Hiiraan Online
Tuesday November 17, 2015
NAIROBI (HOL) - A new report by the World Bank warns that the absence of appropriate business regulations is responsible for the emergence of the anti-competitive behavior currently hindering the emergence of new Somali enterprises as well as prospects for smaller and medium sized enterprises.
This report titled ‘Somalia Economic UpdateTransition Amid Risks' says the country will need to deepen and accelerate the current reform agenda if it is to ensure a level playing field for Somalia’s vibrant private sector in a country that tops the world's most corrupt nations index every year.
After twenty years of conflict, Somalia is ranked the fifth poorest country in the world with an estimated GDP of about US$ 5.7 billion in 2014 and a GDP per capita of US$ 435, according to a data by the World Bank.
It is estimated that only 42 percent of its school-age children are enrolled in primary school, with girls making up just 36 percent of these. About 67 percent of youth aged between 14 and 29 are believed to be unemployed, which makes them vulnerable to recruitment into militia or radicalized groups.
Encouraged by the relative stability in the capital Mogadishu since the ouster of Islamist insurgents in 2011, the World Bank report says that the horn of Africa nations is going through a considerably more peaceful phase that facilitated the progress of several nation-building initiatives including a constitution-making process which is expected to be concluded in 2016 when the country also undergoes elections. A provisional constitution is currently in place, while the formation of states and their administrations, including the fiscal is also proceeding.
Part two of the report which focused on intergovernmental fiscal relations said that taxes basis are currently divided geographically where states collect all the available revenues from their territories and the federal government collecting taxes only from Mogadishu. The report warns the current emerging fiscal structure will limit options available to aciehive a comprehensive intergovernmental fiscal arrangement in short run.
|"Emerging inequality between states is a critical issue the federal government will need to address, but its capacity to do so is substantially reduced for as long as revenue streams are captured by state governments." The report said.
“There has been little discussion of the intergovernmental system that defines the interactions between the Federal Member States and the Federal Government.” says Kathleen Whimp, Senior Public Sector Specialist at the World Bank.
In conclusion, the World Bank has called for increased domestic production and investment to enhance exports. Bank recommended improved private sector regulation,the establishment of a viable and regulated banking sector and making a decision on the country’s HIPC status; reforms to enhance budget credibility; operationalization of the 2011 Financial Institutions Act; and the development of reliable statistics to support policy formulation, planning, budgeting and service delivery.
Somalia Economic Update October 2015 Report