Republic of Somaliland
Ministry of National Planning and Development

The relationship between Somaliland Development Fund (SDF) and the GoSL and how the SDF is linked to GoSL budget cycle

The objective of the SDF is to provide an external development budget, for the Government of Somaliland (GoSL), aligned to and financing the programmes and projects of the 5 year National Development Plan, channelled through more predictable Core Budget funding modality in which the Somaliland Government participates, namely, through the Somaliland Development Fund (SDF). The SDF will be managed by a fund manager who is, on the one hand, entrusted with the mandate of fiduciary agent responsible for financial management and procurement, and on the other, provides operational technical assistance to the GoSL on a development strategy anchored, results-based, multi- year budget process.

This will be a key instrument of economic policy and resource allocation for the Government of Somaliland, underpinned by the establishment of modern financial management information systems. Given the currently available and operating capacities in the Ministry of Finance, Ministry of Planning and Development, and the Bank of Somaliland, there can be no alternative to the establishment of capacity to provide and handle economic policy formulation and management in the short to medium term while allowing institutional capacity to be developed.

The SDF will squarely fit to fulfilling this role. Other expectation from the SDF include the integration of domestic and external development budgets into a complete and realistic annual budget, covering both current and capital expenditures, and capturing the impact of external development budgets, operated by the SDF, on domestic budgets.

Government budgets are prepared according to an annual cycle, but to be formulated well and to contribute to high-quality and sustainable services, they must take into account events outside the annual cycle particularly the macro-economic realities, the expected revenues, and the longer-term needs of programs i.e. down-stream operational and maintenance expenditure of government’s spending policies. This is why annual budgeting cannot be performed properly in isolation but has to be linked to planning, in the context of a multiyear framework.

A well functioning national economic management should: (i) link the Government’s priorities with a budget within a sustainable spending envelope; (ii) highlight the tradeoffs between the competing objectives of the Government; (iii) link budgets with the policy choices made; and (iv) improve outcomes by increasing transparency, accountability, and predictability of funding.

What role could the SDF play in transforming into a Government owned and led fund?

The Government of Somaliland which was hitherto operating out-side the aid sector will be made inclusive, by providing external development budget for the execution of the 5 year NDP, through the establishment of the SDF. Thus, Development Partners will provide assistance within the framework of the Somaliland National Development Strategy. Programmes and projects will be coordinated with Government in order to focus on national priorities, eliminate duplication and rationalise donor activities to maximise cost-effectiveness. Even better, the International Development Partners will increasingly provide more predictable and multi-year funding commitments or indications of multi-year support to Somaliland to enable the Government to plan better the implementation of the Interim 5 year National Development Plan.

However, the Government of Somaliland should provide assurance on its commitment to reform and strengthen its PFM systems and procedures, while the donors are required to use more and more Somaliland’s own institutions and systems, thus mutually ensuring that aid will be used for agreed purposes, improves aid effectiveness by strengthening Somaliland’s sustainable capacity to develop, implement and account for its policies to its citizens. While the Government would implement a PFM reform program and improve accountability and transparency and thus the performance of the system. The relevant procedures and systems typically include, but are not restricted to, national arrangements and procedures for public financial management, accounting, auditing, procurement, results frameworks and monitoring. The SDF could be instrumental as well as facilitate this process.

The Role of the State and other economic actors

First, our strategy of development and employment generation provides a clear role for the state. The state must provide security, invest in human capital, and articulate and implement a social policy focused on assistance to the vulnerable and the excluded and the elimination of poverty. It must create an enabling environment for the activities of the private sector, make effective use of aid to attract trade and investment, and put the economy on a sustainable path to growth.

Thus, the Somaliland Government is in the process of establishing an effective central government that re-establishes the national unity of the country on the basis of strong institutions and the rule of law. Simultaneously, we are committed to building on community level participation and effective management at the local level. We do not see government as the producer and manager of the economy, but as regulator and promoter of the entrepreneurial energies of the people. The state will enter into a direct managerial role only when social justice demands its presence. The government will act in partnership with communities, NGOs, donors, UN organizations and the national and international private sector to implement its programs, and realize its vision. As the legitimate representative of the people, it is the key task and challenge of the government to create the institutions and organizations that would embody principles and practices of good governance.

Principles for Implementing SDF Projects and Progammes

In accordance with the policy and approach to be laid out by the Government of Somaliland, the implementation of infrastructure projects will be entrusted to the private sector. There is consensus in the Government on the need for investment in infrastructure as a means of creating employment and promoting growth and equity and to keep the government out of the business and services that private sector can deliver more efficiently. At the same time, the government will promote the participation of communities in establishing their priorities and in the operation and management of infrastructure facilities at the community level.

The government will also promote monitoring of implementation by the communities so that the private sector is accountable to those who are intended beneficiaries from the investments.

The selection and implementation of all key projects should be based on the criteria of economic return with a clear articulation of the social and environmental implications, in particular the risks posed to the poor and other vulnerable populations. Recurrent costs pertaining to operation and maintenance should be clearly analyzed, and mechanisms for ensuring allocation of resources in the domestic core Government budget for these items should be established, so as to ensure sustainability of finished projects implemented through the SDF. Policies and implementation arrangements to assess and mitigate the environmental and social impact of infrastructure investments should be adopted and appropriate organizational arrangements for their effective implementation created.

To be able to fulfill its role for the promotion of the private sector for service delivery and infrastructure development, the government will need to acquire the capacity for setting priorities, evaluating alternative policy options, and regulating and monitoring the activities of its implementing partners. In considering the options, the government will promote use of labor-intensive methods to create employment.

The government is committed to creating the enabling environment for the operation of national and international firms that would implement its major development projects through performance-based contracting. The government plans to utilize technical assistance in a systematic way to enhance the capacity of its staff and partners. International best practice will be drawn upon to promote the emergence of Somaliland contracting industry. Innovative approaches to building their capacity, setting standards for their performance and periodic evaluation of their performance and dissemination of this information to the ministries and the public should be undertaken.

Somali Landers in the neighboring countries and in the Diaspora have acquired significant experience with contracting. These firms and individuals will be attracted to come back and assisted to form companies or enter into joint ventures with international firms. Timely preparation of infrastructure projects depends on an effective consulting industry. The government and donors should cooperate to attract international firms to the country and promote joint ventures between capable Somalis and these international firms. Contracts with private firms should be performance-based.

At the same time, the government will enhance its capacity to prepare feasibility studies, to regulate the contracting industry, to manage financial flows and to monitor and supervise project implementation. It will also enhance its capacity to assess the environmental and social impact of programs.

International experience has shown that effective operation and maintenance cannot take place without the involvement of communities. As Somaliland communities have acquired significant experience in self-management during the years of absent government, it is imperative that community involvement and empowerment be a significant part of the implementation strategy.

The NGOs have performed a valuable role in assisting communities and households to gain access to basic infrastructure. They have a significant implementation capacity to assist in implementing new programs. Some of them have pioneered methods to enhance the capabilities of communities to implement programs directly. Such efforts should be seriously encouraged. Performance-based contracting with governments and donors could be a useful tool of partnership and accountability. Some NGOs are in contractual relations that resemble the relations between the private sector and the government in other countries. As there will be significant opportunities for a contracting industry, these organizations should be encouraged to become companies.

The successful implementation of the SDF will depend on the existence of capacity both within the government and with other non-state actors. The Somaliland Government recognizes the strengths and constraints of the various actors and organizations that will be key to our success in rebuilding and developing Somaliland.



This article is submitted by Somalland Training and Research Centre (Somtrac), a public policy research centre. The author of the article, Dr. Hassan Jama Mohamed, a Public Finance Management (PFM) expert and a senior economist, is the Programme Director of Somtrac. This article is the first of a series of articles on public policy analysis within the context of Somaliland



Today, the European Union, Somaliland Development Fund, UN-HABITAT and the Government of Somaliland inaugurated the start of installation works for the new 23-km long water supply pipeline from Ged Deeble to Hargeisa. On completion, the project will considerably increase the amount of water available for Hargeisa city, and lay the ground for enhancing water access and equitable distribution of services.

The Hargeisa Urban Water Supply Upgrading Project (HUWSUP) is jointly funded by the European Union and the Somaliland Development Fund to the tune of EUR 15 million and USD 8.6 million respectively. The Project is implemented by UN-Habitat, in partnership with the Hargeisa Water Agency and the Somaliland Ministry of Water Resources. 

The overall objective of the project is to improve access to safe and affordable water and livelihoods of vulnerable households in urban and peri-urban areas of Hargeisa city, through expanded supply of drinking water from sustainable water sources, and associated creation of employment opportunities. Adequate water supply is a fundamental prerequisite that creates opportunities for economic growth at the individual, household, enterprise and collective level.

The new water pipeline replaces the 40-year-old existing pipeline system with a new high-capacity single-transmission main, thus bringing more water into the municipal system. The new water supply pipeline, together with the new Geed Deeble pumping station that will be constructed over the coming 12 months, is designed for a capacity of 20 million litres of water per day. As a first step to increase the water production, four new boreholes at Hora Haadley are currently nearing completion, with very promising yields. The project is expected to be completed by January 2017

These important infrastructure works will lay the foundation for other ongoing and future water expansion works that will contribute to achieving the full potential of the new Hargeisa water system, after drilling additional boreholes, connecting additional well fields, and upgrading the distribution network to deliver water to areas of the city that have so far been underserved.

Hargeisa, Somaliland. On 9 June 2015 – a delegation from the Government of Somaliland (GoSL) accompanied by the Somaliland Development Fund (SDF) donors visited the Roads Development Agency (RDA) laboratory to see the equipment funded by the SDF. Later on, the delegation visited Hargeisa Water Agency (HWA) pipe storage facility where recently imported pipes for Hargeisa Urban Water Supply Upgrading Project pipes have been stored.

The purpose of the visit was to provide the GoSL and the donors with an opportunity to see recently supplied modern laboratory in RDA as well as the recently arrived 371 container loads with 3,696 pieces of 600mm ductile pipes (slightly over 21km) meant for use in the upgrading of the Hargeisa Urban Water main water pipeline. An additional 124 containers with pipes, valves and fittings are expected during the coming month.  Both laboratory equipment and the pipes are funded by the SDF.

From the GoSL side, the members of the delegation were the State Minister of Finance, Osman Sahardid and Mr Ibrahim Siyad, the General Manger of HWA and Prof Hassan Ali Osman, the General Manager of RDA.  The donors were represented by officials from UK Department of International Development (DFID) and Danish International Development Agency (DANIDA) and the Kingdom of the Netherlands. The Embassy of Norway sent their apologies.  

 On behalf of the SDF donors, Pauline Seenan, Head of Economic and Human Development Team at the HWA pipes yard said that: “We are happy to confirm the arrival of the pipes in Hargeisa and appreciate the amount of work that was involved in importing them from China, clearing them through Berbera and finally bringing them to Hargeisa. We look forward to coming back and turn on the taps of increased water in Hargeisa city”.  After visiting the RDA offices and laboratories, Pauline said that “It is very nice to be in here and to see the results of combination of two years of work. The SDF is really focused on infrastructure and particularly on roads. We have got two roads and a bridge rehabilitated. It is also good to see all of this equipment which will help in ensuring sustained quality of roads in Somaliland. It is indeed good to see all the SDF work coming together finally and the tax payers money being well spent”

Speaking for the government of Somaliland at both sites (RDA and HWA), the State Minister of Finance, Osman Sahardid said that that ‘’ It is apparent to everybody the progress made in the roads sector specifically the rehabilitation of Lafaruk- Berbera Road, Kalabaydh – Dila road and now the laboratory equipment which will bring a lot of benefits including testing of road construction materials for the benefits of our roads in Somaliland.  The water upgrading project for Hargeisa is similarly helpful in contributing to provision of adequate accessible water to Hargeisa residents. On behalf of the Government of Somaliland and its people, I would like to thank the government and people of UK, Denmark, Norway and the Netherlands for their contributing to the Somaliland Development Fund and making all this happen”.

SDF has allocated USD 9,928,630 to RDA for roads rehabilitation in Somaliland; namely, the rehabilitation of Lafaruk-Berbera-Sheikh and Kalabaydh-Dilla roads. A portion of this amount was utilised for procurement of the laboratory equipment which are meant to increase RDA capacity for testing of road construction materials (for earth works and Asphalt) for quality control and assurance purposes in both new construction and rehabilitations.

Similarly, the SDF allocated USD 9,503,000 for the upgrading and extension of the Hargeisa Water Supply System; namely the procurement of pipes for the 23 KM of pipeline mains from the Geed Deeble Pumping Station to the Hargeisa Chinese Reservoir, the drilling of 3 boreholes in Hora Hadley, the installation of 6.8km of new pipework between the Hora Haadley and Ged Deeble well fields, the establishment of a small-scale water supply system for Dar-es-Salaam village, and the supply of ductile iron pipes for the upgrading of the Ged Deeble wellfield collector system which connects the new and existing boreholes to the pumping station. These activities are implemented by UN-Habitat. The above stated allocation is also funding the construction of Ayaha 1&2 Settlement Water Supply which is implemented by Terre Solidali.

SDF is a 4- year fund designed to support the Government of Somaliland (GoSL) in filling critical gaps that are fully aligned to the National Development Plan (NDP). The SDF is currently funded by the UK’s Department for International Development (DFID), the Danish International Development Agency (DANIDA) and the Governments of Norway and The Netherlands.


UK Government Minister Grant Shapps has pledged the UK’s ongoing support to the Somaliland people during his first visit to Hargeisa. A press release issued by the UK Foreign & Commonwealth OfficeDepartment for International Development, detailed the outcome of the Minister’s visit in Somaliland:

Representing the UK’s Department for International Development and the Foreign and Commonwealth Office, Mr Shapps met political leaders from Somaliland to reinforce Britain’s ongoing relationships. This included agreeing new support for renewable energy in Somaliland and improvements to water supply in Hargeisa.

In Hargeisa, Mr Shapps met President Silanyo and other Somaliland government ministers to reinforce the warm and long standing relationship between the UK and Somaliland and to urge all interested parties to stand together and avoid any further delays to the election. He confirmed the UK’s position as Somaliland’s primary development partner, which included the signing of an agreement to support the creation of renewable energy resources.

The new DFID-backed green energy programme will pilot mini hybrid grids, which will combine solar power with existing diesel generators to provide up to 2,000 households with access to more reliable, affordable and clean power.

During his visit to in Hargeisa, Minister Shapps said:

The UK remains firmly committed to helping everyone in Somaliland to build a more prosperous future. Access to affordable, reliable electricity sources and clean, fresh water is important for any country to pull itself out of poverty.

Somaliland has a well-deserved reputation for peace and democracy in a troubled region and they need to work with their neighbours to promote wider stability.


The Ministry of Water Resources (MoWR) of the Republic of Somaliland today officially launched Hadaaftimo Water Supply Project. The project seeks to improve access to portable water to about 4,200 inhabitants of Hadaaftimo through borehole drilling, construction of water supply system & establishing a sustainable management committee in Hadaaftimo. The launching event for the project took place in Hafaaftimo District in Sanaag region, on 23rd May 2015, and was officiated by the State Minister for Water Resources Mr. Abdisalam Mohamed Hassan.

“I am really delighted to witness the launch of much awaited life supporting project. I would like to urge Hadaaftimo community to support implementation of this beneficial project that will increase access to adequate safe clean water that is also affordable and cheap” said Mr. Hassan during the inauguration ceremony.

Hadaaftimo town lies 90km east of Erigavo, Sanaag regional base and has an estimated population of 4,200 people. The area is a semi-arid land where annual rainfall is about 200 to 300mm with the experience of frequent droughts. The town has only one functioning borehole which is about 2.5kms to the South-East of town and was drilled and completed in 2008. There are two small water reservoir (24 cum and 46 cum respectively). There is no pipeline from the borehole to town and water is collected and distributed by private water tankers.

 The water management committee estimated that the majority of households consume one barrel (200 litres) of water in five days, thusan estimated 90% of Hadaaftimo households are using small berkads in front of their houses for roof water harvesting. However, these roof catchments do not provide enough water as the frequency and reliability of rain is very short and limited.

 Somaliland Development Fund (SDF) has allocated some funding for the MoWR for conducting a  water study in Hadaftimo,drilling of a new borehole, design of a small town water distribution system inside Hadaaftimo from the new borehole. Besides, the project will establish a water management structure as per the Water Act, 2011 and build its capacity for management of the newly established water infrastructure to to enable effective sustainable water management.

 The project is funded by the Somaliland Development Fund (SDF) and is implemented by the MoWR. SDF is a 4 - year fund designed to support the Government of Somaliland (GoSL) filling a critical gap supporting projects that are fully aligned to the National Development Plan (NDP). SDF is currently funded by the Department for International Development (DFID), the Danish International Development Agency (DANIDA),the Governments of Norway and the Netherlands. The current contribution by the three donor countries currently stands at USD 60 Million. The MoWR is currently implementing a project worth 5.5 million in seven locations across