1 0 42 24 149 56% 66%

MA

MU 0 0 0 0 0 0 0 0 0 0 - -

SIMAD 0 0 5 5 4 0 0 4 5 14 36% 56%

PSU 0 0 0 0 1 0 0 1 1 2 0% 0%

EAU 0 0 1 1 3 0 0 3 1 5 20% 25%

Total - MA 0 0 6 6 8 0 0 8 7 21 29% 43%

TOTAL IPFM 11 38 40 89 49 1 0 50 31 170 52% 64%

PFMS

MU 20 3 6 29 1 0 0 1 5 35 83% 97%

SIMAD 20 0 0 20 1 0 0 1 28 49 41% 95%

PSU 32 11 2 45 2 1 0 3 1 49 92% 94%

EAU 29 7 2 38 1 0 0 1 5 44 86% 97%

Total - PFMS 101 21 10 132 5 1 0 6 39 177 75% 96%

29

In summary:

a. 83 students passed the Financial Accounting paper;

b. 6 students passed the Management Accounting paper;

c. 132 students passed PFM for Somalia;

d. 37 students have now completed the CIPFA Certificate stage and are eligible to proceed to the Diploma phase.

Lessons learned and recommendations going forward:

It is noted that only a small number of students sat the Management Accounting paper. This means that there are 84 students who have passed Financial Accounting and could proceed to the Diploma stage if they could pass the Management Accounting exam in June 2016. However,

since Phase 1 of the programme ends on March 31, it will not be possible for these students to attempt the June 2016 CIPFA exams.

If Phase 2 can be initiated in time to register these 84 students for the June 2016 CIPFA examinations, then it is probable the numbers proceeding to the Diploma level

will be significantly increased – on the basis of pass rates achieved in the November exams the students who would have passed the Certificate level could increase by as

many as 50. See Recommendation 3 in Section 6E below.

An issue that needs to be addressed is the number of “no shows”. This has a real cost as CIPFA

exam fees are based on students registered for the exam, not those who actually sit the exam. Therefore, every ‘no show’ represents a wasted exam fee. It is the responsibility of the university

to ensure that it is only in exceptional circumstances that students who are registered for an exam fail to sit.

Universities should ensure that students registered for an examination actually sit the

examination unless exceptional circumstances occur

STATUS of Deliverables and achievements

All scheduled tasks have been completed as summarised in the table on the next page. As there are only 2 months of this phase remaining, we also summarise the status of other deliverables. As indicated, the deliverables will all be completed by the end of the current project phase on

March 31, 2016.

Table 2: Deliverables Schedule

Ref Deliverable Status January 31, 2016 Plan to complete by

end Phase 1

D01 Completion of delivery of management and administration

Completed

D02 Joint accreditation protocol

CIPFA/Universities

Completed to March 31, 2016

D03 Detailed design and syllabus PFM

course

Completed

D04 Teaching and learning materials for course delivered

Completed

D05 Completion of delivery and

support for ODL and web based system

Completed

30

Ref Deliverable Status January 31, 2016 Plan to complete by end Phase 1

D06 Student management system

operational

Completed

D07 Trained faculty Completed

D08 Student examination results and

certificates

Completed except November

2015 certificates

Certificates will be

issued

D09 PFM Cadre Scheme of Service

submitted

Completed

D10 Student examinations held Completed

D11 Focused PFM course (regional) certificate level and tutorial

support

Completed

D12 Training for senior management

delivered

Completed

D13 Short introductory course delivered

Completed

D14 Budget process practical training

delivered

First two courses delivered Ongoing - will be

completed during February 2016

D15 TA to build University

sustainability delivered

Completed

D16 Completion of delivery of quality

management

Completed

D17 Design of quality management system

Completed

D18 Inception Report delivered Completed

D19 Interim Tutor Mentor Report Completed

D21 Final Tutor Mentor Report Will be delivered by March 31, 2016

D22 Final Report delivered

Other Milestones

Student management and registration

As the programme ends on March 31, 2016, no further students are registered for the CIPFA examinations.

A re-sit of the PFM for Somalia will be held during March 2016. Students have not as yet been registered for this examination.

ODL website

The ODL website is fully functioning. However, the site is currently being redesigned to make it more suitable for operation by the universities to manage in the future. The redesigned site will

be available before the end of this phase. The appearance of the site and registration process

31

will be unchanged, but the ability to view and report on individual student progress will be enhanced.

Webinars

A series of webinars were delivered on PFM for Somalia. Recordings were also made available to students on YouTube.

PFM for Somalia Module

The final module for the PFM Certificate level is PFM for Somalia. All learning material, webinars, tutorial support, examinations and results for this programme have now been delivered.

Resits are being organised before the end of the project in March 2016.

Budget practical training

The final training under this component is scheduled to commence in Kampala during the end of

January 2016. This will be a two-week training programme covering budget forecasting, budget execution and monitoring.

Recommendations and Requirement for a Phase 2

The present Phase of the programme ends in March 31, 2016. This will leave the procurement training, which continues to June 30, 2016, with no logistic support from WYG.

There are 84 CIPFA students who have now passed one of the CIPFA papers and have the opportunity to complete the certificate stage if they could sit a further examination in June 2016.

However, at present there is no opportunity for such additional examinations, nor will there be

any tutorial support beyond the end of March.

Besides the requirement to provide Diploma level training, the above issues should be urgently addressed.

As a matter of urgency, a Phase 2 needs to be initiated to (i) provide management support to the procurement training to June 2016, and (ii) to enable

students to be supported to take June 2016 IPFM Certificate

resits

Incorporation of procurement training

Discussions were concluded over the incorporation of procurement training within

the programme and this will involve the International Training Centre of the

International Labour Organisation (ITC-ILO) developing Certificate and Diploma

level procurement modules specifically for Somalia.

It is important to note that the incorporation of procurement training was part of the

original design of the programme. It was however initially excluded because of the

time constraints and the urgent need to start PFM training, but is now being

incorporated within the programme. Therefore this is simply a reversion to the

32

original design concept.

The main features of the ITC-ILO course are as follows:

a. There will be a procurement course developed by ITC-ILO with 3

Certificate level modules and an estimated study time of 4 months

b. At the end of this period there will be an examination on each module.

Successful students will be awarded a certificate by ITC-ILO

c. The procurement Diploma programme will run parallel to the IPFM course

as an optional stream and contain four modules

d. The procurement course will be integrated with the existing PFM

Education and Training programme, working through the universities and

training the same students, using the same ODL website and management

structure as the existing IPFM course and other PFM training

Updated programme timing and sequence

Upon the incorporation of the ITC-ILO Certificate in Procurement in the PFM

education and training programme, the timing and sequence of the programme have

been updated as follows;

.

Table 3: Updated programme timing and sequence

Level Examination Target exam date

CIPFA Certificate Financial Accounting November 2014

Management Accounting June 2015

Somalia PFM

Certificate

Introduction to PFM in

Somalia September 2015

ITC-ILO Certificate

Legal Framework of Public

Procurement

February/March

20162

Institutional Aspects of

Public Procurement

Management of the Public

procurement Process

Students select procurement or PFM stream

CIPFA IPFM

Diploma

Four papers + additional

PFM paper developed for

June 2016 through

to end 2017

2 This is later than the December 2015 envisaged in the ITC-ILO proposal because the module “Introduction to

PFM in Somalia” is now proposed to be taken after the IPFM CIPFA Certificate

33

Somalia

ITC-ILO

Procurement

Diploma

Four papers June 2016 through

to mid-2017

CIPFA Advanced

Diploma

Four papers End 2018

Commencement of the procurement stream:

In last quarter of 2015, the International Training Centre of the ILO (ITCILO) has been

contracted to provide consultancy services for the development and implementation

of the procurement component for the PFM Education and Training distance learning

certification scheme. This scheme will be implemented in a dual manner, i.e. by (1) a

traditional distance learning program and (2) a parallel track as a self-learning

program with tutorial support. ITCILO will coordinate activities with the consortium

of WYG-International, Michael Parry consultants and the Chartered Institute of Public

Finance and Accountancy (CIPFA) –WYGI-C.

Agreed objectives and deliverables

As elaborated above, the procurement stream of the PFM Education and Training

Program supports the overall objectives of the PFM reform of the Government “to

improve the efficiency and the effectiveness of public financial management processes

and systems, in order to provide timely, transparent and accurate financial

information across the public sector to underpin policy formulation and inform

Government decision making in support of service delivery”.

The deliverables of the capacity building program implemented by ITCILO are the

following:

1) A tailor-made course structure and syllabus for the Certificate level program of the procurement stream.

2) Learning material for the Certificate level including: Study text book and tutorial material for each Module (PPT presentations, exercises, case studies, hand-outs, etc.); Online learning materials, revision courses, webinars on selected topics (4 webinars co-delivered with WYG); a list of bibliography of relevant reference material per Module/topic; a glossary of procurement terms. This material will be provided in electronic format for uploading to the online distance learning (ODL) PFM website.

3) The face-to-face training of the university tutors at the certification level will be jointly delivered with the WYGI-C consortium for the duration of 3 weeks. ITCILO is not in charge of organizing the participant’s logistics venue.

4) Enrolment of students: The pre-requisite for enrolment is the successful completion of the PFM introductory course, including

34

exam, and Government’s approval. In case of no exam foreseen for the PFM introductory course, WYGI-C should put measures in place to ensure an adequate level of English.

5) Delivery of the ODL Procurement certification course: It will be delivered to those students who have been successfully enrolled; the delivery shall start immediately after the successful enrolment of the above students.

6) Tutorial and administrative support to tutors and students. 7) Joint accreditation protocol for examination purposes. The written

examinations shall take place under controlled conditions with a set time limit in accordance with normal examination practice and shall be sent to ITCILO for correction.

8) An examination and certification process based on the three modules. Students undertaking written examinations at the participating universities, with the papers marked by ITCILO. Upon completion of the Modules, students will have access to their first exam (with two re-sit examinations in case of failure). This will lead to the: Award of Certificate to successful candidates.

9) Development of the Senior Management (PFM for Managers for the Procurement Stream) Training including guidance notes, timetable and questions and answers for on-line self-assessment tests.

10) Participation in overall course management and coordination processes.

11) Contribution to progress and final reports on the procurement component.

Expected results

It is expected that the procurement training will lead to:

a. A cadre of procurement staff qualified to Certificate level in procurement;

b. A sustainable capacity within the participating universities to continue to deliver procurement training;

c. A body of learning material on procurement available for the universities and government in the future.

Challenges identified by Universities:

On 23 September 2015 ITCILO had conference calls with the universities course

coordinators of SIMAD, Mogadishu and East Africa Universities. A call with Puntland

University was held on the 2 October 2015. These exchanges were conducive in getting

to know Somali counterparts and to understand the issues that they have faced while

implementing the PFM stream of the program.

Therefore, an abridged list of the issues faced are:

Low utilization of the platform and of the live webinars;

35

Problems with internet connectivity; Turnover of some of the tutors; Attendance to the program (due to security issues in some universities); Lack of defined selection criteria for the students that were to enter the program

(at the beginning of the program; resolved later); The registration period for the prospective students was deemed short; Issues with the nature of the course, its complexity and with the types of

examination; Time allocated to the training of trainers was considered to be short. The universities’ Course coordinators did mention that most of the challenges

have been overcome, but these are still issues that need to be taken into consideration for the procurement stream.

2.4.3 Somalia Financial Management Information System (SFMIS):

Key to realizing Government’s development objectives was the establishment of

adequate procedural and control systems that will ensure the legality, accuracy and

timelines of fiscal information in the areas of planning, budgeting, purchasing,

accounting, reporting and auditing. Establishment of fundamentals for fiscal

discipline through robust mechanisms for comprehensive revenue forecasting to

promote realism of the budget and tightening cash controls for revenue collection and

payments required for a robust Financial Management Information Systems (FMIS).

Change management is central to the whole implementation approach and the

business process re-engineering should consider absorptive capacity during the re-

orientation of the end-users.

The SFMIS Project kicked off with in July 2013 and a ‘fit-for-purpose’ bespoke interim

SFMIS solution was implemented in Oct 2013, and was considered the first ever PFM

system in the history of Somalia.

The procurement of hardware and infrastructure was completed and implemented at

the Ministry of Finance and Central Bank of Somalia. Review and improvement of

business processes followed by completion of the development of full Web-Based

financial system which was successfully implemented and went live in April 2015 as

the country financial system (SFMIS).

Somalia FMIS is now considered one of the most successful implementation of a

Financial Information Systems in the region and seen as a model.

36

Project Approach

The implementation of the web version continued the modular-incremental approach

with emphasis on:

Training-of-Trainers (ToT) to create a cohort of super users who are competent

in supporting and maintaining the system in a sustainable manner and only

escalating to the development team for second level support

Inclusive change management and extensive training for various categories of

users and sensitization of the political class and the public formed a critical

aspect of the implementation approach

Proper and efficient Human Resources capacity building through the

introduction of SFMIS in a phased manner

Implementation of a Web-Based Bespoke system capable of real-time capturing

of the Budget, Expenditures and Revenue and produce real-time financial

reports

During the current SFMIS implementation, the following methodology was followed:

Figure 1: Implementation Methodology

Key SFMIS Achievement – 2015 All the activities that were scheduled for the year were accomplished successfully and

the implementation continues to proceed as planned.

Major accomplishments during the 2015 financial year include;

37

Figure 2: SFMIS Architucture

Implementation of 5 Segment Chart of Accounts

The Chart of Accounts was revised and modified to include 5 segments and multi-level hierarchy in order to

provide the maximum flexibility for financial reporting at any segment and any level.

Figure 3: FGS Chart of Accounts

38

Implementation of SFMIS Core Infrastructure The core infrastructure is the backbone of the environment. It provides a secure, private network for

the users to access the application with or without Internet. The environment is built with a primary

data center and a backup disaster recovery site. The environment was successfully deployed in January

of 2015. The environment has been remarkably stable with no unplanned down time in 2015.

Figure 4: SFIMS Network Environment

Training Extensive, hands-on training has been at the heart of the implementation plan. The team started with

a Training-of-Trainers (ToT) approach to train a team of super users to be competent in supporting

and maintaining the system in a sustainable manner. The super users were instrumental in training

well over 180 civil servants form across the government.

SFMIS Expansion The team completed expansion of the SFMIS network to over 60% of the MDA’s. The objective was to

allow all users to be able to use the system directly from their facilities. The remaining sites to be

connected by the end of January.

39

Post Implementation Support The SFMIS team implemented a comprehensive support and maintenance process with a suitable

Service Level Agreement (SLA) for the infrastructure and the application. The support process provides

a platform for the end users with multiple channels to communicate with the support team including

an online support portal.

Budget Execution A full complement of budget control functions were developed and implemented to provide an

efficient mechanism for the execution of Federal Government of Somalia’s national budget. The core

modules included the budget controls, expenditures management and revenue capturing functions.

Currently, 100% of the Government’s budget is managed through the system.

Improved Payment Approach The SFMIS introduced an improved payment process and control using bar-coded Payment

Instruction, which has a dual benefit of direct payment to end-beneficiary and streamlining bank

reconciliation. The system was configured to track payments from sub-ledger bank accounts in the

SFMIS that roll-up to the Treasury Single Account and thus avoid the current practice of advance

payments and provide a checkpoint for availability of cash before effecting payment. In addition,

allocations cannot be made if there is no approved and sufficient budget with further control at the

payment point that checks for sufficiency of allocation.

According to the new payment approach, the new process segregates between recording the Expense

and releasing of Payments. This allows the government to record the financial transactions of the

expense at the time it is incurred (not at the time of payment), and records the expense amount as an

obligation. This also allows the government to generate reports for all pending payments (obligations)

and aging, which helps with the cash management process and payment efficiency measurements.

All payments are made directly from the Expenditure Bank account, which is part of the TSA in the

Central Bank directly to the registered suppliers or active employees.

Figure 5: New Payment Approach

40

Central Bank Module Due to the lack of a core banking system at the Central Bank of Somalia, the SFMIS team took the

initiative to develop an interim module for the Central Bank completely integrated with SFMIS to

ensure full control of payments and receipts. The Bar-Coded Payment Instruction generated and

approved by the Accountant General Department is scanned and verified by the Central Bank officers

and a Bank Payment voucher is automatically generated.

Payroll The SFMIS provided a completed and fully controlled Payroll module, integrated with the financial

system. All civil servants data was imported to the system (3950 Employee), and since February of

2015, the payroll for all civil servants payroll is processed only through the country system, currently

4340 active employees are registered in the system.

Figure 6: Number of Employees in SFMIS by Grade

Direct Deposit The system has introduced the capability of Direct Deposit payments for MDA’s, Suppliers and Payroll.

This will provide more control on the Government’s payments where the payment is directly

deposited to the payee’s account though an instruction sent to Central Bank of Somalia. All licensed

banks in Somalia were registered in the country system and a provision was made to capture the bank

account information and payment type for each payee.

Figure 7: Sample Direct Deposit Instructions

15431333

342542

69

511

0

500

1000

1500

2000

Number of Employees

A B C D F X

41

Commitment Control The Purchasing module was developed and currently the implementation and training of trainers is in

underway. The module provides full commitment control on the national budget to ensure the

availability of committed budget for supplier.

Figure 8: Purchasing Approach

Use of Country System (USC)

Due to the successful implementation of SFMIS, many donor funded projects decided to use

the country system for their own financial recording. Currently the SFMIS is processing 12

foreign projects and funds including but not limited to:

- Recurrent cost and reform facility

- Public Sector Capacity Injection

- Economic and Financial Gov. Institutional Project

- Somalia PFM Capacity Strengthening Project

- ICT support in Somalia

- Special Financing Facility (SFF)

Financial Reporting

The SFMIS provides a platform to improve the efficiency, transparency and accuracy of the

Government’s financial reporting. Currently all major financial reports such as Trial Balance,

Budget Utilization, Revenue Performance, Source and Use of Funds and many others can be

instantly produced and published.

Furthermore, many charts and financial dashboards were developed to provide real-time

financial information to the executives.

42

Other realized benefits

The following are some of the other specific benefits that are envisaged with the

implementation and operation of the new system on a real time basis.

i. Minimisation of errors in transaction processing.

ii. Achievement of a faster transaction processing cycle;

iii. Achievement of a budgetary and commitment control system - eliminating

budget overruns; the system will have inbuilt checks to match the warrants

against the appropriated budget and it will not be possible to enter into any

commitments without approved warrants on the system.

i. An interlinked system of internal controls providing clear audit trails and identification of the originator for all transactions.

ii. Simplified and timely (automated) reconciliation of bank accounts

iii. Increased public/donor confidence especially in the use of CS.

iv. An opportunity to clean up the government payroll.

v. Timely production of in-year budget reports and financial statements since transactions will be processed on a real time basis and the accounting and financial reports generated automatically.

vi. Significantly contributed to the achievement of PFM objective by providing timely, transparent and accurate financial information across the public sector.

Plans for deepening the system:

The deepening of the system with additional functionalities is planned over the next

3 years as follows;

Plan for SFMIS (2016 – 2018)

Module / Component 2016 2017 2018

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Financial Reporting & Dashboard Financial Charts for Executive Management Mobile Apps Consolidated Real-Time Dashboard Ongoing Development of financial reports and needed

Revenue Management Issuing of system generated receipts and recording in TSA Handheld Collection (pilot with visa fees at airport) Taxpayer Identification Number (TIN)

Billing System Tax Billing Accounts Receivable

Human Resource Employee Management Recruitment Document Archival Manpower planning (linked to budget preparation) Performance Appraisal Training Management Time Management

43

Employee self-service

Fixed Assets Depreciation (notional for Net Book Value) Asset Count Asset Barcoding

Inventory Control Item Master Store Receipt Store Issue Stock Counts / Inventory Reports

Customs Declaration Declaration Management (possibility of interface with pre-shipment

system) Integration with Billing and Revenue Collection Risk Management and Assessment

Cash planning Cash flow forecasting Disbursement schedules and cash releases

Purchasing Release 2 Integration with Inventory and Asset Register Contract management

Integration with other systems Integration with core banking system at the Central Bank Integration with commercial banks payment systems

Ongoing Post Implementation Support

2.4.4 Review of the legal and regulatory framework for financial management:

The Audit and Procurement and concessions bills have been approved by the

Parliament and submitted for presidential approbation. During the year, the

Parliamentary committee on Finance has studied the provisions of the bills in two

workshops held in Mogadishu and Nairobi and this has helped speed up the passing

of the bills.

Review of the PFM bill has also been concluded during the year and semi-final

translated version were presented for validation. It is currently being translated once

again following the outcome of the validation exercise and final one bill will be

submitted within the first quarter of 2016 to the cabinet for endorsement and onward

submission to Parliament.

2.4.5 Reforming the National Civil Service Commission:

Closely linked to the financial management reforms are the public service reform

activities where government is committed to improving the quality of the civil service

as a prerequisite to improving service delivery. There is a civil service law in place

and also to ensure the availability of timely and accurate human resource information,

Government has upgraded its SFMIS with a payroll module to ensure seamless flow

of information relating to government human resources. This has ensured consistency

between the nominal roll and payroll and has thus resulted improvements in the

management of the government payroll transfers. As part of the migration of the

payroll to the SFMIS, the payroll data has been subject to a validation exercise to

ensure that more credible and reliable data is migrated.

Additionally under the Recurrent Cost and Reforms Financing Project (RCRF) are

44

salaries of nearly 4300 civil servants being transparently processed through an

improved payroll reform that has further enabled up to date payment of Civil Servant

and the symbolic resumption of service delivery in both education and health sector

is expected soon.

2.4.6 Capacity Strengthening or Injection through Technical Assistance: International Consultants on budgeting, accounting and reporting, procurement,

banking, auditing, macro-economics, arrears clearance, payroll management and civil

service reform, will soon arrive in the country to hand-hold and train CITs across PFM

institutions. This will be complemented by Somali counterpart SMEs/consultants and

new young graduates recruited and funded under the CIM/RCRF/PFM Technical

Assistance. Young graduates SMEs will be placed across MDAs “as change agents” in

priority areas including department of Procurement, Budget, Revenue, and

Management. There will as well be an outreach and communications strategist who

will be tasked with the design and execution of good Public Relations.

2.4.7 Association of Somali Professional Accountants (ASPA)

The PFMRCU has been coordinating activities to support ASPA to evolve as a

Professional Accountancy Organization by developing and implementing an action

plan to meet the International Federation of Accountants (IFAC) Statement of

Membership Obligations (SMO).

The project aims to launch ASPA as a platform for Continuing Professional

Development (CPD) of like-minded PFM professionals and also for exercising

oversight of its members. PFMCSP will support ASPA to seek membership to the Pan

African Federation of Accountants (PAFA 3 ) that was launched in May 2011 to

accelerate the development of the accountancy profession in Africa and strengthen the

voice of the accountancy profession within Africa and worldwide. ASPA will work

closely with the Chamber of Commerce to introduce an ‘Accountant Report’ in

accordance with the Small and Medium-sized Entities Guidelines on Accounting

(SMEGA) Level 3 issued by the United Nations Conference on Trade and

Development (UNCTAD 4 ) for businesses with a certain level of turnover to be

determined after due consultation with relevant stakeholders.

2.5. PERFORMANCE OF THE PROJECT INDICATORS.

The Project Development Objective (PDO) is “to establish systems for more transparent

and accountable management and use of public funds in Somalia”.The performance of the

3 http://www.pafa.org.za/ 4 http://unctad.org/en/Docs/iteteb20036_en.pdf

45

project on its development objective can be seen to be satisfactory in light of the targets that

were set for 2015; 5 out of the 7 (71%) indicators were successfully achieved, 2 indicators

(29%) partially achieved and no indicators (0%) were not achieved.

46

PDO Level Results Indicators

Measure Unit of

Measure

Baseline

(2014)

2015 target Remarks

Time taken to

publish Annual

Financial

Statements

Per

quarter

More than 6

months and

not published

4 quarters

were

published

Significantly Achieved

Though Government website has been down for

months, it is now active and live.

% decrease in

difference between

budgeted and

actual aggregate

expenditure

% 64.1%

25 Partially Achieved

A summary of the budget variance over the last

eighteen months. The estimated supplementary

budget for the FY 2015 is $199,033,838 and the

actual expenses for the year is $135,420,557. The

budget variance rate for the year is 32%.

Compared to the year 2014, the variance rate

decreased 52%.

2014 2015 Increase/

(Decrease)

Budget Variance (%) 66 32 (52)

Intermediate Result (Component One): Component 1: Public Financial Management Reform

Oversight (PFMRO)

Increased capacity for a structured approach to PFM institutional capacity strengthening.

Intermediate

Results indicator

three

Number of PFM

accredited staff

Number

(persons)

Paucity of

professional

PFM

practitioners

10

Certificate

stage

Achieved

An Impressive 37 students have passed the

CIPFA certificate level on the June and

November 2015 exams.

Intermediate Result (Component Two): Somalia Financial Management Information System (SFMIS)

Improved the technical capacity to handle PFM processes in an efficient manner.

Timeliness of bank

reconciliation

Days Bank

reconciliation

not done

30 achieved

Transactions are recorded on time to allow

timely reconciliation. Transactions are

processed through the SFMIS on a real time

basis.

The Bank auto-reconciliation functionality

that has been implemented in the SFMIS

and used by the end users.

Intermediate Result (Component Three): Expenditure Control, Procurement, Accounting and

Reporting (ECPAR)

Strengthen controls for fiscal discipline, transparency and accountability.

Treasury Single

Account (TSA)

_ Multiple

bank

accounts not

consolidated

Monthly Achieved

All projects bank accounts are reconciled

and consolidated

Transparency,

comprehensiveness

and competition in

the legal and

regulatory

framework

_ Low public

access to

complete,

reliable and

timely

procurement

Government

website

upgraded to

post

procurement

Achieved.

The RFPs were posted to the government

website in April and May. The website was

down briefly and info on procurement are

posted regularly.

47

Summary of achievement of the indicators

2.6. Financial performance

Funding summary:

The Project became effective on 17th January 2014 for duration of 2 years and 3 months until 31st March 2016 with an approved budget of US$ 4,500,000 as highlighted in the table below:

Source of funds Donor Commitment-

Amount received by the end of the year – (31 Dec 2015)

Undrawn balance by end of year (31 Dec 2014)

(US$) (US$) (US$)

(A) (B) (A)-(B)

opportunities

and award

information

opportunities

and awards

Time taken to

publish quarterly

unaudited reports

Days In-year

budget

performance

reports not

published

30 Partially Achieved.

The Appropriation Act 2015 requires that:

“Monthly and quarterly budget

performance reports are to be published on

the MoF website (http://www.mof.gov.so/ )

within deadlines to be specified in

Ministerial Decree or Treasury Circular”.

MoF is recording transactions in the SFMIS

to produce in-year budget performance

reports but so far, with some delays.

No

Achieved 5 71%

Partialy achieved 2 29%

Not achieved 0 0%

7 100%

48

State and Peace Building Fund (SPF) – World Bank

US$ 4,500,000 US$ 4,322,628.53 US$ 177,372.47

Total US$ 4,500,000 US$ 4,322,628.53 US$ 177,372.47

In an effort to support the use of country systems, the projected disbursements of $2,804,000 for the FY 2015 were integrated into the government national budget. The actual disbursement of project funds by the end of the FY 2015 stood at US$ 2,147,257

representing (77%) of the annual budgeted amount–this is equivalent to 47.7% for this year’s funding allocation and a cumulative of 87% of the total project funding of US$ 4.5 million dollars. The project disbursement rate for the financial year 2015 therefore was very satisfactory in relations to the budgeted amount. Project expenditure: Total project expenditure during the year amounted to US$ 1,674,564.58 being 89% of the budgeted amount and 37% of the total project funding. The expenditure by economic categories and activities for the FY2015 is as follows:

3. ANNEX 1: IMPLEMNTATION STATUS OF THE PRIORITIZED AND

SEQUENCED PFM REFORM ACTION PLAN

49

Platforms

Reform Components

Outcomes

Reform Activities

Time Frame Responsible

Agency

2013

(6 months)

2014

2015

2016

Status

Platform I: Instituting PFM fundamentals for budget credibility The objective of this platform is to build strong PFM fundamentals. This will be done by strengthening the PFM systems and institutions and improve PFM knowledge base of key participants by providing training to the cadre of civil servants and PFM participants on the fundamentals of public financial management.

Component 1.1: Resource the Office of the Accountant General

Strengthened Accountant General department.

Enabling the sub-structures in the Accountant General’s Department with clear roles, responsibilities and the required tools Developing a Standard Chart of Accounts (SCoA) to structure and present the budget and financial statements in a clear and understandable manner Establishing aTreasury Single Account (TSA) in the Central Bank through which all revenue collections and authorized payments are made with regular bank reconciliations Issuing interim Treasury Circulars or Ministerial Orders Appoint a qualified Accountant General and well trained accountants to manage the accounting system. Training on preparing comprehensive financial statements to comply with the

Office of the Accountant General in

collaboration with

Accounting Reforms

Implementation Team (ACRIT)

Office of the Accountant General in

collaboration with

Accounting Reforms

Implementation Team

Organization strategy

developed by Ernest & Young

Completed

Completed

Completed

Completed

Completed

50

Platforms

Reform Components

Outcomes

Reform Activities

Time Frame Responsible

Agency

2013

(6 months)

2014

2015

2016

Status

requirements of the PFM legal framework and International Public Sector Accounting Standards (IPSAS) Preparing templates for in-year budget performance reports for management decision making Compilation of a national asset register for FRS Appoint a Technical Advisor with experience in government accounting to advise the Accountant General.

Office of the Accountant General in

collaboration with

Accounting Reforms

Implementation Team

Completed

In progress

Completed

Component 1.2: Strengthen Revenue Departments to improve revenue management

Improved revenue outturns

Review the revenue tariff system to make it value based Outsourcing the management of the seaport and the airport and the collection of their revenues Establish internal controls for the collection and accounting for revenue Automate the revenue management system at the ports Train staff of the revenue departments

MoF in

collaboration with PFMRSC

In progress

Pending

In progress

On schedule

51

Platforms

Reform Components

Outcomes

Reform Activities

Time Frame Responsible

Agency

2013

(6 months)

2014

2015

2016

Status

Procure logistics for the revenue departments to enhance efficiency Undertake diagnostic using the Customs Assessment Trade Toolkit (CATT)

On schedule

Pending

Component 1.3: Strengthening the Central Bank of Somalia

Effective banking arrangements and supervision and efficient monitoring system

Conducting a quick assessment of the existing structure, human capacity, and physical facilities; Implementing an accounting and banking software for the CBS for managing banking transactions; Improving banking arrangements to allow efficient flow of funds and strengthening the governance structure of the Central Bank; Appointing a Board of Governors and obtaining expertise in Banking Supervision Providing expertise to support the revision of Banking laws and finalizing the Financial Institution Bill;

Central Bank Board in

collaboration with PFM Reform Steering

Committee

Central Bank Board in

collaboration with PFM Reform Steering

Committee

Completed

Completed

Completed

Completed

On schedule

52

Platforms

Reform Components

Outcomes

Reform Activities

Time Frame Responsible

Agency

2013

(6 months)

2014

2015

2016

Status

Obtaining membership of SWIFT Association to allow international payments with commercial banks. Providing technical hands-on training and mentoring of staff

Completed

Completed

Platform II: Effective Budget Execution and Financial Accountability The objective of this phase is to ensure that fundamental PFM systems, structures and institutions created by the PFM legal framework are in place and functional so that ultimately, resources are prudently applied in a transparent manner and fully accounted for.

Component 2.1: Reorganize the Office of the Auditor General

Strengthened independent Supreme Audit Institution.

Review the processes of appointment, remuneration and removal of the Auditor General to improve the independence of the Auditor General Recruit and train auditors in the office of the Auditor General on International Standards of Supreme Audit Institutions (ISSAIs) Appoint Technical Advisor with experience in functions of the Office of the Auditor General to advise the Auditor General

Office of the Auditor General in collaboration

with Audit Reforms

Implementation Team (ARIT)

Completed

On Schedule

In progress

53

Platforms

Reform Components

Outcomes

Reform Activities

Time Frame Responsible

Agency

2013

(6 months)

2014

2015

2016

Status

Prepare audit manuals/tools and conduct training

In progress

Component 2.2: Establish and resource Internal Audit Unit

Effective internal controls over Government financial transactions

Developing Internal Audit Charter and Internal Audit Manual Recruiting and training internal auditors to man the Internal Audit Department Appointing a Technical Advisor with experience in internal auditing to advise the Director of Internal Audit

Internal Audit reforms

Implementation Team

(INAIT)

Pending

Pending

Pending

Component 2.3: Aid coordination synchronization of PFM reform activity

create an Aid Management Unit to co-ordinate all donor funded projects in Somalia

MoFP in collaboration with PFMRSC

Completed

Component 2.4: Strengthening Parliamentary oversight

Effective Parliamentary scrutiny of but execution processes, financial reports

PFM training for all members of the Finance and Treasury Committee of Parliament Establish a robust sanctions regime and mechanisms for effective follow-up on audit queries on unauthorized, irregular and fruitless and wasteful expenditure and losses resulting from criminal conduct

PFMRSC and Finance

Committee of Parliament

Completed

In progress

54

Platforms

Reform Components

Outcomes

Reform Activities

Time Frame Responsible

Agency

2013

(6 months)

2014

2015

2016

Status

A ‘substantive secretariat’ comprising of relevant subject matter experts will provide technical advisory services to the committees in ensuring that correct parliamentary procedures are adhered to in the Committee’s examination of the budget and audit reports. Sponsored visits by members of the Finance and Treasury Committee of Parliament to selected countries with strong Parliamentary PFM oversight roles.

PFMRSC and Finance

Committee of Parliament

Pending

In progress

Component 2.5: Public Procurement and Concessions

Transparent public procurement processes

Review and update the public procurement rules Capacity building for procurement staff through training

MoFP in collaboration with PFMRSC

Completed

Completed

Platform III: Improved policy formulation, planning and budgeting The objective of this platform is to strengthen policy formulation, development planning and ensure a participatory budgeting processes that translate government policy into actionable activities for which resources are allocated and used for effective service delivery.

Component 3.1: establish a macro fiscal unit

Sound macro fiscal analysis to support development planning and budget formulation

Recruit experienced economist and policy analysts Macro fiscal policy analysis to feed into the budget formulation process:

MoFP

Completed

Completed

55

Platforms

Reform Components

Outcomes

Reform Activities

Time Frame Responsible

Agency

2013

(6 months)

2014

2015

2016

Status

Public policy analysis, development of sector strategies and linkage to ministry strategic plans. Provide support for the development of a medium term fiscal framework (MTFF). Develop and conduct training on revenue forecasting tools Initiate verification of domestic arrears

In Progress

In progress

Completed

Component 3.2: Development Planning

Development of national plans

Developing long-term national plans Conduct public expenditure tracking surveys

MoFP

On schedule

On schedule

Platform IV: Institutional structures, Strategic Human Resource Management (SHRM), Financial Management Information System (FMIS) and cross-cutting issues. The objective of this platform is to align all organizations within the public sector and to enhance employee skills and competencies.

Component 4.1: PFM training

Availability of a cadre of government employees with broad awareness of PFM processes and structures.

Training on PFM functions and processes for key PFM participants. Training on revenue management and control. Training on fiscal policy analysis and revenue forecasting

PFM training

Implementation team (PFMIT) And (MoFP)

In progress and

on schedule

On schedule

Completed

Component 4.2: Establish PFM Training Centre

Availability of cadre of Somali PFM experts

Provide PFM training to bright university graduates and

MoFP in

collaboration

Completed

56

Platforms

Reform Components

Outcomes

Reform Activities

Time Frame Responsible

Agency

2013

(6 months)

2014

2015

2016

Status

government employees engaged in PFM activities

with PFM training centre

Component 4.3: Establish Somali Institute of Management and Public Administration

Availability of civil servants with effective management and public administration skills

Provide training to civil servants in management and public administration Provide training on leadership to public sector leaders and the political class

All government institutions in collaboration with Somali Institute of

Management and Public

Administration

Completed

On schedule

Component 4.4: Reforming the National Civil Service Commission

Skilled and well trained civil service

Development of a clear policy to guide the recruitment, training, placement, promotion, demotion, dismissals and retirement of civil servants. Recruit and train Human resource officers to manage the NCSC. Procure logistics to support the running of the NCSC.

Ministry Of Labour,

National Civil Service

Commission In Collaboration

With PFM Reform Steering

Committee

In progress

In progress

Completed

Component 4.5: Develop professional accounting body

Production of qualified professional accountants to

Training of certified accountants

Professional Accounting

Body in

Completed

57

Platforms

Reform Components

Outcomes

Reform Activities

Time Frame Responsible

Agency

2013

(6 months)

2014

2015

2016

Status

feed both public and private sector of Somalia

Provide for the conduct of examinations leading to certifications of accountants Regulation of the practice of accounting in Somalia

collaboration with MoFP,

Auditor General Department

and Accountant General

Department

On schedule

On Schedule

Component 4.6: Implementation of Somalia Financial Management Information System

Efficient management information system

Implementing a user-friendly, robust and secured Somalia Financial Management Information System (SFMIS) focusing on capturing budget, handling treasury functions and financial reporting. Users to be provided with access privileges based on their level of authority in the government.

PFMRSC in collaboration

with the Office of the

Accountant General

Completed

Component 4.7: Review of legal framework

PFM Legal frame work creating an enabling environment for sound and efficient PFM systems and institutions

Review and passage of the PFM Bill that is being drafted (preceded by Ministerial Orders). Draft PFM Regulations Prepare Operating Procedures Manual Review and amend the taxation laws. Translation of the laws when passed.

Finance and Treasury Committee of Parliament in collaboration with PFM Reform Steering Committee

In progress

Pending

Completed

In progress and on schedule

Completed

58

Platforms

Reform Components

Outcomes

Reform Activities

Time Frame Responsible

Agency

2013

(6 months)

2014

2015

2016

Status

Dissemination of the reviewed laws through training.

On schedule

Component 4.8: Re-establish and operationalize PFM coordination unit

Effective coordination of donor assistance and synchronization of PFM reform efforts

Create a PFM Co-ordination Unit to co-ordinate all PFM reform efforts. Conducting business process reviews and issuing Treasury Circulars to strengthen internal controls where required and conducting hands-on training. Publishing in local newspapers and government websites information on public finance.

PFM Reform Steering

Committee

Completed

Completed

Completed

59

4. ANNEX 2: DEVELOPMENT PARTNERS SUPPORT TO THE PFM REFORM

STRATEGY AND ACTION PLAN – DIVISION OF LABOUR

Thematic PFM reform area

Development Partner

Remarks

1. Policy analysis, economic planning

IMF AfDB UNDP- SIDP5 Sweden World Bank EC

Statistical capacity (AfDB) Development Assistance Database (DAD) Aid coordination expert Classification of budget

Economic Recovery Strategy

and Plan

Support to Policy Unit

(President's office), New Deal

process (lead donor, support

also via focal point and

UNDP)

On-going

On-going

2. Budget preparation

IMF AfDB

Macro-fiscal framework

Budget preparation process

and related training

3. Resource mobilization

WCO UNDP-SIDP IMF

Customs diagnostics, UN

container control, advice on

improving valuation, advice

on updating tax laws and

training

TA on Tax Administration

(IMF)

4. Budget execution, accounting reporting, and financial Management Information System

World Bank-DFID World Bank SPF DANIDA , Sweden and IMF

FMIS Conceptual Design FMIS Proof of concept FMIS hardware and equipment Payment System - Treasury Single Account in Central Bank Public Expenditure Tracking Surveys (PETS) Data compilation and reporting (IMF) (IMF)

On-going

On-going

WB-DFID TA

provided for

audit of 2012

financial

statements as

continuation of

support provided

for the

preparation of

the financial

statements

5Funded by EC and Sweden

60

5. Central Bank IMF AfDB UNDP-SIDP

Organisational structure, monetary policies Financial Institutions Bill, National Payment System; licensing and supervision of financial institutions; capacity development,; research and statistic, compilation of macroeconomic and monitoring indicators and balance of payments

6. Procurement UNDP-SIDP World Bank will do the legal framework only

7. External scrutiny and audit, non-state actors

UNDP-SIDP USAID

Parliamentary strengthening DFID and EC support the UN on Parliament work

8. PFM Staff Capacity Development (PFM-SCD)

World Bank-DFID UNDP-SIDP

PFM Academy within a university

9. Legal framework

AfDB Continuation of previous support delivered through HESPI

10. PFM reform coordination, Monitoring and Evaluation

World Bank-DFID Norway SFF

Chair of PFM-DG PFM Technical Assistants in Subject Matter Expert roles Strategic communication, public outreach

11. Civil Service UNDP-SIDP USAID

HR policies, functional reviews, training needs assessment, pay and grade, employee verifications (biometric), Anti-corruption

12. Sub-national PFM

UN-JPLG Policy analysis, economic planning and budget preparation (development of decentralisation policy roadmap with special focus on fiscal decentralisation); budget execution, accounting reporting, and financial Management Information; developing and providing capacity development in public procurement at the district level to be coordinated with Nation procurement system; and local revenue generation

Prepared by: PFMRCU