Documentof TheWorldBank FOR OFFICIAL USEONLY ReportNo: 39951-SO INTERNATIONAL DEVELOPMENT ASSOCIATION THE INTERNATIONAL FINANCE CORPORATION INTERIMSTRATEGYNOTE FOR SOMALIA FOR THE PERIOD FY08-09 June21,2007 EasternAfrica CountryCluster2 AfricaRegion InternationalFinanceCorporation Sub-SaharanAfrica Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without the World Bank's authorization. The last Country Re-EngagementNote for Somalia (SecM2003-0136) was discussed on April 3,2003. CURRENCYEQUIVALENTS (Exchange Rate Effective March 31,2007) Currency Unit Somali Shillings (So.Sh.) US$l.OO = 16,200 Somali Shillings Somali Shillings 1.OO = US$0.00006 Currency Unit Somaliland Shillings (SoLSh.) US$1.OO = 6,275 Somaliland Shillings Somaliland Shillings 1.OO = US$0.00016 FISCALYEAR January 1- December31 WEIGHTSAND MEASURES Metric System Vice President: Obiageli K.Ezekwesili Country Director: ColinBruce Country Manager: James Christopher Lovelace IFC Senior Manager: JeanPhilippe Prosper Task Team Leader: Kazuki Itaya FOR OFFICIAL USE ONLY ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Activities AU African Union CDRD Community DrivenRecovery and Development CEM Country Economic Memorandum CISS Coordination for International Support to Somalia CPI Consumer Price Index CRN Country Re-EngagementNote CSP Country Strategy Paper DAC Development Assistance Committee DFID Departmentfor International Development (UK) DRC DanishRefugeeCouncil EC EuropeanCommission ESW Economic and Sector Work EU EuropeanUnion GDN GrossNationalProduct GDP Gross Domestic Product GNP Gross NationalProduct HIPC Heavily IndebtedPoor Countries ICU Islamic Courts Union IDA International Development Association IEG IndependentEvaluation Group IFC International Finance Corporation IGAD Intergovernmental Authority on Development IMF International Monetary Fund ISN InterimStrategyNote JNA Joint Needs Assessment JSDF Japan Social Development Fund LICUS Low Income Countries Under Stress MDTF Multi-Donor Trust Fund NGO NonGovernmental Organization NPV Net Present Value ODA Official Development Assistance OECD Organization for Economic Cooperation andDevelopment OP Operational Policy PCF Post-Conflict Fund PFM Public Finance Management PSD Private Sector Development PPP Public Private Partnership RDP Reconstruction and Development Programme TFG Transitional Federal Government TFIs Transitional Federal Institutions UNICEF UnitedNations Children's Fund USAID UnitedStates Agency for International Development has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. INTERIMSTRATEGY NOTEFOR SOMALIA Table of Contents EXECUTIVE SUMMARY ........................................................................................................... i I INTRODUCTION 1 I1 .. ............................................................................................................. COUNTRY CONTEXT .................................................................................................... 1 A. GovernanceIssues .................................................................................................. 1 B. Economic and Social Issues.................................................................................... 3 C. World Bank Group's Relationship with Somalia ................................................... 5 I11 EVOLVING SOMALI RECONSTRUCTION DEVELOPMENT FRAMEWORK 7 . I V .. WORLD BANK GROUP INTERIMSTRATEGY FOR SOMALIA ......................... 9 A . ProposedProgram by I S NObjectives .................................................................... 9 B ResourceRequirements........................................................................................ 11 C .. Implementation Issues .......................................................................................... 12 D. Scaling-up and Exit Strategy ................................................................................ 13 V . RISKS AND RISK MANAGEMENT ........................................................................... 14 Table 1: Summary of Different Sub-national Contexts................................................................. TABLES: 3 6 Table 3: I S NObjectives andtheir Relationships with the RDP Pillars ......................................... Table 2: Stock of Public and Publicly GuaranteedExternal Debt at April 2007 .......................... 9 Table 4: Estimated Resource Requirementsfor the ISN: FY08-09............................................. 12 FIGURES: Figure 1: Four Fragile State Contexts and Somalia's Asymmetric Situation................................ Figure 2: Strategic Responsesto the RDP by Development Partners ........................................... 3 8 ANNEXES: 16 Annex B: Somalia - MillenniumDevelopment Goals.................................................................. Annex A: Somalia - Social Indicators .......................................................................................... 17 Annex C: Somalia at a Glance 18 CAS Annex B4 - Summary ofNonlending Services................................................................... ...................................................................................................... 21 Annex D: Somalia Post-Conflict PerformanceIndicators (PCPI) ................................................ Annex E: Prefaceofthe RDP ....................................................................................................... 22 Executive Summary ofthe RDP................................................................................................... 23 25 Annex F: JNA andRDP Costing Table (US$Million) ................................................................ ...................................................................................... 30 Annex H:Differentiated Approaches for DifferentFragile State Contexts ................................. Annex G: Indicative I S N Results Matrix 31 36 37 Annex J: Terms of Referencefor A Study on Financing Options for the RDP............................ Annex I:Summary of CRN-Based Activities 2003-2005 ............................................................ 40 MAP: MAP OF SOMALIA ................................................................................................................... 47 EXECUTIVE SUMMARY 1. Somalia has existed as a "failed and fractured state" for the past 16 years. All the previous 13 attempts over the past 16 years to bring peace and stability to Somalia have failed. Notwithstanding the significant ongoing turmoil and difficulties, there is broad consensus within the international community that the current transitional process is the best opportunity since 1991 for making progress toward a stable Somalia. This new Interim Strategy Note (ISN) describes how the World Bank (the Bank) proposes to align its support for the transitional process over the next 23-month period with the Reconstruction and Development Programme (RDP) for Somalia. The RDP resultedfrom the Joint Needs Assessment (JNA) preparedjointly by the Bank and the United Nations (UN) in collaboration with bilateral donors and Somali partners over the past two years. All development partners are aligning and coordinating their support behindthe RDP. .. 11. The ISN is based on lessons of engagement in Somalia and other fragile states (including Sudan).' The lessons include: (a) taking the local context as a stating point, and understanding the political economy; (b) focusing on state building as the central objective; (c) agreeing on an appropriate division o f labor based on comparative advantage, particularly with the UN; and (d) staying engaged long enoughto give success a chance. ... 111. In line with such lessons and principles as comparative advantage and following extensive consultations,the ISN proposes four objectives: a. Buildingbasic accountabilityin Somalilandand Puntland,and more limitedly insouth-central Somalia as circumstances permit, thereby assisting the authorities to use and account for donor and domestic resources. These efforts will be complemented by increased transparency in providing and accounting for resources -the absence of which contributed to state failure inthe past. b. PilotingCommunity Driven Development(CDD) service delivery in selected communities in Somaliland and Puntland. This CDD approach involves addressing community needs, rebuilding social capital, and strengthening and empowering local level institutions through bottom-up participation. This approach will help meet real needs identified in the RDP but also increase the probability that such investments will be sustained even in the situation o f renewed conflict. c. Supporting the private sector in Somaliland and Puntland. Somalia's economy, which at present is entirely private-sector led, can potentially do far more to generate jobs and economic opportunities, particularly for the country's large youth population, than all Official Development Assistance (ODA) combined. BdInternational Finance Corporation (IFC) collaboration will help the authorities develop a supportive enabling regulatory and legal framework - in areas such as business entry and exit, compliance with international standards, and microfinance. ' World Bank, Engagingwith FragileStates:An IEGReviewof World Bank Supportto Low-IncomeCountries Under Stress, 2006. d. Providingeconomic advisory services. The fourth objective is ensuring that the economic agenda i s in sync with progress on the political front. Buildingon the rich experience since 2004 o f producing products such as the Country Economic Memorandum (CEM) and co-leading the preparation o f the JNA and RDP, the Bank will support the international community and Somali partners by providing advisory notes on translating economic findings into practical actions. iv. Duringthe ISN period, the Bankwill also beginto lay the foundationfor eventually normalizingits relationshipwith Somalia. Efforts toward normalization will focus largely on further analysis of Somalia's external debt and arrears, and collaboration with the international community in exploring options for arrears clearance and triggers for such assistance. In keeping with Bank policy OP 2.30, our engagement in Somalia (including Puntland and Somaliland) will be based on an explicit request from the international community for Bank assistance (as properly represented) and with Board approval in each case (and other usual considerations such as our comparative advantage). v. The main risks associated with the ISN are lack of security, political stability and effective governance in Somalia as well as difficulty for the Bank to attract or to retain experiencedand skilled staff to work on Somalia. The I S Nproposes to manage the risks by: (a) focusing on a small carefully selected number o f activities inthose parts o f the country where enabling conditions are suitable; (b) selecting interventiontools that are sufficiently adaptable to a changing environment such as Technical Assistance (TA) and Analytical and Advisory Activities (AAA); (c) choosing areas o f interventionthat are less vulnerable to political changes; (d) targeting proposed interventions at basic levels that are needed for the country regardless of the status of transitional process, and (e) working with the rest o f the Bank to tap skills from other Regions whenneeded, andto strengthen incentives for staff working on a fragile state. vi. Reflectingboth risks and lessons of experience, considerable time and efforts have been invested in fostering a joint approach among key development partners as a way of reducing the potential risk for the Bank. The proposed ISN is one o f the three principal responses to the RDP, which are highly complementary in scope and timeline. The Country Strategy Paper (CSP) o f the European Commission (EC), the European Union (EU) Member States, and Norway emphasizes support in political reconciliation and peace building, security and rule of law, health, education, water and sanitation, and cross cutting issues such as gender, HIV-AIDS and the environment. The UN's Transition Plan system will focus on livelihoods, displaced people, local government development, peace dividends and other quick wins, while providing direct support to the Somali authorities. vii. To effectively implementthe four strategic objectives, the Bank expects to mobilize trust funds of about US%6.5million from the Post Conflict FundiLow Income Countries Under Stress Trust Fund (PCFiLICUS). Inaddition, to provide quality control on technical and fiduciary matters, andensure timely response, Bank organization is evolving towards greater and more timely support for country-level implementation. For example, Management o f the Somalia operations i s already located in the field although not in Somalia itself at this stage. A Rapid Response Committee will also help to facilitate timely strategic and operational decisions that cannot be handledotherwise. *. 11 I.INTRODUCTION 1. This Interim Strategy Note (ISN) presents the Bank's program of assistance to Somalia over the next23 months(FYOS-09). The ISN follows a Country Re-engagementNote (CRN)2 presented to the Board in April 2003 and the President's Memorandum "Somalia: Additional A~tivities"~discussedby the Board inJune 2005, inthe context of an extension of the Bank activities set in motion by the CRN. The preparation of this strategy was postponed, however, until after military conflict between the Transitional Federal Government (TFG), supportedby Ethiopian forces and the Islamic Courts Union (ICU), subsided over the course of 2006/early 2007. 2. Notwithstanding the significant ongoing turmoil and difficulties, there is broad consensus in the internationalcommunity that the current transitional process is the best opportunity since 1991 for making progress toward a stable Somalia. This new ISN will support the transitional process by building on significant investments made since 2004 in analytic and strategic partnerships at the country and international levels, including the Reconstruction and DevelopmentProgramme(RDP) for Somalia which resulted from atwo-year long process of the Joint Needs Assessment (JNA). Since its re-engagement in 2003, the Bank has built up and maintained operational readinessthrough analytical work, trust funded support, staff presence in Nairobi, Kenya (where the donor community covering Somalia resides) and a broadly agreed andhighly complementary division of labor with other development partners. 3. This ISN was preparedas the Bank's response to the RDP and is based on further extensive consultation with international development partners. In line with the Paris Declaration and the Development Assistance Committee (DAC) Principles for Good International EngagementinFragile States, this ISN has beenwidely consulted on at the Nairobi and international levels. A joint review of the ISN, the Country Strategy Paper (CSP) of the EuropeanCommission (EC), European Union (EU) Member States and Norway, and the United Nations Transition Plan (UNTP) for Somalia was organized in Brussels in March 2007. Representatives o f the Bank, the EC, EU Member States, Norway, the United States, Canada, and the United Nations (UN) participated. Such a joint approach among key development partnershelpsto better assess, share and managethe risk ofBank engagement inSomalia. 11. COUNTRY CONTEXT A. GovernanceIssues 4. Until 2004, the previous 13 attempts over the past 16 years to form a central government have been unsuccessful. The memory of the failed international intervention between 1993 and 1995 made many members of the international community reluctant to engage in Somalia again, and those who did engage did not stay long enough to give success a chance. However, the international community has recognized the significant economic and social costs of fragile states, and the serious implications for international security. Thus it has endorsed the Somalia: Country Re-EngagementNote (IDNSecM2003-0136), March2003. Somalia: AdditionalActivities (IDNR2005-0205),October2005. Principles of Good International Engagement in Fragile States by OECD/DAC Development Ministers inMarch 2005, which encourage sustainedengagement. 5. A coherent and stable "unitary" state in Somalia seems unlikely in the near future. Inthe mediumterm, an uneasy co-existence ofthree mainpolitical blocs inSomalia is likely to continue - the Transitional Federal Institutions (TFIs) in the south-central, the Somaliland authorities inthe northwest, and an Islamic insurgency against the TFIs. Puntland's interests, as a declared autonomous state within a Federal Somalia, tend to align with the TFG's. Notwithstanding military success against the Islamic Courts Union (ICU) inend-2006/early 2007, insecurity and absence of core public services appear to make the TFIs unpopular with large segments ofthe population andunable so far to makenoticeable progresstoward atruly `unitary' state. 6. The transitionalprocess faces considerablechallenges.Giventhe historical mistrustof central government, support by the Somali people for the transitional government or any other authorities will depend on the efforts made at reconciliation. It will also depend on progress toward the rule of law and provision o f social services and other public goods. The challenges here are considerable, given recent military exercises, political infighting, rent-seeking behaviors (mainly through unregulated concessions on national or public assets by individual members of the TFIs), and almost no progress toward creating a civil service that provides core state functions, including donor coordination. Nonetheless, the international community continues to engage proactively with the TFIs, for example, on the draft RDP. 7. There is an urgent need for inclusive dialogue aimed at ensuring a broad-based governmenton the basis of the TransitionalFederalCharter. To be effective, the leadership of TFIs has to reachout to all segments of the Somali society, includingtheir current adversaries. At the writing ofthis I S Nthere is aplanto organize the NationalReconciliation CongressinJuly 2007. Originally scheduled for May 2007, this event still requires considerable preparation and coalition-building ifit is to succeed. 8. The Bank faces three different operationalenvironmentswithin Somalia. A region- by-region analysis according to the Bank's four categories of fragile states4shows that the current situation in the south-central region controlled by the TFIs falls somewhere between "Prolonged crisis/Impasse" and "Post-Conflict Transition". The situation in the northern region controlled by the Puntland authorities can be classified as "Post-Conflict Transition" while the situation in the northwestern region controlled by the Somaliland authorities i s that of "Gradual Improvement" (see Annex Hfor Bank's four fragile state typologies). 9. Somaliland is both an example of growingpeace and stability, and a challengeto a unitary Somalia. Since declaring independence unilaterally in May 1991, Somaliland has enjoyed relative peace and stability as a result of home-grown clan-basedreconciliation process. Among key milestones in the process so far has been the adoption of the new Constitution in 2001, local elections in 2002, and presidential elections in 2003. The first multiparty parliamentary elections were heldon September 29,2005. Some 246 candidatesparticipated and the opposition gained a majority in Parliament. Presidential elections are scheduled for 2008. IDA 15 Paper, "Operational Approaches and Financing inFragile States", OPCSand FRM, June 2007. 2 Unlikemany other parts of Somalia, the adequateconditions for development and limitedreform activities exist inSomaliland. Figure1: Four Fragile State Contexts and Somalia's Asymmetric Situation Gradual Improvement Deterioration Post-conflict Transition ProlongedCrisisor Impasse Table 1: Summaryof DifferentSub-nationalContexts* Transitional Federal Somaliland Authorities Puntland Authorities Institutions (TFIs) Status Ithas internationalsupport as Ithas claimedindependencefrom Itconsidersitselfas an "transitional" authorities the rest of Somaliasince 1991, but autonomousregional representingSomalia,but limited the claim is not internationally governmentof afederated formalrecognition. recognized. Stateof Somalia. Security and South-central regioncontinues to be Northwesternregionremains calm Northern regionis relatively Operational unstable and insecure. and stable, and conditionsfor stable, and conditions for Environment development and limited reform some development activities activitiesexist. A territorialdispute exist. A territorial dispute with Puntlandthreatensits calm and with Somalilandthreatens its stabilitv relativestability. Public Finance There are no institutionsand no civil There are some governance Limited governance Management service.No PFMor internalcontrol institutions, limitedPFM and institutionsexist, but no systems exist. Proliferationof internalcontrolsystems exist. PFMand internal control ministrieswith duplicated and systems. unclearmandates. There is no budgetpreparation. There is no consultative process to There is no established Plans and expenditures are preparethe budget.There is little budgetpreparationprocess. determinedon an ad-hoc basis. linkbetweenplansandbudgets. There is no linkbetween plansandbudgets. Transparency and There is very low transparencyand There is limited accountabilitybut There is low transparency Accountability accountability. notransparency. and accountability. Core State Capacity There is no civil service. There is some civil service. There is limited civil service. There is very low capacity. There is some capacity. There is low capacity. Representation Officials are appointedor selected Presidentand members of the Officials are appointedor through aclan-basedsystem. ParliamentaryHouseof selected throughaclan-based Representativesare democratically system. Suffers from low credibility and elected.A traditional clan-based popularity amongthe population. Council ofEldersfunctions as the Upper House ofthe Parliament. Predominant Humanitarian. Early reconstructionto Recovery Activity Phase development. Possibility for first generationreformexists. * Basedon Post-Conflict PerformanceIndicators (PCPI) and observationand assessmentby Bank staff. See Annex D for the PCPI. B. Economic and Social Issues 10. Economic data is of variable quality and reliability. Since the onset of civil war in 1991, no aggregate data on macroeconomic trends has been collected. While a large quantity of 3 statistical data has been collected over the years by various organizations, the methodologies used are inconsistent and incompatible, and the quality varies significantly. Nonetheless, the economic data collected by the Bank for the Country Economic Memorandum (CEM) and I S N represents the best available data that is used by other development partners including the International Monetary Fund(IMF). 11. Fragility has exacted significant economic and social costs. Somalia has existed as a "failed and fractured state" since the last central government was overthrown in 1991. Decades o f prolonged conflict and cyclical famine caused by recurrent drought and flood have displaced an estimated 370,000 Somalis and resulted inthe exile o f another one million. The economic and social costs o f State failure have been substantial. One indicator i s that Somalia's estimated population o f 8 million in2005 had an income per capita o f US$226 (compared to a sub-Saharan average o f US$515). Somalia was also ranked 161 out o f 163 countries in the 2001 UNDP HumanDevelopment Index. In2004, the country had an infantmortality rate of 133 per 1,000 births (compared to 100 per 1,000 birth in sub-Saharan Africa), and 1 in 7 children is likely to die before his or her fifthbirthday. The maternal mortality rate is estimated at 1,013 per 100,000 births. Less than 1 in 3 Somalis have access to clean water. The incidence o f poverty is very high, with 43 percent o f the population living below the extreme poverty line o f US$1 per day. The Bank estimates that Somalia's income per capita could have been a third higher than the US$226 estimated for 2002 hadthe country not hadthe civil war.5 12. Somalia's "lost generations" are a significant issue for the country's long-term recovery and development. Fewer than 1 in 5 children are enrolled inprimary school. O f the very few children who complete primary school, only 1in8 is a girl. The disparity between girls and boys enrollment is significant. The education and health sectors in Somalia are faced with poor quality o f and limited access to services. Public funding in the two sectors is minimal in Somaliland and Puntland. In the TFI-controlled area, it is non-existent. Humanitarian organizations and the private sector continue as the principal service providers for education and health services. Rampant unemployment, inadequate social services, appalling level o f illiteracy, widespread poverty and lack o f opportunities provide a fertile ground for radicalism, particularly among the youth. The abundance o f small arms makes the society continuously vulnerable to crime, violence, and conflict. 13. The private sector and remittances have sustained Somalia in absence of central government. Since 1991 there have been significant (but unmeasured) private investments in commercial ventures largely funded by large remittances from the diaspora. Today, remittances amount to approximately US$l billion per year, accounting for about 70 percent o f Gross National Product (GNP). A strong private sector has emerged in Somalia, particularly in Somaliland, as a result o f the prolonged peace and achievement o f relative security. Indeed, the private sector is generating a wide range o f economic activities such as the provision o f some basic social services and other services such as electricity, telecommunications, domestic water supply, and urbanwaste disposal. However the cost of doing business is extremely high. One reason i s that Somalilanders at the moment do not have access to regular bank financing and cannot borrow at international market rates. Import and export activity also faces large A Country Economic Memorandum (CEM) for Somalia, January 2006, World Bank. 4 constraints, as traders cannot obtain international insurance or guarantees. There has been very little foreign direct investment inrecent years. 14. Trade is the growth engine of the Somali economy. Cross-border trade has been growing steadily over past six years. Aggregate trade data reported by partner countries to the IMF shows that imports have almost doubled inthe period 2000-05, reaching a historical record in2005 at US$626 million. Similarly, exports have quadrupled insix years, reaching US$250.9 million in 2004. Livestock continues to dominate exports despite the Saudi ban on Somali livestock, followed by charcoal, fish, hides, and skins. The largest recorded imports through Berbera (Somaliland) and Bosasso (Puntland) ports are food, building materials, and fuel. Khat, a narcotic, i s exported mainly from Ethiopia and Kenya, and is the second top import product after sugar. The khat trade is a significant business, with annual imports value estimated between US$30-50 million. However, it has devastating economic and social costs on the Somali society as it makes the user highly unproductive and aggressive. 15. Somaliland and Puntland have limited fiscal management capacity while the Transitional Federal Government (TFG) still has none. Fiscal management in both Somaliland and Puntland suffers from low revenue collections, expenditures mostly for security and general administration, and poor planning and managementof development projects. Trade taxes, mostly specific rather than ad valorem including export taxes, have been the source of more than 80 percent of annual revenue. Compared to the pre-civil war period, deficit financing i s limited to semi-voluntary loans fiom major businesses that are repaid through tax exemptions rather than central bank inflationary financing. In 2006, Somaliland had a budget of US$23 million, of which only 7.6 percent was devoted to health and education expenditures. The security forces and the police receive 46 percent of budgetary allocations. The Puntland government had a budget of US$16 million in 2006. Military and police force constitute 45 percent of budgetary expenditure while less than 3 percent is spent on social services. 16. Clan and sub-clan systems dominate the Somali economic, social and politicallife. While cladsub-clan affiliations have strengthenedtheir capacity to exploit resources and protect common interests, they have virtually destroyed much of the larger group identities that are fundamental for a coherent society. A further complication is that clan alliances are also fragmented and fluid, as exemplified by frequent fighting within the clans and sub-clans. It would, therefore, be misleading to characterize all Somali conflict as being merely clan-related as the conflict increasingly has ideological and geopolitical dimensions. C. World BankGroup's Relationshipwith Somalia 17. The Bank has not had an active portfolio in Somalia since 1991. The normalization of the relationship with the Bank and the resumption of regular lending and other financial services to Somalia require the fulfillment of certain requirements based on the Bank's Articles of Agreement and operational policies. These include but are not limited to: (a) the government's international standing as well as its ability to enter into, and perform obligations under, agreements with the Bank; (b) the government's willingness to recognize Somalia's past obligations to the Bank; (c) the clearance of arrears owed by Somalia to the Bank; and (d) the Bank's operational ability to efficiently undertake project identification, preparation, appraisal, or supervision in Somalia. The Bank's relationship with Somalia is guided by BarWOperational 5 Policy 2.30 regarding Development Assistance and Conflict as well as by BP/OP 7.30 on Dealingwith De Facto Government. 18. Now andinthe foreseeablefuture, the Bank's engagementin Somalia is based on an explicit request from the internationalcommunity. InJune 2003, the President of the Bank issued a memorandum on the matter of the Bank's role in a country where there was no government in power.6 It noted that, under OP 2.30 if there was no government in power in a member country, the Bank's assistance could be initiated by requests from the international community, as properly represented, and with Board approval in each case'. Until now, the BankremainsengagedinSomalia basedon anexplicit request from the international community. The Bank's normalization with Somalia itself i s a significant potential leverage in promoting governance reforms in Somalia. Therefore the timing of normalization must be carefully and strategically determined. 19. As of June 2007, Somalia is in arrears of approximately US$163 million (nominal stock) in total with IDA, and approximatelyUS$874 million (nominal stock) in total with all the multilateral financial institutions. Since 1991, Somalia has neither borrowed nor serviced its public debt. Somalia's total external debt (public and publicly guaranteed) i s estimated at US$3.3 billion inApril 2007, of which an estimatedUS$2.6 billion is inarrears (see Table 1). O f this debt, 41 percent is owed to multilateral creditors, 45 percent to Paris Club bilateral creditors, and 14percent to non-Paris Club bilateral and commercial creditors. Somalia remains at pre-decisionpoint for the Highly IndebtedPoor Countries (HIPC) Initiative. Creditor Total Arrears 1/ Stock (YO) Principal Interest Total 1.Multilaterals 1,325 40.7 530 344 874 World Bank- IDA 2/ 527 16.2 117 46 163 IMF 353 10.8 182 171 353 AfDB Group 134 4.1 44 21 65 Others 310 9.5 187 106 293 2. Bilateral & commercial 1,935 59.4 924 833 1,757 Paris Clubcreditors 1,472 45.2 573 740 1,314 NonParisClub& commercialcreditors 462 14.2 351 93 444 Total Debt (1+2) 3,258 100.0I 1,454 1,177 2,631 Sources:Creditor StatementsandWorld Bank GlobalDevelopment Finance. 1/ Includesprincipalandinterest arrears as well as penaltycharges. 2/ IDA interestamounts, which representoverdue service chargeto IDA, are as of June 2007. 20. During a three-year period between 2003 and 2005, the Bank made modest contributionof US$6.09 million (or approximately US$2 million per year) from the Post- Conflict Fund (PCF) and Low Income Countries Under Stress Fund (LICUS). Those activities under the CRN supported macro data collection and analysis, HIV/AIDS prevention, livestock strategy, community health, distance learning, and local area development. Duringthis period, the Bank also produced Economic and Sector Work (ESW) that significantly contributed See Memorandum of the President ofthe International Development Association to the Executive Directors on ' a Country Re-engagement Note and Post-Conflict Fundfor Somalia, IDA/R2003-0146, June 2003. Ibid. at paragraph2. 6 to the formulation o f donor programs. These included a CEM, a Conflict Analysis Note, and work on a Report on Female Genital MutilatiodCutting. InOctober 2005, the Bank allocated an additional US$2 million for the health and fishery sectors inPuntland from the special "Tsunami recovery" window o f the Japan Social Development Fund(JSDF). 21. Lessons learned from the 2003-2005 Country Re-engagement Note are valuable inputsfor the ISN. The impact of CRN-based activities was modest due to a number of factors (see Annex I). These include: (a) weak Somali ownership in some areas and the allocation o f scarce resources to some sectors that were institutional priorities for the Bank but were not necessarily considered high country priorities; (b) high transaction costs caused by too many small activities in a high operating cost environment; and (c) significant delay in the implementation caused by the complex inter-UN agency financial transfer agreements. For example, UNDP delegated the implementation responsibility for the CRN to other UNagencies, and this had the unfortunate consequence o f compromising lines o f communication and accountability. In addition, the absence o f Bank's presence in the country made it necessary to work through a line o f intermediaries; however, this "diffusion" o f responsibility severely limitedBank's ability to exercise its prudential obligation to monitor financial management and results on the,ground. 111. EVOLVING SOMALIRECONSTRUCTIONDEVELOPMENT FRAMEWORK 22. The CEM for Somalia, prepared by the Bank in 2005, has provided the analytical basis for various pre-RDPdonor developmentstrategies and the JNA. Since its publication, the C E M has been widely used as a resource for Somali partners and the international community. The C E M emphasized the importance o f the private sector and significant remittance flows from the diaspora in mitigating the social and economic costs o f a protracted conflict and failed state. The C E M therefore promoted a private sector-led growth accompanied by a "minimalist" state structure that is lean. But the structure must also be responsive and accountable, and capable o f leveraging the private sector's and civil society's potential for service delivery to the Somali people increative ways. 23. The RDP is pro-poor and providesthe overallframework for internationalsupport. The main objective o f the JNA was to guide the development o f the RDP as the overall framework for mobilizing international assistance for Somalia. The RDP lays out the prioritized needs and broad costing for reconstruction and recovery o f Somalia during the five-year transitional period. The RDP i s a pro-poor fkamework premised on three mutually reinforcing pillars o fpriority needs, covering: (a) deepening peace, improving security and establishing good governance; (b) strengthening essential basic services and social protection; and (c) creating an enabling environment for private sector-led growth to expand employment and reduce poverty. All three pillars are interdependent on each other for success, and for each, specific attention has beenpaid to defining a strategy, related initiatives and priority outcomes. The rationale behind the RDP's three inter-dependent pillars is that peace, security and good governance are foundations for all reconstruction and development initiatives. Sustained peace and security depend on the creation o f alternative livelihoods and sustained poverty reducing economic growth and investments inpeople. Inturn, the economic growth that is necessary for sustained 7 poverty reduction depends on investments in people, peace, and security and other actions to reduce the cost of doing business. The JNA/RDP will be finalized in July 2007 (see Annex E: RDP Prefaceand Executive Summary as well as Annex F: .TNA/RDP Costing Table). 24. In respondingto the RDP, the Bank is incorporating key lessons drawn from the Independent Evaluation Group (IEG) review on Bank support to fragile states', OECD- DAC work on fragile states, and Bank's recent experience in Somalia, Sudan and other fragile states. Those include: (a) taking the local context as a starting point, and understanding the political economy; (b) focusing on state building as the central objective; (c) agreeingon an appropriate division of labor based on comparative advantage, particularly with the UN; (d) acting quickly while managing expectations vis-a-vis the clients and partners; (e) transferring knowledge and expertise from one fragile state engagement to another within the Bank in order to reduce the risk of repeating the same mistake; and (f) staying engaged long enough to give success a chance. Development partners have demonstrated a strong commitment to coordinating their overall responses to the RDP. In addition to the Bank's ISN, there are currently two other strategic documents that have been preparedin response to the RDP, which are the CSP by the EC, EUmember states and Norway, and the UNTP (see Figure 2). Figure 2: Strategic Responsesto the RDP by DevelopmentPartners Development Programme (RDP) and 3 Pillars States, Norway Proposed UN Transition Plan Country Strategy InterimStrategy (UNTP) Paper (CSP) Note(ISN) 25. Development partners generally share a common view of challenges and opportunities ahead. Those challenges include: (a) lack of security, political stability and effective governance in Somalia; and (b) the need to respond appropriately to the different demands and opportunities within TFIs, Somaliland and Puntland. Additionally for the Bank, these challenges include: (a) ensuring that the engagement with Somalia i s timely, sustained and led by staff with appropriate skills and commitment; and (b) ensuring that our operational policies (including new OP 8.00 Rapid Response to Crisis and Emergencies), procedures and instruments for fragile state engagement - particularly procurement - provide both fiduciary assurance and flexibility to meet the unique circumstance in fragile state contexts. Regarding opportunities, development partners also agree that notwithstanding the current difficulties, this i s the best opportunity since 1991 for making progress toward a stable Somalia. The proposals 8 World Bank,Engagingwith Fragile States: An IEGReviewof World Bank Support to Low-IncomeCountries Under Stress, 2006. 8 in the Bank's ISN reflect the lessons of experience and these broad views within the development community. IV. WORLD BANK GROUP INTERIMSTRATEGY FOR SOMALIA 26. In accordance with OP 2.30, proposed Bank interventions will be based on an explicit request o f the international community for Bank assistance, as properly represented, and with Board approval. While the current country environment make it necessary to sequence Bank engagement in Somalia by focusing on the Somaliland and Puntlandregions, every effort will be made to ensure harmonized policy andregulatory approaches across all three regions. 27. The I S N objectives come from: (a) the pillars o f the RDP; (b) the Bank's comparative advantage and technical competency; and (c) the division o f labor supported by other development partners during a series o f joint reviews in Nairobi and key donor capitals. There are four ISNobjectives. Their relationships with the RDP pillars are summarized below. Table 3: I S NObjectives and their Relationshipswith the RDPPillars RDPPillar RDPSub-pillar ISNObjective Primary Focus Area Corresponding to Bank's Comparative Advantage Pillar One: Deepeningpeace, improving Public finance Strengtheningaccountabilityand SomalilandandPuntland security and establishing good management transparencyby building basic (and more limitedly insouth- governance. PFMcapacity and other minimum centralas circumstances accountabilitymechanisms. permit). Pillar Two: Strengtheningessentialbasic Socialservicedelivery Strengtheningdecentralized SomalilandandPuntland servicesand social protection. service deliverythrough community-driveninterventions. Pillar Three: Creatingan enabling Privatesector Generatingeconomic SomalilandandPuntland environmentfor private sector-led growth development opportunitiesby improving to expandemploymentandreduce enablingbusinessenvironment poverty. andinvestment climate. ParisDeclarationand DAC Principlesfor Donor coordinationand Contributingto the collective Somalia Good InternationalEngagementin harmonization internationalefforts to support the FragileStates. transitionalprocessby providing timely economic analysis and policy recommendations. A. PROPOSED PROGRAM I S NOBJECTIVES BY ObjectiveOne: Strengtheningaccountabilityand transparency by buildingbasic PublicFinanceManagement (PFM) capacity and other minimumaccountability mechanisms. 28. The main focus of PFM activities will be, but not limited to, Somaliland and Puntland. Given a wide regional diversity o f administrative conditions and capacity to perform core state functions (see Table l), Bank intervention in PFM must be carefully tailor-made to meet the needs and conditions o f each region. Bank activities in this area o f strategic intervention may include: the provision o f technical assistance and training on economic management, treasury operations, accounting and auditing, budget formation, revenue 9 mobilization and public procurement. InJuly 2006 the Bank organized a post-conflict leadership seminar including the central role o f transparent and accountable PFM in transition for cabinet members, parliamentarians and senior civil servants o f the TFIs. Similar events were also organized separately for Somaliland and Puntland in December 2006. Following the seminar, Somaliland has produced a P F M work plan, which will be the basis for Bank assistance. As and when the TFIs and Puntland prepare their own PFM work plans, the Bank will assist them in their endeavors provided that there are sufficient financial and human resources available to do so. ObjectiveTwo: Strengtheningservice deliverythroughcommunity-driven interventions. 29. The main focus of pilot Community Driven Development (CDD) activities will be selected communitiesin Somaliland and Puntland. Bank activities for the second objective may include but are not limited to piloting o f an inter-agency community-driven recovery and development project. Community-Driven Recovery and Development (CDRD) entails the articulation o f the community's self-perception and future vision and a development plan to realize that vision. The plan generally comprises a series o f prioritized actions beginning with specific tangible projects. Through the community-driven process, community members review and analyze their resources and needs, prioritize their requirements, develop a plan of action, organize into a decision-making body (or refine an existing one), receive and manage resources, carry out the project, and ensure quality and accountability. By directly relying on poor people to drive development activities, CDRD has the potential to make poverty reduction efforts more responsive to demands, more inclusive, more sustainable, and more cost-effective than traditional community-based assistance projects. External partners typically and only facilitate the process, including ensuringinclusive andparticipatory consultations with the community and looking into issues o f technical design, feasibility, sustainability and implementation arrangements, rather than selecting or implementing the projects for the community. ObjectiveThree: Generatingeconomic opportunitiesby improvingenablingbusiness environmentand investmentclimate. 30. The main focus of Private Sector Development (PSD) activities will be Somaliland and Puntland. Somalia's economy is almost entirely private-sector led, and this feature can be exploited as part o f the recovery effort. Ifthe business environment and investment climate can be improved in a way that fosters its constructive and positive development, the Somali private sector can potentially do far more in terms o f generating jobs and economic opportunities, particularly for the country's large youth population, than all the Official Development Assistance (ODA) combined. It can also play a significant role in infrastructure service provi~ion.~Based on the recommendations from the CEM, the objective o f Bank intervention together with the International Finance Corporation (IFC) in this area i s to help the authorities develop a "light" but effective regulatory framework that serves as the foundation for buildingan Some goodexamples ofPPP exist inSomaliasuch as water supply inBoroma(northwest) andJowhar (south- central).They couldserve as a modelfor expansionto otherplaces. 10 enabling environment for business development as well as investments and complements the demonstrated dynamism o f the Somali private sector. Bank Group activities in this area o f strategic interventionmay include providing advisory services and technical assistance on: Legal and Regulatory Framework: Improvements in key areas impacting transaction costs and investment decisions o f private sector including: (a) trade facilitation - ports and customs; export and import licensing and quality standards o f key merchandise trade; (b) microfinance and credit -establishment of policy framework to support development o f sustainable microfinance services; (c) contract enforcement - formal and informal, including industry-based commercial dispute resolution mechanisms; and (d) property titling for commercial use. Public-PrivateDialogue: Capacity buildingto support key business and industrygroups contribute effectively to the national policy and programming dialogue, to support membership voice private sector concerns, and obtain selected key services that will assist inbusiness growth and employment. 0 Public-PrivatePartnerships(PPP): Further development o fpublic-private partnerships in infrastructure and social service delivery will be a priority. Inaddition to extending the reach and raising the quality o f such services, PPPsalso have the potential to increase social inclusion and cohesion. Objective Four: Contributing to the collective internationalefforts to support the transitional process in Somalia by providing timely economic analysis and policy recommendations. 3 1. The Bank's advisory services in a fragile state context can have a positiveimpact on the directionof such dialogueand can also serve as usefulinputsto the transitionalprocess as economic and development issues are often at the heart of peace and reconciliation discussions. One o f the best and most appreciated contributions the Bank makes in a fragile state context is its high quality analytical work (and timely dissemination) that can promote substantive and balanced dialogue among key stakeholders. The Bank will support the international community by providing macro-strategic and other technical advisory notes on translating economic findings into practical policy guidance and recommendations for the RDP implementation phase. Bank activities in this area o f strategic intervention may include: (a) policy advice on sectoral policies, financing and implementation options for the RDP, fragile state engagement; (b) transfer o f relevant experience and knowledge on reconstruction and development from other post-conflict transitional processes; and (c) advocacy and promotion o f good practice and principles that are consistent with the Paris Declaration and D A C Fragile State Principles. B. RESOURCE REQUIREMENTS 32. An estimatedresourcerequirementfor the two-year periodcoveredby this ISNis US$6.5 million. 11 Table 4: EstimatedResourceRequirements for the ISN: FY08-09 FY08 FY09 Total I S N Objective One us$1,000,000 US$600,000 US$1,600,000* I S N Objective T w o US$1,400,000 US$1,400,000 US$2,800,000** I S N Objective Three us$l,ooo,ooo US$500,000 US$1,500,000 I S N Objective Four US$300,000 US$300,000 US$600,000 Total US$3,700,000 US$2,800,000 US$6,500,000 C. IMPLEMENTATIONISSUES 33. The implementation and partnershiparrangements for the I S N activities will be inclusive and flexible based on partners' comparative advantages and competencies, and will vary from one objective to another: Objective One: Strengthening accountability and transparency by building PFM capacity, will be executed by the Bank inpartnership with the U.K. Departmentfor InternationalDevelopment(DFID). Objective Two: Strengthening decentralized service delivery and local governance through community-driven interventions, will likely take the form of ajoint initiative involving the Bank, DFID, United Nations Children's Fund (UNICEF,) and DanishRefugeeCouncil(DRC). Thejoint initiative will be funded by the Bankand DFID, and implementing partners will include UNICEF, DRC and possibly other agencieswith a good track record inthis area. Objective Three: Generating economic opportunities by improving enabling business environment and investmentclimate will be executedby the Bank with the IFC. Objective Four: Contributing to the collective international efforts to support the transitional process in Somalia by providing timely analysis and policy recommendations, the Bank will work with Denmark, Italy, Norway, Sweden, UnitedKingdom,UnitedStates,EC,IMF,and the SomaliDonor Group (SDG). 34. Under the proposed flow of funds and other fiduciary arrangements, no funds under the ISN will be directly channeledthrough or disbursed to any Somali authorities. Instead, funds will be disbursedthrough reputableconsultancy services and international NGOs. The SDG has commissioned a consultancy study to explore appropriate financing options for the RDP (see Terms of Reference inAnnex J). 35. Somalia aid coordinationcapacity and effortswill haveto be enhancedconsiderably. TFIs' interaction with the international community has tended to be ad-hoc and bilateral. Lack ofhuman capacity i s a major contributor to this mode of operation. The international community has asked the Bank to serve as co-chair of the SDGwith DFID. The Bank also serves as co-chair of the Coordination for International Support to Somalia (CISS) with the UN. The CISS is 12 currently overseeing the establishment o f a decentralized coordination structure for Somaliland in Hargeisa in cooperation with the Somaliland Ministry of Planning and International Cooperation. 36. Results monitoring and measurement will be very critical and very difficult. The nonlinear nature o f progress in a volatile fragile state environment requires close tracking o f performance. However, lack o f field presence and access to project sites caused by insecurity makes it very difficult to do so. Nonetheless, the ISN proposes a set o f performance indicators to measure the outcome o f Bank support that focuses on types o f interventions that promote good governance. Those performance indicators are modest and grounded in the realities o f the current country situation (including the country's absorptive capacity) as well as the Bank's own capacity to provide assistance (see Annex G). These indicators include the establishment of basic and minimum internal financial control mechanisms such as a rudimentary Accountant General's Office or Auditor General's Office, local government acceptance o f action plans preparedby the communities themselves as the basis for its development plan, and creation of an inclusive and transparent national PPP forum. Satisfactory and steady progress along them will help the country strengthen the legitimacy and credibility o f its public institutions, economic performance, access to services, and donor support over the two-year period. The Bank will assess progress against these indicators on an ongoing basis. 37. Bank organization is evolving towards more timely and appropriate support for country-level implementation. Within the Bank, the new Sustainable Development Department o f the Africa Region can help facilitate a more holistic and integrated approach to the conflict for better results, particularly in the context o f sub-Saharan Africa where social issues, environmental degradation, livestock and natural resources management, access to water and infrastructure are often at the heart o f conflict. The establishment o f the Fragile State and Post-Conflict Unit in the Africa Region can facilitate transfer o f knowledge and expertise from one fragile state engagement to another inAfrica inorder to reduce the risk o f repeatingthe same mistake and to mainstream conflict sensitivity in Bank operations across the region. Management o f the Somalia operations i s already located in the field, although not in Somalia itself at this stage, and discussions are taking place on how best to attract and maintain highly motivated staff to work on fragile states like Somalia.lo D. SCALING-UP AND EXITSTRATEGY 38. The Bank remains committed to staying engaged in Somalia in the long run, but scaling-up in the Somali context will imply the extension of I S N activities to the south- central region of Somalia. Bank activities under this ISNwill focus largely on Somaliland and Puntland where the relatively secure and conducive environments for development activities exist and are expected to remain so. Though there will be some limited support for south-central under this ISN, particularly inPFM, given the fragility and volatility o fthe political and security situation in that part of the country and limitations on the amount o f assistance the Bank will be 10 An IEGReview of WorldBankSupport to Low-IncomeCountries Under Stress, 2006. 13 able to provide, the benchmarks for scaled-up assistance in the south-central region o f Somalia will be: Cease-fire and reconciliation: Effective and sustainable cessation o f hostilities on the ground, and meaningful efforts at reconciliation (e.g., through an inclusive National Reconciliation Congress). International Obligations: Upholding the internationally accepted principle o f unhinderedhumanitarianaccess. Coordination: Establishment o f a broadly accepted donor coordination structure for the south-central region with the TFG. Good Governance: Demonstrated and sustained commitment toward making progress inthe public financial management framework. InternationalSupport: Organization of an international donor conference. 0 Security and Staff Safety: A secure environment for staff to carry out dialogue, project preparation, and supervision. 39. Ifthese benchmarks are met and ISNactivities are extended to cover the south-central region o f Somalia, the Africa Region will come back to the Board to discuss financial and human resources implications o f the scaling-up with anI S NUpdate. V. RISKSAND R I S KMANAGEMENT 40. The Somalia country context is a high risk venture, and will remain so in the foreseeablefuture. Risks inSomalia include: Absence of core state functions and lack of realism on the part of the Somali authoritieswill continue to discourage the increase of international assistance. 0 Overwhelmingthe country capacitywith too many reform agendas. Ina fragile state context where virtually every economic and social sector requires reform but the country's capacity i s weak, selectivity, prioritization, and sequencing o f reform agendas are critical. 0 Challenging environment for results monitoring and measurement. While the nonlinear nature o f progress ina volatile fragile state environment requires close tracking o f performance, lack o f field presence and access to project sites caused by insecurity will make it very difficult to do so. 0 Significant deterioration in the situation in part or all of the country is a major concern. While this cannot be entirely mitigated, the flexible response proposed in this ISNwould allow the World Bankto managethe situation appropriately. Difficultenvironment to secure full complianceof fiduciary requirementsis a major concern. The Bank will strive to mitigate fiduciary risks and possible delays resulting 14 from fiduciary concerns for its future operations by focusing on building core PFM functions. Another risk for the Bank is to attract and retain competent and experienced staff to work on a fragile state due to insufficient incentives and recognition o f their work as pointed out by the 2006 IEGreport on Bank operations inLICUS countries. 41. Eventhough Somalia is a highrisk country, by focusing on a small number o f carefully selected activities in certain parts o f the country, the overall risk for this ISN can be reduced to moderate. The Bank's engagement in Somalia needs to strike a realistic and delicate balance between, on one hand, doing all it can where the Bank can bring added-value and, on the other hand, protecting the Bank from overexposure and unmanageable risks in a difficult and challenging operational environment. The Bank will manage the risks o f proposed Bank interventions by: (a) selecting intervention tools that are sufficiently flexible and adaptable such as TA and A M ; (b) choosing areas o f interventions that are less vulnerable to political changes; (c) targeting interventions at basic levels that are needed for the country regardless o f the status of the transitional process; and (d) using reputable intermediaries (e.g., consultancy firms and international NGOs) as the implementing agency (in case o f I S N objectives 1 and 3) and the financial agent (in case o f I S N objective 2). Furthermore, in accordance with the Paris Declaration and the D A C Principles for Good International Engagement in Fragile States, considerable efforts have been devoted to harmonize the ISN with other development partners' strategy documents. Such ajoint approach among key development partners will further reduce the potential risk for the Bank. The deployment to the field and retention o f experienced operational staff, particularly those staff with fragile state experience and expertise, is another important risk. Management is exploring ways to strengthenincentives and recognition for staff working on fragile states by using Somalia as a pilot. 15 Annex A: Somalia Social Indicators - Latest single year Same regionhncomegroup Sub-Saharan Low- 1975-80 1985-90 2001-2006 Africa income POPULATION Total population, mid-year (millions) 4.5 6.0 6.9 719.0 2,338.1 Growthrate(% annual averagefor period) 8.7 1.0 3.3 2.2 1.8 Urbanpopulation (%ofpopulation) 26.3 28.7 33.7 36.7 30.7 Total fertility rate (births per woman) 7.25 (1977) 7.25 (1987) 6.95 (2003) 5.2 3.6 POVERTY (99ofpopulation) Nationalheadcountindex 43.2 (2002) Urbanheadcountindex 23.5 (2002) Ruralheadcount index 53.4 (2002) INCOME GNI per capita(US$) 137 150 226 (2003) 600 510 Consumer price index (1995=100) Foodprice index (1995=100) INCOME/CONSUMPTIONDISTRIBUTION Gini index 39.7 (2002) Lowest quintile (%of incomeor consumption) 4.1 (2002) Highest quintile (% of incomeor consumption) 35.6 (2002) SOCIAL INDICATORS Public expenditure Health(%ofGDP) 2.6 1.5 Education(%ofGDP) 3.4 3.2 Netprimary school enrollment rate PAofage group) Total 19 (2006) 64 78 Male 2l(2006) 68 82 Female 17(2006) 60 76 Access to an improved water source (% ofpopulation) Total 29 (2006) 58 75 Urban 58.4(2006) 82 89 Rural 13.7(2006) 45 69 Nomadic 3.S(2006) Immunization rate (9 of childrenages12-23months) Measles 9 30 19(2006) 61 66 DPT 19 20(2006) 59 67 Child malnutrition (%under 5 years) 35(2006) 44 Lifeexpectancyat birth (rears) Total 42 42 47 46 58 Male 40 40 46 45 57 Female 44 43 49 46 59 Mortality Infant (per 1,000 live births) 133 133 96(2006) 101 79 Under 5 (per 1,000 live births) 22s 225 156(2006) 171 122 Adult (15-59) Male (per 1,000 population) 500 516 519 3 17 Female (per 1,000 population) 412 452 461 266 Maternal(modeled,per 100,000 live births) 1,013(2006) 24 538 Births attendedby skilled healthstaff (%) 33 (2006) 39 38 Source: World Develooment Indicatorsdatabase. World Bank 04/05/06. - Note:Net enrollment ;ate: break inseries between 1997and 1998due to change from ISCED76to ISCED97. Immunizationrefersto children ages 12-23 monthswho receivedvaccinationsbeforeone year of age. 16 Annex C: Somalia at a Glance Somalia at a glance 9/14/06 sub- Key Development Indicators Saharan Low Somalia Africa income Age distribution,ZOO5 (2005) Male Female Population,mid-year (millions) 8.2 741 2,353 70-74 I Surface area (thousand sq. km) 638 24,265 29,265 Populationgrowth (%) 3.3 2.1 1.8 6044 Urban population (% of total population) 35 35 30 50.54 4044 GNI (Atlas method, US$ billions) 552 1,364 30-34 GNI per capita (Atlas method, US$) 745 580 20.24 GNI per capita (PPP, international $) 1,981 2,486 10-14 0-4 GDP growth (%) 5.3 7.5 30 20 10 0 10 20 30 GDP per capita growth (%) 3.1 5.6 O*rce"l (most recent estimate,200LL2005) Poverty headcount ratio at $1 a day (PPP. %) 44 Poverty headcount ratio at $2 a day (PPP, %) 75 Jnder-5 mortality rate (per 1,000) Life expectancyat birth (years) 47 46 59 Infantmortality (per 1,000liva births) 133 100 80 Child malnutrition(% of children under 5) 26 29 39 200 Adult literacy,male (% of ages 15 and older) 73 150 Adult literacy,female (% of ages 15 and older) 50 Gross primary enrollment, male (% of age group) 99 110 100 Gross primary enrollment,female (X of age group) 87 99 50 Access to an improvedwater source (% of population) 29 56 75 0 Access to improvedsanitation facilities (% of population) 26 37 38 1990 1995 2000 2004 ~Somalia nmSub.Saharan Africa r. Net Aid Flows 1980 I990 2000 2005 ' (US5 millions) Net ODA and official aid 433 494 104 191 Growth of GDP andGDP per capita (%) irowth Top 3 donors On2004) Norway 1 1 20 34 United States 60 72 10 32 Netherlands 3 0 6 19 Or--++- Aid (56 of GNI) 71.9 59.1 Aid per capita (US$) 67 74 15 24 Long-Term Economic Trends 90 95 GDPper capita 00 Consumer prices (annual 56 change) GDP implicit deflator(annual % change) 103.9 215.5 +GDP - Exchangerate (annual average, local per US$) 28.8 1,896.1 Terms of trade index (2000 100) 1980-90 1990-2000 2000-05 (average annualgrowth %) Population,mid-year (millions) 6.5 8.7 7.0 8.2 0.3 0.5 3.2 GDP (US$ millions) 604 917 2.1 (Om of GDP) Agnculture 68.4 65.5 3.3 Industry 8.0 1.o Manufactunng 4.7 4.6 -1.7 Services 23.6 0.9 Householdfinal consumption expenditure 97.3 0.8 General gov't final consumption expenditure 15.6 7.0 Gross capitalformation 42.4 15.5 -2.6 Exports Of goods and SBNICBS 33.2 9.8 -12.2 Imports of goods and services 88.5 37.7 -6.2 Gross savings 4 . 8 17.0 Note: Figures in italics are for years other than those specified. 2005 data are preliminaryestimates...indicates data are not available. a. Aid data are for 2004. Development Economics,Development Data Group (DECDG). 18 Somalia Balanceof Payments and Trade 2000 2006 Governance indicators, 2000 and 2004 (US$ Mions) Total merchandiseexports(fob) Total merchandiseimports(cm Volce and accountability Nettrade in goods and serviws Political stability Workers'remittancesand compensationof employees(receipts) Regulatory quality Current accountbalance as a % of GDP Reserves,indudinggold Central Government Finance $2004 Country's percentile rank (0-loo) 02000 hrgher valuesmpry benw ralmpr (W of GDP) Revenue S o u m K.Ufminn-KT~~V-MB*I1~l,World Bank Tax revenue Expense Technology and Infrastructure 2000 2004 Cash surplusidefidt Paved roads (% of total) 11.8 Highestmarginaltax rate (%) Fixed lineand mobile phone Individual subscribers(per 1,000 people) 15 68 Corporate High technologyexports (% of manufacturedexports) External Debt and Resource Flows Environment (US$ mi//ions) Total debt outstandingand disbursed 2,562 2,849 Agriculturalland (% of land area) 70 70 Total debt service 0 Forest area (% of land area, 2000 and 2005) 12.0 11.4 HIPC and MDRl debt relief(expected;flow) -0 - Nationallyprotectedareas (% of land area) .. 0.8 Total debt (% of GDP) Freshwaterresourws percapita(cu. meters) 753 Total debt service(Oh of exports) Freshwaterwithdrawal(% of internalresources) .... 548 Foreigndirectinvestment(net inflows) 0 9 CO2 emissionsper capita (mt) 0.00 Portfolioequity (net inflows) 0 0 GDP per unitof energy use Compositionof total external debt, 2004 (2000 PPP 8 per kg of oil equivalent) Energyuse per capita (kg of oil equivalent) IBRO, 0 ) riOA, 444 IBRD 111.111, 349 Total debt outstandingand disbursed 0 0 Disbursements 0 0 Principalrepayments 0 0 0,lstsral.1.118 Interestpayments 0 0 IDA Totaldebt outstandingand disbursed 396 422 Disbursements 0 0 Private Sector Development 2000 2006 Total debt serviw 0 0 Time requiredto starta business(days) IFC (fiscalyear) Cost to start a business(% of GNI per capita) Total disbursedand outstandingportfolio 0 0 Time requiredto registerproperty(days) --- of whichIFC own account 0 0 Disbursementsfor IFC own account 0 0 Rankedas a majorconstraintto business Portfoliosales, prepaymentsand (% of managerssurveyedwho agreed) repaymentsfor IFC own account 0 0 n.a. ma. MiGA Grossexposure Stockmarket capitalization(% of GDP) New ouarantees - - Bank branches(per 100,000people) Note:Figuresin italicsare for years other than those specified. 2005 data are preliminaryestimates. ..indicatesdata 8/13/06 are not available. -indicates observationis not applicable. DevelopmentEconomics,DevelopmentData Group (DECDG). 19 Millennium Development Goals Somalia Withselected targetsto achieve behveen 7990 and 2075 (estimate closestto date shown, +/- 2 years) Goal 1:halve the rates for $1a day povertyand malnutritlon 1990 1995 2000 2004 Povertyheadcountratioat $1 a day (PPP, % of population) Povertyheadcountratioat national povertyline (% of population) Shah of incomeor consumptionlo the poorestqunitile(%) Prevalenceof malnutrition(Ohof childrenunder5) 18 26 Goal 2: ensure that children are able to complete primary schooling Primaryschool enrollment(net, %) 9 Primarycompletionrate (% of ralevant age group) Secondaryschoolenrollment (gross,%) Youth literacyrate (% of people ages 15-24) Goal 3: eliminate gender disparity In education and empower women Ratio of girlsto boys in primaryand secondaryeducation (%) Women employedin the nonagdwlturalsector (% of nonagriculturalemployment) 22 Proportionof seats held bywomen in national parliament(%) 4 8 Goal 4: reduce under4 mortality bytwo-thirds Under-5mortalityrate (per 1,000) 225 225 225 225 Infantmortalityrate (per 1,000live births) 133 133 133 133 Measlesimmunization(proportionof one-yearolds immunized,%) 30 34 38 40 Goal 5: reduce maternal mortality by three-fourths Maternalmortalityratio (modeledestimate,per 100,000live births) 1,100 Birthsattendedby skilledhealthstaff (% of total) 34 25 Goal 6: halt and begin to reverse the spread of HIWAIDS and other malor diseases Prevalenceof HIV (% of populationages 15-49) 0 9 Contraceptiveprevalence(% of women ages 15-49) 1 incidenceof tuberculosis(per 100,000people) 341 411 Tuberculosiscases detected under DOTS (%) 22 31 44 Goal 7: halve the proportion of people without sustainable access to basic needs Access to an improvedwater source(% of population) 29 Access to improvedsanitationfacilities(% of population) 26 Forest area (% of total land area) 13.2 12.0 11.4 Nationallyprotectedareas (% of total land area) 0.8 CO2 emissions(metrictons percapita) 0.0 0.0 0.0 GDP per unitof energyuse (constant2000 PPP $ per kg of oil equivalent) Goal 8: develop a global partnershipfor development Fixed line and mobile phone subscribers(per 1,000 people) 2 2 15 88 internetusers(per 1,000people) 0 0 2 25 Personalcomputers(per 1,000people) 8 Youth unemployment(% of total laborforce ages 15-24) iducation indicators(%) Measles immunization (X of I-year olds) CT indlcators (per 1,000 people) loo 75 1 '"1 75 i v-7 50 25 25 M 1888 2WO 2m 2W4 0 0 1880 18B5 ZWO 2W4 2wo 2W2 2004 +Primary netenrollmentratio (..) -E- Ratio of girls to boys in primary (L OFixed+ mobilesubscribers secondary education(..) OSOmaliE DSUb-SEhErEnAfrica Internet users Note: Figuresin italicsare for years other thanthose specified...indicatesdataare not available 8/13/06 DevelopmentEconomics,DevelopmentData Group (DECDG). 20 CAS Annex B4 - Summary of Nonlending Services As of4/13/2007 21 Annex D: Somalia Post-Conflict Performance Indicators (PCPI) (Disaggregated Averapes1 I I 2005 [ I South-CentralI 2006 Puntland I SomalilandI Average 7. Reintegrationof DisplacedPopulation 1.5 1.0 1.0 2.0 1.3 8. Building HumanResources 1.8 1.5 2.0 2.0 1.8 9. SocialCohesion, Non-DiscriminationandHuman 1.o 1.5 1.5 1.3 Rights C) Average for Social Inclusionand Social Sector 1.7 1.2 1.5 1.8 1.5 Development D.Public SectorManagement andInstitutions 10.FiscalandBudgetaryManagement and 2.0 1.o 1.5 2.0 1.5 Efficiencyof RevenueMobilization 11.Re-establishingPublicAdministrationandRule- 2.0 1.o 2.0 2.0 1.7 BasedGovernance 12.Transparency, Accountabilityand Corruption in 2.0 1.o 2.0 2.0 1.7 D) Average for PublicSector Management and 2.0 1.o 1.8 2.0 1.6 Institutions 2005 South-Central 1 2006 Puntland 1Somaliland Average Average PCPI: 1.8 1.1 1.8 2.2 1.7 22 Annex E: Preface of the RDP As of October 30,2006 This Reconstruction and Development Programme (RDP) has been produced by an integrated team of Somali and other technical experts drawing on information from (a) existing sources, (b) consultation workshops, (c) selected field visits and meetings with a wide array of Somali groups and individuals, (d) consultations with aid agencies working in Somalia, and (e) questionnaire- based fieldwork undertaken by Somali experts in all regions, to review priority needs and develop reconstruction and development proposals to address those needs. It responds to specific local needs by providing differentiated suggestions for South-Central Somalia, Puntland and Somaliland. Moreover, it reflects the importance of three key cross-cutting issues - peace- building and conflict prevention, capacity building and institution development, and human rights and gender by addressing them as an integral part of the proposed initiatives to achieve desiredreconstructionand development objectives. The Joint Needs Assessment (JNA) which underpins this RDP has been undertaken in a very participatory manner, reaching all parts o fthe country and involving extensive consultations with many Somali groups including, local authorities, parliamentarians, traditional authorities, women's groups, youth groups, civil society organizations, non-governmental organizations, private sector business, and religious leaders invarious locations. After agreement was reached on a concept paper in mid 2005, blended teams o f international experts (two from the Diaspora plus others) together with local Somali experts were assembled for each o f the following six clusters: I Governance, Security and the Rule of Law I1 Macroeconomic Policy Framework and Data Development I11 Infrastructure IV Social Services and Protection o f Vulnerable Groups V Productive Sectors and the Environment VI Livelihoods and Solutions for the Displaced Three o f these cluster teams were led by the World Bank (the Bank) (Macroeconomic Policy Framework and Data Development; Productive Sectors and the Environment; and Infrastructure) and three were ledthe UN (Governance, Safety and Rule o f Law; Social Services and Protection o f Vulnerable Groups; and Livelihoods and Solutions for the Displaced). Cluster teams held in-depth discussions with key representatives from donors, international Non- Governmental Organizations (NGOs), as well as with the Bank and UN agencies. To ensure ownership and participation o f Somali stakeholders, workshops were organized in collaboration with Bank/UN to identify and discuss the JNA methodology, priority needs and proposed areas o f interventions. Bilateral development partners and regional institutions - the African Union (AU), the Intergovernmental Authority on Development (IGAD) and the League of Arab States (LAS) - have been consulted and involved in the assessment process. The Bank-UN-led technical needs assessment team has worked under the guidance and support o f a Coordination Support Group (CSG) consisting of the key supporting donors (EC as chair, Italy, Norway, Sweden and the UK); the Transitional Federal Government (TFG), IGAD, International Finance 23 Corporation (IFC), the NGO Consortium, and the Bank and UN. In addition, the Puntland Authorities and the Somaliland Authorities, which are not members o f the CSG, also provided invaluable input into the process. In 2005, the TFG and the international community asked the Bank and the United Nations Development Groups (UNDG) to co-lead a post conflict needs assessment for Somalia, the JNA. The main objective of the JNAprocess has been to assess needs and develop aprioritized set of reconstruction and development initiatives to support Somali-led efforts to deepen peace and reduce poverty. The implementation o f proposals resulting from this comprehensive needs assessment i s expected to lay solid foundations for the establishment o f an effective, participatory and transparent systemo f governance, andthe achievement o f sustainable recovery, reconstruction and development, thus reversing regression from the Millennium Development Goals (MDGs), and advancing socioeconomic development for all Somalis. The Somali RDP results from the priority needs, key strategies and priority actions and recommendations o f the JNA. The RDP i s a pro-poor instrument premised on three pillars o f priority needs, covering: 0 Deepening peace, improving security and establishing good governance 0 Strengthening essential basic services and social protection 0 Creating an enabling environment for private sector-led growth to expand employment andreduce poverty. All three pillars are interdependent on each other for success, and for each, specific attention has beenpaid to defining a strategy and priority outcomes and related initiatives. For each area of intervention, the implementation and absorptive capacity, as well as detailed Results-Based Matrices (RBM's) can be found in the Cluster Reports, which are available at www.somali- jna.com. To respond to the different situations o f South-Central Somalia, Puntland and Somaliland, the RDP includednot only a synthesis report (Volume I) three geographic focused programmatic but volumes, one for each o f these three geographic areas. A fifth volume includes the six cluster reports. The geographic volumes (11-IV) represent contextualized presentations o f priority needs and actions that, together with the synthesis report, could be used for programming assistance. This Synthesis RDP has five parts. The political, security and socioeconomic context of this JNA are reviewed in Section I.Key needs together with a vision are given in Section 11. Key prioritizing criteria and principles underpinningthe reconstruction and development strategy are given in Section I11together with a three part strategy focusing on deepening peace and security, improving social services, and achieving rapid poverty reducing development. Key aspects o f phasing, a financing framework and coordination arrangements are discussed in Section IV. Finally, a detailed RBMi s given in Section V. 24 ExecutiveSummary of the RDP As o f October 30,2006 Background. Somalis have experienced decades o f conflict and persistent high levels o f poverty. Some 43 percent o f Somalis live on less than US$1 per day and 73 percent live on less than US$2 per day. Somalia was ranked 161 out o f 163 countries on the 2001 UN Human Development Report. Only 22 percent o f primary school age children are in school and 22 percent o f children die in the first five years o f their life. Following civil war and the final downfall of the central government in 1991,much o f the public infrastructure was destroyed in the early 1990s, social services collapsed, livelihoods were disrupted and large numbers o f people were displaced. Despite this, Somali resilience has led to civil society, NGOs, religious groups and the private sector doing an impressive job in maintaining some services such as education, health andwater. Though these services fall well short o f what is needed and many o f them are focused on urbanareas and hence do not reach the rural poor, the situation would have been even worse without them. Moreover, Somali ingenuity, together with large remittances have been instrumental in creating new private sector initiatives in this uncertain situation and preventing even deeper poverty. Despite numerous mediation attempts, conflict with widespread intermittent violence persists in the central and southern parts o f Somaliato this day. Incontrast, Puntland and Somaliland have managed to limit violence and have re-established basic public institutions. Following the Somali National Reconciliation Conference in 2004 a 275-member Federal Transitional Parliament was established, Abdullahi Yussuf Ahmed was elected interim President, the Transitional Federal Government (TFG) was formed with Ali Mohammed Ghedi as Prime Minister, andParliament was finally convened inSomalia inFebruary 2006. Impressivethough these achievements are, the Somali peace agreement i s founded on a delicate power-sharing formula, which itself i s indicative o f the reality that reconciliation, and the settlement o f key divisive issues have not yet been achieved. In June 2006 there was the worst outbreak of violence in Mogadishu since 1991, and the Islamic Courts Union (ICU) now not only controls Mogadishu, but also most o f South-Central Somalia. Talks between the TFG and I C U were held inKhartoum inJune and September andmore are planned. Objective. This report - a framework for deepening peace and reducing poverty - presents an assessment o f priority needs and then outlines reconstruction and development initiatives to address these needs. It i s designed to: (a) support the Somali people in their ongoing efforts to deepen peace (achieve reconciliation, peace and security in South-Central Somalia as well as further strengthening it in Puntland and Somaliland) and reduce poverty (by expanding and improving social services and by expanding economic opportunities, employment and incomes); and (b) support the international community intheir efforts to help Somali society achieve this objective. These proposed reconstruction and development initiatives promote and reinforce peace building, address the causes o f conflict, and are responsive to the current situation by incorporating needed capacity building and human development. Moreover, they draw on the following three key features o f the Somali situation: (i) the people are remarkably resilient and resourceful and have created a vibrant and engaged private sector and civil society which can 25 contribute much; (ii) i s general scepticism regarding government institutions after decades there o f either oppressive or non-existent government; and (iii)the experiences o f Somaliland and Puntland provide a useful source o f positive experiences with regard to reconciliation, peace building,reconstructionandreneweddevelopmentto draw upon. Key Needs. Drawing on existing research, the outcome o f workshops held with a wide range of Somali stakeholders from all parts of the country, information gathered from selective field visits, and the results o f questionnaire-based fieldwork to gather information on local perceptions o f priority needs and how to best address them in South-Central Somalia, Puntland and Somaliland, this assessment identified three broad groups o f needs as the highest priority: Deepenpeace, improve security and establish good governance; Strengthen basic social services (especially education, health and water supply); and Rebuild infiastructure, together with other actions, to sustainably expand economic opportunities, employmentand incomes. As expected, the emphasis in and between these three key needs varied somewhat from location to location due to their differing stages o f reconciliation, peace building, recovery and reconstruction. Moreover, the different situations in South-Central Somalia, Puntland and Somaliland create different challenges and opportunities with regard to the current possibilities for effective implementation of sustained reconstruction and development initiatives. However, in all locations, the underlying vision is to deepen peace and reduce poverty for the Somali people. This involves achieving reconciliation, peace and security at all levels of Somali society; developing effective, transparent and accountable institutions at all levels; sharply increasing school enrolments and reducing gender imbalance; improving health services with special attention to women, children and communicable diseases; and achieving rapid poverty reducing private sector development. Inkeepingwiththe basic objective ofthis Somali JNA,together with global experience withpost conflict reconstruction and development initiatives, the four core criteria for selecting proposed priority initiatives from alternatives to compiling specific initiatives under these three pillars are: (a) impact o f peace building, (b) contribution to sustained equitable poverty reduction, (c) opportunity for effective implementation and capacity transfer, and (d) cost effectiveness. The Reconstruction and Development Framework. To respond to the three key groups o f needs and pursue the basic objective o f deepening peace and reducing poverty, a three-pronged Reconstruction and Development Programme (RDP) i s proposed, composed o f the following pillars: 6) Deepening peace, improving security and establishing good governance through disarmament, demobilization and reintegration (DDR), the establishment and strengthening of core public and private sector institutions (including security institutions), decentralization, and conflict resolution mechanisms; 26 (ii) Investing in people through improved social services (especially education, health and water supply) to raise human skills, and actions to address the needs of speciJc vulnerable groups such as internally displacedpersons (IDPs); and (iii) Establishing a sustainable enabling environment for rapid poverty-reducing development, to expand employment and reduce poverty. This includes infrastructure, policies and actions to overcome constraints facing the livestock and agriculture sectors and to ensure protection of the environment and sustainable use of natural resources. The three pillars o f this strategy are all necessary to address the priority needs and sustainably deepen peace and reduce poverty. No two would be sufficient by themselves. Peace, security and good governance are foundations for success with all reconstruction and development initiatives. But sustained peace and security depends on the creation o f alternative livelihoods and hence sustained poverty reducing economic growth and investments in people. Inturn, the economic growth that i s so necessary for sustained poverty reduction depends on investments in people, peace and security and other actions to reduce the cost o f doing business. Pillar I: Deepening peace, improving security and establishing good governance. This is necessary to go beyond the coping strategies supported by humanitarian assistance o f the past 15 years. First, this involves strengthening initiatives at all levels to achieve reconciliation and complementing this with needed constitutional review and democratization. This i s most urgent and most challenging in South-Central Somalia and can draw on the experience with progress already made with reconciliation in Somaliland, and to a lesser extent Puntland. Particular problems such as land tenure and access to water that are a source o f conflict and inhibit the recovery o f economic activities need to be urgently addressed through transparent, participatory and widely supported dispute resolution mechanisms. Second, in South-Central Somalia this includes the demobilization, disarmament and reintegration o f some fifty thousand combatants and the establishment o f a police force. Some o f the combatants can be absorbed into the new security forces while others need to have alternative livelihoods. In Puntland and Somaliland, this involves reintegrating and finding alternative livelihoods for about 6,000 and 5,000 ex- combatants respectively, and it also involves improving the police forces. Then establishing the rule o f law necessitates initiatives to establish well trained civilian police forces and well coordinated and accessible judicial services drawing on the strengths o f the existing traditional, shari'a and secular systems. Third, this necessitates the establishment o f lean, efficient government institutions embodying good governance processes o f transparency, accountability and participation, with extensive decentralization o f services and responsibilities. InSouth-Central Somalia this involves building these institutions from scratch, while in Puntland and Somaliland it involves rightsizing the existing civil services and deepening the decentralization process. Building on existing strengths, the delivery o f services such as education, health and water needs to draw on public- private partnerships. In all locations and at all levels o f government civil society and the media will need to help ensure accountability. Part of this building o f needed government institutions will involve sound public finance management that over time attracts both local and donor confidence. Also, this capacity building needs to make provision for conducting a census and 27 establishing systems to provide basic timely data needed to develop and monitor policies. To ensure macroeconomic stability it i s important that there be fiscal balance to avoid deficit financing. Pillar 11: Investing in people. As the majority o f an entire generation have not received basic education and a large number o f qualified Somalis have left andjoined the Diaspora there i s an urgent need to expand education at all levels. This involves the combined efforts o f existing private sector providers plus public initiatives to address everything from training teachers, providing materials, rebuilding education infrastructure, reviewing curriculum and finding ways to ensure much greater gender balance by increasing the number o f girls attending school and to reach the children o f nomads. Second, improving health indicators (such as infant and maternal mortality) and fighting common diseases calls for a range o f initiatives including consolidating and expanding basic health services (training o f health workers, providing additional equipment and materials, and rehabilitating/expanding facilities), improving public awareness and prevention o f common diseases and the importance o f nutrition, and improving access to safe water and sanitary services. Inimproving education, health and water supply services, it will be necessary to build on existing experience and strengths o f private supplies (civil society organizations (CSOs), NGOs, religious groups and the private sector) and build private-public partnerships to achieve results as quickly as possible. In addition, the special needs of IDPs, refugees and disadvantaged groups have to be addressed to avoid them becoming a future source of conflict and to involve them in recovery and renewed development and thus achieve an improvement in their social indicators and reduce the very high incidence o f poverty amongst them. Pillar 111: Establishing a sustainable enabling environment for rapid poverty-reducing development. The rebuilding o f infrastructure and other initiatives to reduce the cost of doing business andfacilitate the recovery o f key traditional productive sectors (especially livestock and agriculture) and to expand economic options and diversify livelihoods is critical for sustained employment creation and poverty reduction. During reconstruction, there will be employment opportunities created through labour intensive works programmes and community driven development initiatives but the only long term solution to the need for expanding employment, economic opportunities and incomes i s sustained and sustainable private sector development. Key infrastructure initiatives comprising this third pillar include the rehabilitation o f transport facilities (primary and secondary roads, bridges, ports and airports), expanding power generation and distribution networks, further rehabilitation o f irrigation systems, and the expansion of humanwater supply and sanitary services. Inall these areas, drawing onthe energy and capacity o f the private sector will be a key to success. This pillar also includes actions to expandfinancial services by building on the strengths o f existing hawala companies. To directly support livestock activities it includes the expansion o f veterinary services to improve livestock health and to establish a livestock export inspection system that i s accepted by destination countries. Reducing the cost o f doing business naturally depends heavily on the maintenance o f peace and security, but it also depends on the establishment o f a simple, transparent and stable market- friendly regulatory environment for private sector business, and a continued commitment not to have public sector enterprises re-enter productive sector activities as was the pre-civil war situation. Interms o f support to productive sectors to overcome impediments to their sustained expansion it includes improvements in veterinary services, agricultural services and the 28 expansion o f financial services. Ensuring the environmental sustainability of economic activities calls for effective licensing and regulation o f fishing, plus controls on charcoal exports, the development o f alternative energy options, and better management o f grazing to halt deforestation. Options in the face of ongoinguncertaintyin South-CentralSomalia. Ongoing uncertainties make immediate implementation o f many o f the elements o f this framework problematic, especially in South-Central Somalia. Progress already made by Somaliland, and to a lesser extent Puntland, makes it possible to implement programmes to improve governance and social services there, and facilitate private sector-led economic development. These include administrative governance (especially at the district level), deepening the rule o f law (policing and the judiciary), the reintegration o f demobilized militia, and strengthening fiscal policy and public finance management. However, little o f this can be implemented yet in South-Central Somalia. Possible exceptions include some core capacity building components, such as policing, and capacity buildingfor some parts o f a future civil service (e.g. the Civil Service Commission (CSC), and public finance management); through improved social services - though this too will inevitably be constrained in South- More could be done now to implement components o f the second pillar - investing in people Central Somalia until ongoing uncertainties are resolved. Existing education, health and water supply services could be expanded and built upon with NGOs, religious groups, and private sector partners. Community driven initiatives could help expand services and foster community dialogue by demonstrating the benefits o f collaboration. However, this would be more cost effective and generate better results in the context o f improved security and basic public institutions. reducing development - could also be implemented. Finally, some components o f the third pillar - establishing an environment for rapid poverty- These include the expansion o f microfinance, and building on ongoing efforts to improve livestock health. But the resolution o f land and water disputes that are so important for the full recovery o f crop production, especially in the Shabelle and Juba valleys, necessitates the foundations o f reconciliation and dispute resolution mechanisms that are not yet present in South-Central Somalia. Similarly, large infrastructure initiatives cannot be cost effective without peace and security. Indeed, attempting to implement such projects without first establishing basic peace and security risks exacerbating tensions. Similarly, ensuring sustainable use o f natural resources requires collective action and hence the existence o f institutional capacity to monitor and,enforce such action. 29 Annex F:JNA andRDPCostingTable (US$ Million) RDPPillar One: DeepingPeace,ImprovingSecurity and EstablishingGood Governance Year 1 Year 2 Years 3-5 - Total Conflict Resolution&Peace Building - 8.1 8.9 9.5 26.5 Security and Rule of Law 56.7 47.7 78.6 183.0 Administrative Governance 19.0 48.1 84.6 151.7 Macroeconomic Stability 17.2 20.6 50.1 87.9 Public Finance Management 5.1 3.8 3.9 12.8 Sub-Total 461.9 RDPPillar Two: Investingin PeoplethroughImproved Social Services Year 1 Year 2 Years 3-5 Total Education 58.0 58.8 206.0 322.8 Health 24.3 37.5 91.8 153.6 Water and Sanitation 12.1 13.2 27.1 52.4 Returnand Settlement 24.8 19.7 86.6 131.1 ProtectingVulnerable & Disadvantaged 1.6 1.4 3.1 6.1 Sub-Total 666.0 RDPPillar Three: Establishinga SustainableEnablingEnvironmentfor RapidPovertyReducing Development Year 1 Year 2 Years 3-5 Total Infrastructure 91.2 131.8 570.6 793.6 Financial Services 0.8 4.0 16.1 20.9 Productive Sector 25.4 41.6 97.7 164.7 Private Sector Development 7.4 6.4 16.1 29.9 EnvironmentSustainability 9.3 16.1 16.7 42.1 Improving Livelihood & Food Security 12.3 6.6 22.5 41.4 Sub-Total 1,092.6 TOTAL 373.3 466.2 1381.0 2,220.5 30 3 m L . . . 0 . . 0 . . 0 . 0 . m m * * e * * * n 3 . ... ... 0 . n s m IA Annex H: DifferentiatedApproachesfor DifferentFragileState Contexts Deterioration ProlongedCrisis or Impasse Deterioration in CPIA or rising conflict risk. Often Prolonged conflict or domesticpolitical impasse. no consensus between donors and government on No consensus between donors andgovernment on developmentstrategy. developmentstrategy. Interim Strategy Note, focusing on stemming the Interim Strategy Note, focusing on maintaining decline in governance and social indicators and operationalreadiness for re-engagement and preventing an escalation o f conflict. Limitednew providing economic inputsto early peace or financing; focus on project restructuring. reconciliation dialogue. Increased use o f CDD, private sector, NGO and Small grant-based fmance, aiming at local ring-fenced mechanisms (including service delivery and local economic development inareas economic development and protection o f human capital, generally through non-government o f insecurity). recipients (including service delivery and local State capacity and accountability: focus on , economic development inareas o f insecurity). transparency, dialogue, civil society capacity and maintaining institutional capital to facilitate Capacity and accountability: focus on eventual turnaround. institutional analysis, dialogue, and counterpart training. Contributing to community level conflict prevention, andto multi-donor efforts for peace- Use o f socio-economic issues for restoration o f building or governance reform at a national level. dialoguehdentification o f entry points for change. Post-Conflictor PoliticalTransition GradualImprovement Highfluidity in thepolicy environment and Presence of somegovernment reform leadership, but opportunitiesfor rapid reform due to the successful facing entrenched systems where change is often conclusion of apeace or national reconciliation dijjcult, slow and liable toperiodic setbacks. urocessor renewed international engagement. Includes some of the "post-post-conflict countries. " InterimStrategy Note, focusing on re-building Country Assistance Strategy focusing on state capacity and accountability and delivering building state capacity and accountability to rapid visible results insupport o fpeace-building. achieve selective development results, supported Exceptional IDA allocation. by moderate IDA allocation. Joint Needs Assessmentlrecovery planning, Activities to boost domestic reform curfents, linkingpolitical, security, economic, and social including leadership support, communications recovery. initiatives, training and capacity-building. State capacity and accountability: support for a State capacity and accountability: development broad state-building agenda, through institution- policy operations (innon-resource rich building and, where appropriate, development countries) restricted involume, supported by policy operations with robust oversight sector and capacity-building projects and with mechanisms and sector programs (including strong oversight mechanisms. Asymmetric transitional projects working through CDD or reforms. NGO mechanisms). Leadership and civil society Public administration, service delivery and support. economic development to address areas with Public administration, service delivery and crime, insecurity, or conflict. economic development to address areas with crime, insecurity, or conflict. 36 Annex I:Summaryof CRN-BasedActivities2003-2005 Project component Fundsdisbursed Implementing agency Macro Economic Analysis & Dialogue US$1,123,750 UNDP Population Quick Count US$420,222 UNFPA Strategic Entry Point Objectives Results Support to Macro- economic Data Analysis Watching Brief Achieved and Dialogue Establishment o f database for key macro-economic and socio- Partially economic data. achieved Promoting nationallregional dialogue and consensusbuilding on Not achieved key macro-economic issues. Capacity building to rebuildSomali economic analysis skills. Not achieved Strengthening local capacity for data collection and analysis. Partially achieved Production o f relevant sectoral studies to examine potential sources o f economic growth. Partially achieved Production o f baseline population data. Dropped Project component Fundsdisbursed Implementing agency Support to Somali Livestock Boards $ 810,627 FA0 PuntlandPastoralists Program $489,555 Care SomalidVSF-Suisse Strategic Entrv Point Objectives Results Creating an enabling Elaboration o f a Somali livestock strategy. Achieved environment for the livestock and meat Establishment o f livestock boards Partially industry achieved but unsustainable Establishment o f certification body for livestock and'livestock products. Dropped Improvedcapacity for diagnostics and disease control. Not achieved Establish a centre o ftraining for livestock health and research Not achieved 3. Coordinated Action Plan to Address HIV/AIDS Issues Project component Fundsdisbursed Implementing agency Sero-prevalence study; capacity buildingto US$640,685 WHO nursing schools National & regional strategy framework & US$276,481 UNDP action olan Strategic Entry Point Objectives Results Coordinated action plan Support to formulation o f nationallregional HIV/AIDS strategy, Achieved 37 IIto address HIV/ AIDS issues Dimensional analysis on perceivedimpacts o fHIV/AIDS. Partially achieved Partially Epidemiological assessment/ monitoringof HIV prevalence. achieved Advocacy and awareness on HIV/AIDS. Achieved Establish a centre oftraining for health professionals Not achieved 4. Post Conflict Rehabilitation of the Health Sector in Somalia Projectcomponent Funds disbursed IImplementing agency Rehabilitation of Health Sector I[US$308,15 1 IIFRC/SRCS 0bjectives Results Funding for 14 clinics inPuntlandwith increasedcommunity Rehabilitation of the Health Sector In involvement and support for the reconstruction of a centrally administeredhealth service inthe area. Somalia Conducting a study ofthe SRCS integratedhealth care program, Partially examining the role of international organizationsinsupporting achieved localNGOs on community involvement and governance development. Projectcomponent Funds disbursed Implementing agency Distance learning US$873,207 UNDP Capacitybuilding for fmancial planners US$383,000 UNDP Strate icEntr Point Objectives Results --Capacitybuilding for Establishment o f centre of training for livestock health and Not achieved skills development/ research. training centers Establishmentof a centre oftraining for health professionals Not achieved Establishing VISA connections at 6 universities. Achieved Capacity buildingof the Somali universities to manage their own Not achieved DLfacility andprogram Developing and delivering aDLcourse for financial planners. Achieved 6. Community-Driven Development Projectcomponent Funds disbursed Implementing agency Pilotingof community-basedintervention II$200,000 IIUNDP supportinthe south-centralregion I Local governmenttraining in Somaliland and $ 190,000 UN-Habitat Puntland II II I Strategic Entry Point Objectives Results I PilotingCDD-type I1Community-based support inorder to strengthenlegitimacy and II achieved intervention inthe south- 1 credibility ofthe BayDistrict Administration I Not I 38 central region Training and capacity Training of municipal and local government officials on Achieved building o f municipal and consultation, participatory planning and budgeting local authorities 7. UNDPOverheadCharge//Administrative Fees for Managing the LICUS Fund 39 Annex J: Terms of Reference for A Study on Financing Options for the RDP Consultancy to DesignFinancingOptionsfor Reconstructionand Development in Somalia Proposal from Scanteam, Development Initiatives and Oxford Policy Management Scanteam, Development Initiatives (DI) and Oxford Policy Management (OPM) present the following proposal in response to the Somalia Donor Financing Options Working Group's call for a group of consultants to examine financing options for the Reconstruction and Development Programme (RDP) for Somalia. The consultancy is to prepare a synthesis report with options and recommendations regarding possible financing mechanismsandhow they can be applied. 1.0 Introduction The consultancy distinguishes between the range of funding options (described as `supply') and how they should be applied (`demand'). Detailed procedural issues can easily obstruct progress and prevent financing mechanisms from working quickly or optimally. To avoid this, the synthesis report must show how these two sides of the equation can best be linked to ensure that the financing mechanisms are tailored to the situations in Somalia. While the three consulting organizations have divided up the tasks as described below, they will be exchanging information regularly and working together inthe field. 2.0 Key elements of TOR The TOR suggests severalsources of financing for the RDP: (i) Official ODA -channeledindifferentways (ii) Private Somali financing from abroad - both household transfers and private sector investments and (iii) Publicfundsmobilizedinternally. The second source of funding is seen as the largest, where household transfers are estimated at around US$l billionper year. Local public funds are by far the smallest. The main task on the `supply' side of the equation involves an analysis of the strengths, weaknesses, opportunities and constraints of the alternative financing mechanisms and assessing the levels of resources likely to be channeled through different mechanisms from various sources. On the `demand' side, the consultants are expected to asses how the funds canmost effectively beused. 40 The synthesis paper is expected to cover the following issues: a. Mechanisms for supporting financing options b. Likely outcomes (e.g. contributions to trust funds, support to Diaspora Funds, challenge funds?) c. Policy needs to ensure effective implementation d. Social and economic issues -gender concerns and financing options e. Social impacts - for example through changing the ways by which remittances are delivered f. Risks-e.g. o funderminingtraditional coping strategies g. Understanding the potential and complementarities between different sectors and mechanisms However, it is unlikely to be possible to cover all the elements listed above, given the time constraints. 3.0 Rangeof fundingoptions 3.1 ChannelingODA Scanteam will focus on the channeling o f ODA, whatever the channel and implementation modality. DI would expect to contribute to this section from its experience o f mechanisms like the Common HumanitarianFunds. It recommends beginning with a "mapping exercise": looking at how the international community intends to mobilize funds, the likely size over the next five years, and the channels the different actors are considering. This mapping should cover a range o f actors: e Bilateral donors (the D A C donor group), e Non-traditional donors - other Islamic countries, fellow African countries, other donors that may be identified, e UNagencies interms of what they already have mobilized and what they believe they will in addition be able to allocate from own (core) funds or future co-financing and other contributions (outside o f a formal Somalia- fund), a Lending institutions in terms o f possible grants and concessional "soft'' credits, e Existing funds that are either involved or interested in becoming engaged inSomalia (global funds such as the healthfunds etc), e Larger international NGOs that may have own funds they are interested in applying insome coordinated fashion with the IC. Regarding the bilateral donors, key issues will be what kinds o f constraints may exist on the funding being made available. One donor may have funding from different budget 41 lines - for example general un-tied ODA, a UN allocation, a humanitarian or transitional or post-conflict allocation, a region-specific allocation, etc. The idea is to see how flexible funding can be (if funds are earmarked for humanitarian needs, can they be channeled through a Multi-donor Trust Fund(MDTF) or not? Ifthey are allocated for the UN,does it have to be earmarked or can it go to an UN-managedMDTFand from there channeled to anNGO?) What share o f the funds they make available do the donors wish to direct - either to a sector, or to a channel (for example through own national NGOs), or to one or more o f the three main regions? How much are they willing to channel through freely programmable channels like MDTFs? What would make them willing to channel a higher share o f their funds through MDTFs? What would make them willing to increase their absolute contributions to Somalia, and in particular through flexible channels like MDTFs? 3.1.1 StructuringJoint Mechanisms There are two sets o f instruments they I C probably wants to have inplace. The first i s an oversight and reporting system on overall resource mobilization, allocation, application and results. The other i s one or more instruments for multi-donor management o f funds, presumably one or two MDTFs. The two o f them may be linked (the MDTF/s taking on the coordination and reporting role), but not necessarily - it depends what the actors believe i s most effective. On the coordination side, the experience i s that it i s extremely time intensive (costly) to try to track resource flows. It is also, with hindsight, extremely expensive not to have done so. The lack o f coordination and overview o f what i s happening is always a problem - but there do not seem to be many examples of successful coordination systems. Scanteam would assume that what we should look into is how this task can be addressed at a level and with resources that are acceptable in terms o f costing and results. One logical solution is to link this up with whatever overarching resource management system may otherwise be designed, but this i s one issue to be looked into. MDTFs have so far proven to be the most flexible, efficient and effective instrument for managing and applying donor funds in high-risk low-information situations, such as the one Somalia i s facing. There are, however, a number o f considerations that need to be taken into account when designingthe actual system. One choice has to do with whether the international community wants one or two administrators o f MDTFs - in practice, whether there should be one UN managed and one World Bank managed MDTF. If only one fund i s chosen, the implications o f this in terms o f disbursement need to be assessed, If two funds are chosen, the coordination mechanisms needto be designed. Whether one or two funds are chosen, the principles for setting policy and allocating funds need to be agreed to, and inparticular the role o f national authorities. Concerns of equity - across regions, across sectors and needs, etc - need to be balanced against capacity to implement. If imbalances arise (one region i s able to move resources much 42 faster than the others, for example), how can they be addressed inthe short and the long run, and what kinds o f mechanisms can be in place that will ensure speedy decisions while maintaining/developing trust? 3.1.2 DesigningFlexibility in Disbursementof Funds A key challenge for the IC has been flexible disbursement arrangements that can adjust as funding opportunities open up and other channels turn out to be more difficult than foreseen. MDTFs have proven to be flexible inprinciple, but inpractice have at times not performed as expected. A system that ensures design o f good projects and the timely disbursement o f funds to implementers has been a major challenge for MDTFs. A robust yet quality appraisal and approval system must be put inplace and then speedy disbursement mechanisms. Taking a pro-active risk-management approach means that as many alternative legitimate implementers as possible must have as direct access to funding as possible, and this may bethe greatest single designchallenge for the MDTFs. Scanteam would put considerable effort into ensuring that the two potential administrators are fully on board and would begin reviewing whatever procedures and rules that need to be taken into consideration for ensuring that more open and speedy access to funds i s ensured (for this reason the UNDGand World Bank have already been contacted and agreed to make available two o ftheir experienced staff inMDTFissues). What i s overall level o f risk that donors are willing to take regarding the application o f the funds? Would they be willing to sign risk-sharing clauses with MDTF administrators that would make procurement easier? Would they accept simplified verifications ("due diligence") o f potential implementing partners (NGOs, local community based organizations), and take some risk with public sector entities? What degrees o f freedom would an MDTF administrator, in sum, have? What would be the trade-offs in terms o f funding levels from the donors? One real difficulty i s making funding access easier for legitimate non-public and non-UN agencies - NGOs, community organizations, religious groups, etc. Finding clearance and quality oversight mechanisms that are acceptable to both the administrators - with their fiduciary responsibilities to their Boards and the donors - that can also address the implementers' needs for speed and flexibility will be a serious concern. This i s where the "supply and demand" equation has to be resolved, but where the "supply side" has a responsibility for designingoptions that will enable ''demand agents" to hook up to them. Scanteam will pay particular attentionto this issue. Inpracticalterms, how easy would itbe for NGOs to compete for funds? Should it be the case that NGOs should have equal access to funding as a UNagency, for example? What are the implications for an UN-administered fund if this i s what the donors want? How can project selection committees ensure unbiased appraisals and approvals? What are the criteria for being eligible for MDTF funding? Or i s the simplest solution still to have a UNagency as Partner and they then "contract" NGOs etc as implementers? Or can there 43 be a mix, where the larger international NGOs can access funds directly while others may needaUNagency as partneragency? This disbursement approach may have implications. One is that donors need to reduce their earmarking when providing funds through the UN (in the UN-managed MDTF in Iraq, nearly 90 percent of donor funds were earmarked by sector or UN agency). One option is moving to the World Bank approach of providing a preference for a sector rather thanabsolute earmarking. Other similar issues needto be considered. Would such an MDTF be able to accept resources from pooled funds, such as GAVI or others that may want to contribute to Somalia but may not want to set up their own system, but could "preference" or perhaps earmark to sectors? That is, could the MDTF/s represent an overall efficient channeling instrument FROM donors and international funds TO all available and eligible implementers? How would this affect staffing, structuring, rules for the funds for this to work? 3.2 Other fundingsources OPM will focus on private sector funding options as follows. It will be necessaryto look at the private sector from both the supply of funds and demand for funds (needs). OPM will have to address a variety of agents and issues: 0 Needs and use of private funds by Somali community in Somalia, distinguishing between immediate needs for consumption and possible early requirements for investment and working capital for trade and eventually production (particularly for MSMEs) as the economy begins to move towards more normal functioning (hard to estimate but maybe Dahabshiil canhelp); 0 A view on whether the private sector in Somalia is (or is likely in a short time to become) capable of using such funds effectively for investment and working capital, and to what extent, and if not, what can be done rapidly to build such capacity. 0 The extent to which private funds might be used to supplement/compliment public funds in financing the activities of the voluntary sector (community organizations and self-help groups, national and localNGOs, etc), and the possibility of using a form o f challenge fund to facilitate the combination of public and private funds in support of such organizations. 0 Assess the level of remittances by Somali community outside (Diaspora), their views on the needs of relatives in Somalia and the likely level of interest ina Diaspora Bond. 0 A view on the possibility of using other mechanisms to stimulate private sector financing in Somalia, such as infrastructure challenge funds, PPPs or other mechanisms; 0 Assess the status of the financial sector infrastructure (status of the banking system, the channels for fund transmission, access to finance), and the possibility of legitimizing certain hawala channels without falling 44 foul o f the FATF principles for Anti-Money Laundering and Combating the Financingo fTerrorism 4.0 How funds can be used DI will focus mainly on the application o f the funding options and on ensuring that the design o f the funding mechanisms is based on robust information on how they are likely to be applied by Somali stakeholders. DI would expect to work in collaboration with the other consultants on a day to day basis. Inorder to understand how funding options can be used most effectively, DIwill start by building a comprehensive outline o f the provision o f basic services in Somalia - what i s covered by UN agencies and NGOs, government as well as the private sector to determine where the perceived gaps are in service provision and what are they key priorities. This will involve building on the JNA and work that has already been done and also obtaining further information from UN agencies, NGOs (both international and Somali), private providers and service users. One key issue will be to understand the extent to which services funded by the international community through UNagencies and international NGOs are actually delivered by Somali NGOs because o f the security situation. Another will be to examine the extent to which service providers can scale up, under what circumstances and inwhat time-frame. These consultations will also enable DI to compare the legal and accountability requirements for funding options such as MDTFs, global funds, Diaspordchallenge funds with the status and capacity o f delivery organizations to avoid developing funding options that do not match the reality on the ground. This will require information and input from Scanteam and OPM on the requirements for the different options, as well as discussion with the UN and WB advisors on the requirements/flexibility o f their institutions. With regard to the aspects o f funding options to be covered in the synthesis paper, DI proposes to focus on: 0 Policy needs to ensure effective implementation 0 Risks - e.g. o f underminingtraditional coping strategies and, as with all involved, 0 Understanding the potential and complementarities between different sectors andmechanisms. With regards to the policyneedso f funding options, DIwill: 0 Explore the extent to which local delivery organizations, like religious organizations and Somali NGOs, meet criteria to receive international funding or whether special mechanisms needto be developed. 0 Examine whether some provision currently funded by the international community, such as the work o f local NGOs, could be funded through 45 alternative means such as user fees or Islamic charitable giving in collaboration with OPM or other consultants working on this issue. a Shed light on how funding options can best try to support services for the poorest, since the JNA has highlighted the fact that the poor have substantially less access to services like health and education - and how social protection and safety net programmes could be implemented in Somalia 0 Arising from these issues DIwill expect to contribute to recommendations on the provision for recurrent costs, the scope and mandate o f different financing mechanisms, procedural issues o f the transfer o f funding, the criteria for non-government funding, the governance o f financing mechanisms and the issue o f differentiation o f funding mechanisms by region or sector. Under risks,DIwill examine a range o f issues such as: a The potential for excluding certain service providers from access to international funding, such as community-based or religious organizations. a The extent to which lack o f capacity is likely to affect the ability to use different types of fundingeffectively and how this should be addressed The extent to which the terms and conditions o f funding mechanisms can enable the implementation o f the RDP under changing and volatile domestic conditions inSomalia DIwill actively take account o fgender issues and access for women inthe above, but is not proposingto major on this area. 46 IBRD 33483 SOMALIA SELECTED CITIES AND TOWNS MAIN ROADS REGION CAPITALS RAILROADS NATIONAL CAPITAL REGION BOUNDARIES RIVERS INTERNATIONAL BOUNDARIES 40°E ERITREA REP. OF 45°E 50°E YEMEN REP. OF YEMEN Aden Caluula To To DJIBOUTI of Desé Desé Gulf Saylac Maydh D h Boosaaso a Surud Ad r o o (2,408 m ) Mts. r AWDAL Ceerigaabo V all Bullaxaar Madow eHurdiyo y Xaafuun Baki 10°N WOQOOYI Cay B A R I S A N A A G Kar Kar Mts. 10°N GALBEED Burao Qardho To To Garadag Bandarbeyla Addis Hargeysa Ababa TOGDHEER S O O L Laascaanood Garoowe NUGAAL Eyl E T H I O P I A Gaalkacyo M U D U G Hilalaya To To Imi Dhuusa Mareeb To To Hobyo Kibre GALGUDUUD 5°N Mengist Ferfer 5°N Beledweyne BAKOOL Ceel Buur Xuddur H I R A A N Luuq Buulobarde I N D I A N Garbahaarey Baydhabo habeelle S SHABEELLAHA O C E A N G E D O DHEXE Buurhakaba Wanlaweyn Jawhar Cadale B AY Baardheere JUBBADAJuba MOGADISHU BANAADIR DHEXE To To SHABEELLAHAMarka HOOSE Mado Gashi K E N YA Bu'aale Baraawe r Bilis Jilib i Qooqaani d SOMALIA a 0° JUBBADA Jamaame 0° To To n Nairobi HOOSE e Kismaayo 0 50 100 150 200 Kilometers B 0 50 100 150 Miles This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. 40°E 45°E 50°E NOVEMBER 2004