Integrated TSF Support and Sustaining Debt Management in Somalia

Start & End Date: 2019-2022

Country/Countries: Somalia

Multilateral Institution(s) Involved: African Development Bank

Somali electricity sector has reached a point where it can no longer continue to operate informally. The sector needs formalisation through the establishment of appropriate regulatory and legislative framework. The FMEW is the mandated Government institution to provide leadership in addressing the sector challenges especially the development of policy framework and carrying out an effective oversight responsibility over the electricity sector. However, lack of capacity of staff at the Ministry has limited their ability to address the challenges in the electricity sector as a result, of the sector is dominated by unregulated private entities engaged in generation and distribution of electricity to customers While the private sector and the Government through the FMEWR have expressed a strong desire and readiness to partner in formalising the sector, the federal Ministry lacks the capacity to effectively do so. During a knowledge-sharing workshop organised by the Bank in Nairobi in April 2018 to share the findings of a study on the Somali energy sector, they also emphasised the significance of capacity building. The workshop participants which were government and private sector operators from PPD, the FGS and FMS, concluded that, the key challenges that require immediate attention in the Somali electricity sector are; (i) absence of a policy and regulatory framework; (ii) lack of technical skills and expertise; and (iii) lack of reliable data and data collection mechanisms.

The Transition Support Facility (TSF) was established in 2008 (initially as the Fragile States Facility) as an operationally autonomous entity within the AfDB and designed to complement the Performance-Based Allocation (PBA) of African Development Fund (ADF) resources, which tends to be low relative to the needs of states affected by fragility and conflict. In the Integrated TSF Support and Sustaining Debt Management Project in Somalia, the AfDB provided multifaceted and mutually reinforcing support initiatives through all the three TSF pillars. Pillar II provided crucial support to help highly indebted countries to transition from the vicious cycle of unsustainable debt, and to restore access to concessional finance. This was ring-fenced by Pillar I, which supported government operations and targeted service delivery, while Pillar III projects provided a limited pool of resources to support targeted capacity building and technical support activities that could not easily be undertaken through traditional Bank support projects and programmes.

Through this project, an effective debt and aid management information system was established. The system is still operational and has been recognised as being best practice in the region. The project also facilitated the reengagement of other MDBs and key bilateral donors, supported external and domestic resource mobilisation, and addressed capacity constraints to enable the Ministry of Finance to effectively execute its mandate under the new policy and strategic frameworks.