Puntland Annual Plan - 2007

Ministry of Planning and International Cooperation
Puntland State of Somalia
Copyright ©2007
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The Ministry of Planning and International Cooperation
E-mail address: mopic1@hotmail.com/mopic3@yahoo.com
Websites: http:www.puntlandgov.net/ http:www.puntlandinfo.org
DAWLAD GOBOLLEEDKA PUNTLAND EE
SOOMAALIYA
PUNTLAND STATE OF SOMALIA
FYDP First Year Annual Plan, 2007

The Puntland Annual Development Plan 2007
Table of Contents
Glossary 3
Foreword 4
PART I: BACKGROUND 6
1. Introduction 6
2. FYDP and State Development Policies 7
3. Strategic Principles 8
4. The Political Context and Governance 10
5. The Macroeconomic Setting and Development Challenges 11
6. Differential Diagnosis 21
7. Development Constraints 23
8. Lessons Learned 25
PART II: SETUP AND APPROACH 27

1. Annual Plan 2007 27
2. Resource Mobilisation 28
3. Plan Financing: Growth of Development Funds 32
4. Sectoral Allocation 33
5. Implementation Arrangements 35
PART III: SECTORAL PRIORITIES FOR THE ANNUAL PLAN 38

1. Governance and Institutions 38
2. Finance and Planning 40
3. Social Services: Investment in Human Capital 43
4. Leading Productive Sectors 48
5. Infrastructure Development 53
6. Decentralisation and Rural Development 58
7. Information and Culture 62
ANNEXES 63
1. Annex I 63
2. Annex II 65
2
Glossary
ARM Additional Resources Mobilisation

CSO Civil Society Organization
DB Developmental Budget
DDR Disarmament, Demobilization and Reintegration
EAU East African University
EDPs Entrepreneural Development Programmes
EEZ Exclusive Economic Zone
FGM Female Genital Mutilation
FYDP Five-Year Development Plan
GDP Gross Domestic Product
GER Gross Enrolment Rate
GIS Geographical Information System
GUMCO Golden Utilities Management Company
HADMA Humanitarian Affairs and Disaster Management Agency
ICOR Incremental Capital Output Plan
ICT Information and Communication Technology
IDPs Internally Displaced Persons
LEADS Livestock, Environment, and Development Initiative
M&E Monitoring and Evaluation
MDGs Millennium Development Goals
MoF Ministry of Finance
MOPIC Ministry of Planning and International Cooperation
MTEF Medium-term Expenditure Framework
PHA Puntland Highway Authority
PIDAM Puntland Institute for Development of Administration and Management
PPAs Participatory Poverty Assessments
PRAs Participatory Rural Appraisals
PRSL Poverty Reduction and Sustainable Livelihoods
PSAWEN Puntland State Agency for Water, Energy, and Natural Resources
RDP Reconstruction and Development Programme
RIDF Rural Infrastructure Development Fund
SBP State Bank of Puntland
SPSS Statistical Package for the Social Sciences
SSB State Statistical Bureau
SWALIM Somalia Water and Land Information Management
TFC Transitional Federal Charter
TFG Transitional Federal Government
TVET Technical and vocational education and training
UN United Nations
UNDP United Nations Development Programme
UNICEF United Nations Children’s Fund
WFP World Food Programme
WHO World Health Organization
3
Foreword
Governance is the exercise of economic, political, and administrative authority to manage a

country’s affairs at all levels, which clearly has major implications for equity, poverty, quality
of life, responsiveness to citizen demands, and the ability to meet global pressures with
appropriate policy actions1. These functions could be properly achieved by devising sound
plans and appropriate strategies to achieve better results. Good governance, among other
things, is participatory, enhances transparency and accountability, improves effectiveness and
equity, and promotes the rule of law. An appropriate aid to all these essential government roles
is a strategic plan that sets out clear targets and apparent objectives.
To promote mechanisms, processes, and institutions through which citizens articulate their
interests through consultative processes, Puntland State of Somalia (PSS) has opened the
forum to all stakeholders so that their creative ideas and concerns are heard and accommodated
in the development processes. To provide the necessary services to its citizens, PSS has
developed a Puntland Five-Year Development Plan (PFYDP) for the period 2007-2011. This
process began in 2005. Both local consultants and external experts deployed by UNDP assisted
in producing this plan.
To ensure that the Five-Year Development Plan is operational, PSS divided it into annual plans.
This process commenced with the 2007 Annual Plan that sets out annual priorities, strategies,
and sectoral allocations for the year. The annual plan uses the same basis of formulation as the
PFYDP. The main purpose of the five-year plan was to prioritise, in a concise and methodical
way, the short-term, medium-term and long-term needs of the state in all sectors, establish
targets for development goals, and set up a strategic plan to overcome barriers in order to
achieve the desired development goals2.
The vision for the period of intervention of the plan is to create a strong and secure PSS within
the federal setup, preserving its Islamic and cultural heritage, developing human resources,
preserving the environment, and exploiting natural resources equitably.
The 2007 Annual Plan begins a transition period, from an ad-hoc situation to that of sustainable
development within the five-year intervention period. The strategy of the state is to facilitate the
process of creating a conducive environment for the development of a free enterprise economy.
The state’s role is to maintain peace and stability, and create meaningful opportunities for its
citizens to grow and develop.
The Annual Plan is also used as an instrument to alter the current state of aid coordination
strategies that do not entail a government role. The existing system that was in operation
during the civil war, and in the earlier years of PSS, is that most aid to Puntland came in the
form of emergency humanitarian assistance, responding to Puntland’s most immediate needs.
1 UNDP definition: Report of the Conference on Public Procurement Reform in Africa, 30 November to 4 December 1998 Abidjan, Côte
d’Ivoire.
2 Puntland Five-Year Development Plan, 2007-2011, Ministry of Planning and International Cooperation, Puntland State of Somalia.
4
This aid was provided by the UN and international agencies, often on an ad-hoc basis, and
international organizations were operating without any planned state intervention. The state is
also planning to create an Aid Coordination Office that will manage aid inflows in order to make
it complementary to the local development efforts, and create a sense of ownership.
The Ministry of Planning and International Cooperation, being the lead ministry responsible for
the coordination of development plans, is grateful to all those who participated in the formation
and completion of this enormous project. Particular thanks go to local consultants and expatriate
experts deployed by UNDP. The ministry wishes to express its gratitude to UNDP/the Poverty
Reduction and Sustainable Livelihoods (PRSL) programme that financed the 2007 Annual
Plan formulation, and has been providing constant feedback during the whole process, and
supporting the publication of the development plans. The ministry is also grateful to its staff,
technical working groups from other state economic sectors, and all stakeholders who have
participated in consultative sessions, and who have made valuable inputs.
Abdi Salad Ali

Minister of Planning and International Cooperation
5
PART I: BACKGROUND
1. Introduction
A well-governed and effective state is an essential prerequisite for achieving sustainable socio-
economic development. To a certain extent, the government of Puntland has succeeded in
improving overall governance from a shattered base, by building institutions and systems
and securing reasonable peace and stability. Puntland’s efforts to adhere to the constitution
(which sees Puntland as an integral part of the Federal State of Somalia) and to maintain
peace, stability, and governance, supported by a proactive international community, have all
contributed to the modest yet admirable achievements.
There are three critical ingredients for peace and prosperity: political leadership with vision;
a committed bureaucracy to catalyse and turn the vision into reality; and a hard-working
population. The government has a dream to extricate the economy from the deep mire of
poverty and to ensure high quality democratic governance and access to basic services for its
citizens. The state needs significant transformation, re-engineering, and reform at all levels.
The rich cultural heritage, Islamic value systems, and social capital will act as the foundation
for growth.
However, it would be futile to wait until the stabilisation process is over to start our collective
endeavour for growth and development. In fact, sustainable stability and peace would be
elusive if not backed by meaningful opportunities for citizens to grow and develop. There
cannot be peace in an economy haunted by hunger, poverty, and unemployment. The Five-
Year Development Plan (FYDP) 2007–2011 embodies the results of a collective endeavour to
establish a vision and translate the dream of the people of Puntland into concrete achievements.
Peace, security, and sustainable and modest gross domestic product (GDP) growth are crucial
for reducing poverty.
As an integral part of the development agenda for the state, Puntland initiated the formulation
of the Five-Year Development Plan, which will guide future development efforts in the state.
International institutions carry out most of the current development and humanitarian activities,
often on an ad hoc basis.
The strategy of the government is to facilitate the process through the creation of an enabling
environment conducive to the development of a free enterprise economy, where regulation
acts not as a lid but a ladder for growth. However, during the period of transition, and to reverse
any regression in efforts toward achieving the Millennium Development Goals (MDGs), the
state needs targeted safety nets, food security, and livelihood support, for which continued and
redoubled international support is envisaged.
Against the backdrop of a fragile Transitional Federal Government (TFG) in its infant stage,
weak macroeconomic settings, the challenges of security and peace, a severe resource crunch,
the dominance of the private sector, and the emerging free market economy, the relevance of
the FYDP could be seen to be undermined. However, considering Puntland’s rich comparative
advantage and resource endowments, it is critical to unlock the growth potential. The first
FYDP 2007-2011 and the first Annual Plan 2007 are designed to act as the lever that will pull
the economy into a trajectory of secular growth in partnership.
6
2. FYDP and State Development Policies
Any well-thought-out development strategy only becomes fruitful when there are clear-cut
policies. The FYDP has been based on Puntland State’s commitment to respond to social
demand and to go forward and achieve tangible results in terms of economic development,
improved social services, and poverty reduction. To react favourably to popular demand, the
state devised its development policy guidelines and shared them with all stakeholders, in order
to make them the basis for a common future policy:
• To ensure good governance by enhancing the capacity and efficiency of government

institutions and keeping the government budget under control by reducing wasteful
expenditure and enhancing revenue collection; to also speed up the demobilisation
process to reduce the excessive number of policemen on the payroll.
• To facilitate a free enterprise economy within the context of social welfare by encouraging
healthy competition together with environmental preservation.
• To maintain security and create an environment conducive to domestic and foreign
investment in the state, especially in small- and medium-sized industries whose raw
materials are available in Puntland; to also enhance cooperation with international aid
groups.
• To develop viable mechanisms to combat development obstacles such as corruption,
terrorism, and all kinds of drugs (including khat).
• To work toward eliminating discrimination against women and enabling them to actively
participate in policy decision making and administrative management.
• To improve the health conditions of the people by supporting public health centres and
encouraging private ones, in order to combat contagious diseases.
• To enhance human resource development by supporting and encouraging the education
sector, in order to ensure free primary education for school-age children and reduce
unemployment among the youth.
• To improve and upgrade the existing physical infrastructure of the country through sound
resource management, allocating funds to this end and for the establishment of new
development projects.
• To collect the necessary statistical information from all sectors during the preparation
period of the Five-Year Development Plan and to lay down procedures for establishing a
reliable database for the country, without which it would be difficult to plan and address
developmental issues.
• To push forward the current process of decentralisation of power with community
participation at the district and village level, a clear indication of the state leadership’s
commitment to being responsive to the wishes of the public; with the current government
efforts to establish local government councils directly elected by their respective
communities, the government has began a new era of democratisation in Puntland.
The Vision
Every country needs a vision that stirs the imagination and motivates all segments of society
to greater efforts. It is an essential step in building political consensus on a broad national
development strategy, which encompasses, inter alia, the roles and responsibilities of different
agents in the economy, the government at all levels, the private sector, communities, and civil
society.
7
Vision
A strong and secure Puntland State within the Somali Federal System preserving its Islamic and
cultural heritage, developing human resources, preserving the environment and exploiting natural
resources equitably and sustainably.
This vision promotes sustainable development, improved living standards, and a better future for
its citizens by way of:
Peace, security, stability, human rights, democracy, rule of law, and good governance.
Accelerated, sustainable growth to create opportunities through a free enterprise economy.
An enabling environment for all sections of the society to grow and excel.
Targeted safety nets for poverty reduction and sustainable livelihoods.
Building human resources and institutions for better participation in the development process.
Fostering and developing a scientific spirit and innovation.
The Rationale for the FYDP
The FYDP plan has been designed to demonstrate the will of the government and the people in
achieving the stated development vision. Successful implementation of the plan would provide
a valuable opportunity to gain experience in development planning and to instil confidence
and credibility among Puntlanders and the international community, to further rally around the
cause of accelerated development in partnership. The rationale for the FYDP and the annual
plan is summarised in the box below.
Rationale for the FYDP

Puntland’s resolution to implement the FYDP toward recovery, rehabilitation, and
development.
The National Development Plan embodies the vision of Puntlanders to ensure sustainable
peace, security, human rights, equity, justice, and accelerated development for a better
future.
Development constraints force the government to seek international support to build
consensus for a broad national development strategy.
Predictable resource commitments exist for long-term development needs.
FYDP is Puntland’s National Development Plan to enable the international community
to support the country-led development strategy to eradicate poverty and achieve the
MDGs.
Unlocking the growth potential of the economy is crucial.
3. Strategic Principles
The broad strategy outlined in the FYDP is as follows:
Formulate policies and strategies and build the capacities of government, institutions, and
human resources to:
• Create an enabling environment for growth and development.

• Ensure a free enterprise economy, with the role of government shifting towards facilitation
and regulation.
• Encourage free trade and export led growth.
8
• Enable the leading sectors (livestock, fisheries, trade, and commerce) to propel
growth.
• Aim toward wage goods, poverty reduction, the achievement of the MDGs, and
employment generation.
• Facilitate and build infrastructure (human and physical) and improve connectivity.
• Promote gender equity and human rights, especially for the vulnerable populations.
Comparative Advantage: Unlocking the Potential
The fundamental corollary to the strategy of growth is to leverage some of the comparative
advantage of Puntland State through facilitating and creating a favourable climate.
• Geographical location – the strategic position (Horn of Africa), with access to international
sea routes, offers great potential for growth.
• An extensive coastline, rich marine resources, and a large Exclusive Economic Zone
(EEZ) – these provide a potentially rich resource base, if developed and managed in a
sustainable way.
• Significant livestock economy and potential mineral resources (oil and natural gas).
• Relative growth and stability (though fragile) in the region.
• Deepening democratisation and decentralisation.
• Free trade (low trade barriers).
• Somali diaspora and remittances – there is potential for channelling human and financial
resources into productive sectors.
• Market-led growth – free exchange rate (current and capital account).
• Vibrant private sector – this is conducive to growth.
• Somalia is signatory to key international conventions.
• Low population density and a large geographical area.
Monitorable Targets: FYDP and Annual Plan
• Achieve a sustained GDP growth rate well above 5–10 percent per annum.
• Extreme poverty reduced from 43 percent to 33 percent by 2011.
• Employment (productive and sustainable) to grow by 4–5 percent per annum.
• Primary sector to grow by 3–5 percent per annum, secondary sector by 8–12 percent,
and service sector by 10–15 percent.
• Achieve the MDGs at an accelerated pace.
Alignment with the Reconstruction and Development Programme
Under a UN and World Bank umbrella, a Reconstruction and Development Programme (RDP)
was developed to rehabilitate the state and allow recovery from the ravages of war and conflict;
in addition, it will safeguard it from a relapse into conflict. The RDP is expected to be a pro-poor
instrument for deepening peace and reducing poverty, premised on the three pillars of priority
needs, key strategies, and priority actions. It aims to:
• Deepen peace and security and establish good governance;

• Invest in people through improved social services; and
• Establish an enabling environment for rapid poverty-reducing development.
9
The FYDP is in alignment with the goals, objectives, and priorities of the RDP. As the budgetary
leverage to finance the development plan is seriously constrained, the state envisages an
unbundling of the package in accordance with the principle of “variable speed”, so that a state
like Puntland, with a demonstrated capacity for peace and development, would have access to
funding proportional to its needs and priorities.
4. Political Context and Governance
The collapse of the independent democratic republic of Somalia, the disillusionment with the
distorted democratic process, the marginalisation and neglect during the military regime, and
the ravages of the civil war have inflicted serious damage on a resource-poor economy. It
deteriorated further on account of its susceptibility to frequent natural calamities, particularly
droughts and floods. The state came under the grip of refugees and returnees, leading to
almost a doubling of populations in host communities, especially in urban areas. An indirect
fallout of the returnee migrants is the sudden economic boom, especially in the urban areas,
as they also contributed skills and investments.
The major governance concerns for Puntland include: statelessness as nation building is in
its infancy; rudimentary and evolving public institutions, systems, and procedures (including
the democratic and decentralisation processes). Transparency and accountability are below
benchmarks, there is high potential for conflict relapse, and the economy is fragile and vulnerable,
with limited budgetary resources. Taking cognisance of these factors, the government is
determined to address them in a time-bound manner.
Peace and Conflict Resolution
Fundamental to peace and security are credibility and consensus that are sustainable and cost-
effective. Speedy development and the provision of opportunities for all sectors to grow and
develop would add value to the peace process. The conflicts in the state are largely on account
of competition over a depleted resource base. Development and progress would invariably
provide win-win scenarios for all sides. As this is the underpinning strategy for the government,
protecting the lives and property of its people and providing an enabling environment for their
peaceful pursuits require proactive machinery as well as a strong state to act as a deterrent.
Under the strong guidance and active involvement of traditional leaders (Isims), Puntland has
managed to maintain levels of peace and security that have enabled it to establish political and
administrative institutions, deliver some limited but increasing basic social services, encourage
an active civil society, and promote a thriving private enterprise community. The comparatively
favourable security situation has further attracted economic immigrants from both South Central
Somalia and Ethiopia, who have settled in urban centres and engaged in varied economic
activities.
While Puntland aspires to be part of a federal Somalia, its relative success in maintaining
stability has in large part been due to its homogeneity, as well as its de facto separation from
the political developments of South Central Somalia, for which Puntland’s progress towards
peace and democracy can serve as lessons learned.
10
Puntland’s first charter, ratified and implemented in 1998, was replaced by the current
provisional constitution in 2001. It specifies the State of Puntland as a temporary entity that
will be incorporated as a federal state into the Republic of Somalia once the present functional
federal government becomes more active. The State has a three-tier structure of governance,
consisting of the state executive, regional administrations, and district councils.
Puntland’s structure of government harmonises with the decentralised system of administration

based on federalism. The key construct of a decentralised federal Somalia, specified in the
Transitional Federal Charter (TFC), is a proposed four-tier administration: federal government,
state governments, regional administrations, and district administrations. The TFC articulates
a division of functions and powers of the federal and state governments, but does not identify
specific responsibilities for regional or district authorities, which are specified in Puntland’s
constitution.
The public administration has a growing civil service, which needs greater skills, administrative
acumen, and capacities to meet the development challenges. Salaries and wages alone
account for the lion’s share of the annual budget, leaving very little leverage for development
expenditure. There is a strong need to have a qualitative shift in favour of a lean and effective
bureaucracy responsive to the development needs. Undoubtedly, civil service is at the cutting
edge of government, and its effectiveness, transparency, and accountability are key to building
credibility and confidence across all sections. The broad strategy would involve quality
improvement, capacity building, downsizing, and decentralisation.
Decentralisation
The people of Puntland are expressing a strong desire for a decentralised system of governance,
in which there is devolution of power and service delivery to district and local levels. Eleven out
of 33 district councils have had elections and the process should be completed by end 2007. The
government is committed to decentralised and participatory governance as the major driver for
regional growth and cost-effective service delivery. The road map would be developed towards
strengthening the process, convergence of defacto and dejure responsibilities through effective
functional demarcation and assignments, supplemented by comprehensive devolution process
and opportunities for local councils in the mobilisation of resources, mainly through taxation
and cost recovery.
5. The Macroeconomic Setting and Development Challenges
The State of Puntland, despite many disquieting baseline conditions, has taken significant
strides, benefiting from the peace dividend and relative stability. This is increasingly manifested
in the buoyancy of the economy (trade and commerce, construction, communications, etc.),
particularly since 2001.
An assessment of macroeconomic performance is rendered difficult on account of the absence

of critical data (especially GDP growth, sectoral growth and contribution, monetary and fiscal
trends, inflation, savings and investments, etc.). However, the available indicators supplemented
by surrogate measures indicate slow but steady overall growth.
11
Puntland is in a way a marginalised subsistence economy, with a low production base and
high vulnerability to drought and natural calamities. It lacks institutions for macroeconomic
management and monitory policy development. The state is stuck in the poverty trap, leading
to low savings and investments – extreme poverty hovers around 43 percent. Puntland’s per
capita income ranges between US$195 and $226, according to seasons and geographical
spread. More than 85 percent of the budget goes towards current expenditure, leaving little
room for developmental outlays. Though formal debt is low, informal debt is steadily growing in
financing the increasing needs of the government; the undeveloped financial system acts as a
barrier to the growth of savings and investment.
Table 1: Selected Macroeconomic Indicators for Puntland
Macroeconomic Indicators: Puntland, 2005 Status
Geographical area 212,510 km2

Population (52% nomadic; 48% urban) 3.96 million
Density of population 11/km2
Coastline 1,640 km
Sectoral Contribution to GDP

• Livestock (major source of employment and foreign exchange
earnings)
40% of GDP
• Fishing (second highest income and foreign exchange earner)
• Frankincense
• Trade and commerce
Average budget size (Somali shillings, with US$ in millions in brackets) 58 billion (3.86)
• Period 1999–2001 (annual average) 254 billion
• Period 2002–2006* (*8 months) (16.93)
Fiscal deficit (average surplus 1999–2004) 10.2%

State Bank of Puntland income (Somali shillings)
• 1.2 billion in 1999 to 3.2 billion in 2001
• 3.2 billion in 2001 to 12.8 billion in 2004
Exports and imports: these show a corresponding spurt in the above time
periods
It can be seen that the livestock and external sectors dominate the economy. The growth
momentum is clearly visible since 2001, in terms of overall budget size and export growth, as
indicated in Table 1 and Table 2.
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Table 2: Budgetary Trends
Budget Allocation by Sector: Puntland State 2003–2004 (US$)
2003 2004
Ministry
Allocation Expenditure Allocation Expenditure
1 Presidency 830,148 830,148 986,358 986,358
2 General Expenditure Of State 4,160,214 4,160,214 5,040,256 5,040,256
3 Parliament 209,900 209,900 438,036 438,036
4 Auditor 51,176 51,176 98,185 98,185
5 Military (Darawish Defence) 4,294,496 4,294,496 4,915,896 4,915,896
6 State Lawyer 16,208 16,208 21,008 21,008
7 Ministry of Finance 1,144,335 1,144,335 582,226 582,226
8 Ministry of Education 132,930 132,930 177,106 177,106

Ministry of Planning and
9 52,620 52,620 158,176 158,176
International Cooperation
10 Ministry of Health 120,564 120,564 316,964 316,964
Ministry of Commerce &
11 41,712 41,712 81,420 81,420
Industry
Ministry of Information &
12 99,732 99,732 120,040 120,040
Communication
13 Ministry of Sport & Labour 58,884 58,884 140,116 140,116
Ministry of Agriculture &
14 72,492 72,492 152,512 152,512
Livestock
15 Ministry of Ports & Fishery 122,400 122,400 223,630 223,630
Ministry of Public Works &
16 162,524 162,524 503,408 503,408
Transportation
Ministry of Interior Affairs and
17 274,752 274,752 347,100 347,100
DDR
Ministry of Religious Affairs &
18 62,340 62,340 85,268 85,268
Awqaf
Ministry of Local Government &
19 - - 133,936 133,936
Rural Development
Ministry of Women & Family
20 - - - -
Affairs
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2003 2004
Ministry
21 Custodial Body (Prison Guards) 322,160 322,160 341,976 341,976
22 Police Forces 1,953,540 1,953,540 2,522,460 2,522,460

Consol of Judiciary & High
23 108,792 108,792 163,604 163,604
Courts
24 Puntland Security Services - - - -
Grand Total 14,291,919 14,291,919 17,549,681 17,549,681
2005 2006 (8 months)

Ministry
1 Presidency 987,790 987,790 1,282,602 1,282,602

General Expenditure of the
2 4,618,434 4,618,434 3,508,472 3,508,472
State
3 Parliament 544,500 544,500 471,477 471,477
4 Auditor 101,048 101,048 145,804 145,804
5 Military (Darawish Defence) 6,373,296 6,373,296 5,148,526 5,148,526
6 State Lawyer 21,008 21,008 16,219 16,219
7 Ministry of Finance 738,919 738,919 687,248 687,248
8 Ministry of Education 193,106 193,106 299,510 299,510

Ministry of Planning and
9 139,080 139,080 107,992 107,992
International Cooperation
10 Ministry of Health 332,964 332,964 308,589 308,589
Ministry of Commerce &
11 81,420 81,420 69,287 69,287
Industry
Ministry of Information &
12 120,904 120,904 118,643 118,643
Communication
13 Ministry of Sport & Labour 142,492 142,492 132,892 132,892
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2005 2006 (8 months)

Ministry
Ministry of Agriculture &
14 151,719 151,719 129,365 129,365
Livestock
15 Ministry of Fisheries & Ports 238,229 238,229 222,251 222,251
Ministry of Public Works &
16 516,648 516,648 295,954 295,954
Transportation
17 Ministry of Interior and DDR 317,887 317,887 348,139 348,139
Ministry of Religious Affairs &
18 87,820 87,820 84,160 84,160
Awqaf
Ministry of Local Government &
19 137,436 137,436 119,776 119,776
Rural Development
Ministry of Women & Family
20 57,236 57,236 59,238 59,238
Affairs
Custodial Body (Prison
21 341,904 341,904 358,922 358,922
Guards)
22 Police Forces 2,905,716 2,905,716 2,647,824 2,647,824
Consul of Judiciary and High
23 165,204 165,204 155,182 155,182
Courts
24 Puntland Security Services 81,927 81,927
Grand Total 19,314,760 19,314,760 16,799,999 16,799,999
Source: Ministry of Finance, Puntland, 2006

Note: Expenditure is a provisional estimate; the allocation and expenditure are given as equal, which indicates
(a) the accounts are getting finalised and (b) the dominance of salaries and operational commitments
Sectoral Expenditure Pattern
The sectoral expenditure pattern for the various ministries for 2004–2006, disaggregated into
development and non-developmental expenditure, is presented in Annex II.
It can be seen that almost 98 percent of the budgetary expenditure is going towards salaries,
wages, and operational expenses. On average, only 12.7 percent is earmarked toward the
implementation of development programmes and activities. However, in addition to the normal
budget, the government is implementing a social development project with the resources
received from the diaspora (US$1,506,400) in 2004 and 2005.
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External Sector: Exports and Imports
Table 3: Export Trends
Major Exports 2000 2005
Goats/sheep (in heads) 571,455 1,594,859
Cattle (in heads) 27,604 91,910
Camels (in heads) 8,177 26,109
Hides/skins (in bundles) 186,400 100,594
Other general cargo (in tons) 110 188
It can be seen that the export of goats and sheep increased by 179 percent and cattle by 233
percent during the period under review. Livestock dominate the export sector.
The table below shows the growth of imports during the same period. There has been a 52
percent increase in the import of construction materials, indicating both the buoyancy of the
sector and the level of investments flowing into real estate and construction.
Table 4: Import Trends
Major Imports (Tons) 2000 2005
Sugar 19,054 54,701
Rice 26,209 53,946
Flour 27,386 33,909
Construction materials 59,575 90,532
Diesel 16,707 34,353
Bagged cargo 2,812 8,817
General cargo 93,374 79,208
Composition of Revenue
As can be seen form the following graph, customs duty through Bossaso Port dominates the
revenue for the state (about 80 percent). The revenue base is not diversified and is narrow.
Concerted efforts are needed for additional resource mobilisation, if the development dreams
are to be realised. Self-reliance is the long-term goal. Rationalisation of the tax structure,
effective tax enforcement, broadening the tax base by bringing potential sources under the tax
16
net, etc. are fundamental to resource mobilisation, coupled with cost reduction, and revenue
expenditure compression.
Table 5 shows the major revenue sources and the respective share in the total revenue collected
for 2005.
Table 5: Monetary Composition of Revenue: Puntland, 2005
Revenue Collection % Share
Customs Duty 228,427 80.1
Indirect Taxes 23,318 8.2
Income Tax 4,277 1.5
Government Property Fee (Land Tax) 3,978 1.4
Government Service Charge 24,835 8.7
Other 318 0.1
Total Revenue 285,151 100
In US$ million 19.7
Note: Collection figures are in Somali shillings (millions)
Figure 1: Composition of Revenue in Percentage: Puntland, 2005
Land tax Gov. service Other

1.4% charge 0.1%
Income tax 8.7%
1.5%
Customs duty
Indirect taxes
8.2% Indirect taxes
Income tax
Land tax
Gov. service charge
Other
Customs duty
80.1%
Composition of Expenditure
Table 6 shows the composition of government expenditure for the year 2005. It can be seen
that 82.9 percent of the total is going towards salaries, wages, and operational and general
expenses.
17
Table 6: Budgetary Expenditure: Puntland, 2005
Heads Expenditure % Share
Wages and Salaries 179,676 62.0
Operational and General Expenses 60,554 20.9
Repayment of Loans 38,931 13.4
Welfare and Reconstruction 4,800 1.7
Public Works and Investment 0 0
Grants and Reserves 5,760 2.0

289,721
Total Expenditure 100
(US$20 million)
Note: This is provisional data. Expenditure figures are in Somali shillings (millions).
The graph below shows the composition of the expenditure of the government. There is very
little fiscal manoeuvrability, as most of the revenues are absorbed by expenditure on salaries,
wages, and operational expenses.
Figure 2: Composition of Expenditure in Percentage: Puntland, 2005
Composition of Expenditure %: PL 2005

2
0
Wages & salaries
1.7
Operational
13.4 expenses
Loan repayment
Welfare and
reconstruction
20.9 Public investment
Grants and
62 reserves
As can be seen, the root cause of the fiscal position is the burgeoning civil service and increasing
salary commitments. During the initial stages of the development process, the growth of the civil
service could not be fully avoided. However, the key is to maintain a satisfied, well paid, lean,
and capable civil service rather than an oversized one. Undoubtedly, quality administration
would lead to faster growth and employment generation for a wide segment of the population.
18
Figure 2.1: Employment Growth in Puntland’s Civil Service: 2000–2005
2006
1890
1540
1300
1150
1047
2000 2001 2002 2003 2004 2005

Source: Ministry of Labour, Youth, and Sport
Socio-economic Profile
Puntland has an area of 212,510 km². Its population, according to official estimates, is around
3.96 million, out of which 52 percent constitutes nomadic pastoralists. The main sources of
livelihoods and income are livestock, agriculture, fishing, and remittances. The livestock sector
contributes to about 80 percent of foreign exchange earnings, 40 percent of the GDP, and 60
percent of employment opportunities. In other words, Puntland relies heavily on the livestock
sector; however, it is fragile even at the best of times. This is due to the state’s semi-arid and
arid climatic zones, which experience recurring droughts. Meanwhile, the fishing sector has
huge potential for expansion; the Puntland coastline is 1,640 km long and has extremely rich
marine resources. Puntland is also one of the largest producers and exporters of frankincense
in the world – an industry that provides livelihood to many communities.
Remittances from the diaspora also make up a large part of household incomes. While it is
hard to establish the exact amount of these private transactions in Puntland, it is estimated that
Somalia receives around US$1 billion annually in remittances. They also provide substantial
community funding, promoting small businesses and basic service provision. Both the fishing
and frankincense sectors, if properly exploited, could create economic diversification and more
stable growth by expanding the export base to more than just one sector (livestock), which
is susceptible to climatic shocks. The state is urbanising at a rapid rate, and it is estimated
that 30–35 percent of the population live in the capital Garowe and the other major towns of
Bossaso, Galkacyo, Gardo, Las-anod, and Baran.
Poverty and Inequality
Poverty is widespread, and about 43 percent of the population live on less than US$1 a
day. Wide regional disparities exist; the average per capita income in Mudug and Nugaal is
US$150–200 per annum, while in Bari, Sool, and Sanaag it is estimated at US$250–300 per
annum. Similarly, there are some striking inequalities between urban and rural areas. The rate
of unemployment is estimated at 61.5 percent in urban areas and 40.7 percent in rural areas
(UNDP-World Bank estimate, Socio-Economic Survey, Somalia, 2002). Since the period of
state collapse and civil war, the private sector has increasingly assumed the responsibility for
service provision and the trend is continuing.
19
Basic Social Indicators

Though they are improving, the quality of basic services and access to them are very low.
The gross enrolment rate (GER) at primary level is one of the lowest in sub-Saharan Africa
at 24 percent, with a mere 19 percent going on to secondary level. Only 15 hospitals with a
total of 1,223 health staff serve Puntland’s population of 3.96 million. Over half of the staff are
not properly qualified. This results in, among other outcomes, under-five and infant mortality
rates that are among the worst in the world – a shocking 225 per 1,000 children and 133 per
1,000 live births (UNICEF, 1999). Another factor contributing to these high rates is that about
two-thirds of the people do not have access to safe water and sanitation facilities. The use of
khat and the practice of Female Genital Mutilation (FGM) are extremely widespread among
Somalis. About 98 percent of Somali girls and women have undergone FGM, and khat chewing
is highly prevalent among men. These practices have high costs in terms of public health, but
khat use also results in a massive outflow of resources.
Table 7: Selected Social Indicators

Puntland MDG Targets
Key Basic Social Indicators
Baseline* for 2015
Population living below US$1/day 40–45% 20–22.5%
Children underweight for age (percent of children under five) 26.8% 13%
Gross enrolment rate (% of school age population) - 100% (net)
Ratio of girls to boys in primary education - 100%
Under-five mortality rate (per 1,000) 225 75
Infant mortality rate (per 1,000 live births) 133 44
Maternal mortality rate (per 100,000 live births) 1,600 275
Births attended by skilled health staff (%) 49.2
HIV Prevalence (% of adults aged 15–49) Less than 1% -
Contraceptive prevalence (% of women aged 15–49) 8.3%
Malaria prevalence (per 100,000) 113
Proportion of land area covered by forest - -
Access to an improved water source (% of population) 25.9% 64.5%
Access to improved sanitation (% of population) 41.5% 62.5%
IDPs and refugees returned/resettled
Source: World Bank, World Development Indicators 2006; MDG Report for Somalia, 2006 (Draft); UNDP and
the World Bank, Somalia Socio-economic Survey, 2002; UNDP, Somalia Human Development Report, 2001;
UNICEF Multiple Indicator Cluster Survey, 1999; Conflict Analysis Regional Report Puntland, 2004; UNICEF,
Primary School Survey, 2004/2005; Puntland Ministry of Planning, Facts and Figures, 2004; WHO, Annual
World Health Report, 2004.
* Baseline data ranges from 1999 to 2006.
20
Displaced Persons and Livelihoods
Puntland has an estimated 60,000 internally displaced persons (IDPs), most of whom have
fled drought and conflict in South Central Somalia. They tend to live on the margins of society,
with even less access to basic services than the rest of the population, and are often clustered
together with the urban poor and confined to dismal living conditions. There are also about
3,000 Ethiopian refugees in Puntland, living in similarly harsh conditions. The authorities are
concerned about their ability to absorb and sustain IDPs, refugees, and returnees. The strategy
is to encourage refugees to return to their places of origin, while IDPs and returnees are to be
assisted to integrate into society with assured livelihoods.
6. Differential Diagnosis
Though the major reasons for the persisting poverty are weak governance and inadequate
institutional capacities, poverty is a complex phenomenon that warrants a differential approach.
Table 8 presents a summary assessment of the causative forces of poverty in Puntland.
Table 8: Poverty in Puntland: Differential Diagnosis
I. Poverty Trap Low income, saving, and investment – 85% of

• Poverty mapping revenue goes for current consumption/administrative
• Proportion of HHs lacking basic expenses. There is instability and no enabling
needs environment. Barriers to investment flow include
• Spatial distribution of HH poverty massive poverty, which limits household savings
• Spatial distribution of basic and investment, and poor infrastructural facilities
infrastructure (power, roads, and access. Pastoral and nomadic communities
telecoms, watsan, etc.) dominate the poverty-stricken.
• Ethnic, gender, and generational
distribution of poverty There are potentially high rates of population growth
Key Risk Factors in the first stages of demographic transition. There is
• Demographic trends environmental degradation and resource depletion,
• Environmental trends as well as epidemics and outbreaks of diseases.
• Climate shocks Communities are water stressed and drought
• Disease affected.
• Commodity price fluctuations
II. Economic Policy Framework FYDP envisages growth with stability, but the
• Business environment national government is weak. The central bank and
• Trade policy monetary system are weak, as it the currency. The
• Investment policy overall policy framework is weak and rudimentary,
• Infrastructure but evolving. Major trade is through Bossaso
• Human capital Port, but there is no trade policy. The TFG is a
member of the WTO; there is a lack of concrete
and comprehensive policies on human resource
development and infrastructure. The private sector
dominates service provision and is active; it has
significant potential if the enabling environment is
created and sustained.
21
III. Fiscal Framework & Fiscal Trap The budgetary process is not standardised or
• Public sector revenues & expenditure consolidated; revenue administration is weak, and
by category there is disproportionate administrative expenditure.
o Percentage of GNP The debt-GDP ratio is low (favourable). A major
o Absolute comparison with part of revenue goes for security and governance
international benchmarks (public administration); there is weak enforcement
• Tax administration & expenditure and a narrow tax base. As the revenue surplus is
management at times negative or meagre, public investment is
• Public investments to meet poverty grossly inadequate to make any meaningful dent into
reduction targets the poverty trap. The macroeconomic growth rate
• Macroeconomic instability is low and fluctuating (due to seasonal drought and
• Overhang of public debt livestock failure); though borrowing is limited, hidden
• Quasi-fiscal/hidden debt debt is high.
• Medium-term Expenditure Framework
(MTEF)
IV. Physical Geography Puntland is arid with low rainfall and is highly
Transport Conditions vulnerable to natural calamities: periodic droughts,
• Proximity to ports, international trade flash floods, and water stress. Environmental
routes, and navigable waterways degradation, overgrazing, deforestation, and
• Access of population to paved roads resource depletion exist.
• Access of population to motorised It is a favourable location, with access to sea routes
transport and a rich coastline with plentiful marine resources.
Population Density The rural economy is rather cut off.
• Cost of connectivity to power,
telecom, and roads
• Arable land per capita As about a third of the population is urban, the
• Environmental impact of land- unit cost of service provision could be reasonable;
population ratios however, the nomadic population (52%) poses a real
Agronomic Conditions challenge. Large tracts of land are arable if water is
• Temperature and precipitation available; there is a high land-population ratio, which
• Soil, topography, and suitability for is favourable for poverty reduction.
irrigation
Disease Ecology
• Human diseases
• Plant diseases and pests Major outbreaks of diseases and severe droughts
• Animal diseases lead to periodic damage and loss to both humans
and livestock (livelihood); there is high vulnerability
together with weak coping strategies.
V. Governance Pattern & Failure
• Civil and political rights There is reasonable stability, yet the overall
• Public management systems governance level is low. National government
• Decentralisation & fiscal federalism collapse left three systems of justice (formal,
• Corruption patterns and intensity religious, and traditional, with traditional dominating).
• Political succession and longevity Decentralisation is in its infancy at the district
• Internal violence and security level; the devolution strategy or road map is to be
• Ethnic, religious, and cultural developed. Clan conflicts and potential violence
divisions aggravate poverty, both in terms of cause and effect.
22
VI. Cultural Barriers There is clan conflict. With subsistence farming and
• Gender barriers other land use, the land ownership pattern is not well
• Ethic & religious divisions defined; interest is a taboo. The diaspora plays a
• Diaspora significant role in the national economy, but there is
limited channelling into productive sectors.
VII. Geopolitics Puntland’s coastline is extensive; there is
• International security threats global interest in the rich marine resources as
• Cross-border security threats well as the potential oil reserves. Illegal fishing
• Trade barriers and encroachment into the territorial waters is
• Participation in regional and problematic, along with cross-border conflict and the
international groups Saudi livestock export ban. The TFG is a member of
the WTO.
Note: modified from Jeffrey Sachs, 2005
7. Development Constraints
The state is having an identity crisis internationally on account of the delay in the effective
functioning of the federal setup, although it is currently gaining strength. The situation creates
tremendous strain in enforcement of international laws and treaties, access to capital, and
international recognition. Poor surveillance and weak enforcement of the law of the sea (in the
absence of coast guards) have led to overfishing and the illegal exploitation of the rich marine
wealth, posing a serious challenge to growth.
Savings and Investment Constraints
If the economy has to grow at a sustainable medium-term growth rate in the range of 3–4
percent, savings would have to reach 20–22 percent and investments 18–20 percent. There
is an a priori ceiling on savings and investment on account of the poverty, negative savings of
the government sector, poor banking facilities, and the weak level of confidence in security and
return on investment, compounded by the fragile TFG. This restrains Puntland from gaining
access to commercial borrowing for long-term development, soft lending windows, and foreign
direct investment.
Governance and Institutional Capacity Constraints
The overall governance standards need rapid improvement, to provide content and meaning to
the existence of the government and to instil credibility. The state needs appropriate laws that
enable growth, the institutional capacities to implement them, and a responsive and capable
decentralised administration. In recent years, Puntland has been trying to come out with a series
of policy and legislative measures. Good law is an essential but not a sufficient precondition for
better governance. Most of the existing laws are not effectively implemented on account of weak
institutional capacities and resources. Significant efforts are required to build capacities and to
institutionalise monitoring systems on law effectiveness and implementation. The government
proposes to set up appropriate institutional mechanisms such as the Parliamentary Committee
on Policy Implementation. In terms of civil service reforms, serious efforts should be taken
to rationalise and downsize the civil service to achieve the much-needed qualitative shift.
Transparency, accountability, democratic decentralisation, and the fight against corruption
would be the basic principles of improved governance.
23
Primary Production Constraints
Puntland is a subsistence economy largely dependent on primary production. Low production,

low productivity, limited value addition, and inadequate technology inputs constrain growth. In
addition, a weak quality assurance mechanism and production base lead to low quality goods
entering the domestic market, where there is low purchasing power. There apparently exists a
mismatch between productive capacity and aggregate demand.
Foreign Trade Constraints
Foreign trade acts as an engine for growth. The composition of exports is virtually dominated
by primary commodities, without value addition. Middlemen rule the market and the terms of
trade are presumably against primary commodities. The export market is not diversified and as
the economy grows, the import intensity will eventually lead to foreign exchange constraints.
Infrastructure Constraints
The vast geographical area and extensive coastline can act as a bane rather than a boon,
against a backdrop of ill-developed infrastructure and connectivity. Limited access to markets,
the high cost of service delivery, and poor connectivity are major development constraints.
Most rural communities are not effectively connected with feeder and coastal roads. Power
and telecommunication services, which are essential for development, are yet to reach many
areas, and a large segment of the population lacks access to basic services.
Human Resource Constraints
Puntland’s manpower resources lack the capacity and skills needed for fast-tracking
development; poor human resource capabilities would hinder any effort toward forging an
economic leap. In this area, illiteracy, malnutrition, poverty, poor health, inadequate skills, and
poor managerial capacities must be addressed.
Environmental Constraints
The economy is highly vulnerable to natural calamities like droughts and floods. Deforestation,
land degradation, and resource depletion are occurring at the same time and are often the
key reasons for conflict. Unscrupulous actors who illegally exploit the marine resources and
biodiversity compound the problem. The state is severely water stressed, though there is scope
for improvement if water is well managed through conjunctive use, recharging and harvesting
the resource by adopting a basin approach.
Technological Constraints
Technological growth would invariably lead to increased productivity and development in all
sectors. The state will promote adaptation and development of appropriate technical choices
in all sectors, particularly in agriculture and land management. Information and communication
technology (ICT) holds great promise for economic growth and is a primary tool in the fight
against poverty, bringing the benefits of economic development to poor and underserved
24
communities. ICT has immense potential to increase factor productivities across sectors and
overcome time and distance barriers in reaching remote locations and communities, thus
improving the provision and delivery of basic goods and services.
It would also help the state in “leapfrogging” to the “information age” and could significantly
improve transparency and governance. Accordingly, improved application of ICT in select
government institutions and encouraging the private sector to actively invest in setting up
training institutions, internet connectivity, and ICT infrastructure are of importance.
8. Lessons Learned
Though the economy is still in its nascent stage of development, over the years the state has
learned tremendously. Prudential policies, correct strategies, well-designed programmes, and
good governance would significantly help to free the economy from costly mistakes. Significant
strides achieved by the private sector and the diaspora in substituting and supporting service
delivery need to be strengthened and leveraged for growth, along with the enterprise and
capital built in the process. The role of the government would be that of facilitator, guardian,
and umpire to generate growth momentum and to ensure a level playing ground. The following
key lessons learned during the development process need to be dovetailed to the planning
process.
Effective Governance for Development
On account of the fragile security situation, significant budgetary resources have been used
for non-development activities. The role of the state in economic development per se is rather
limited. It is critical that the revenue generated is also being used for development planning
and growth, which in turn would yield better returns for governmental expenditure. Lopsided
revenue allocation and priorities may result in public resentment and frustration.
Community Voice and Development Choices

Las-anod in Puntland’s Sool region shows how using the community voice is a means to develop
the region. During the field visit of the Hon. Vice Minister of Finance, Mr. Yasin Ali Abbule, the local
citizens claimed that “people are paying tax to the government, but nothing is coming down by way
of development”. The minister responded by earmarking 30 percent of the total revenue collected
from that region toward a development fund in a separate bank account and requested the business
community to add resources to the corpus for local development. The account is slowly growing and
will be used to meet some of the developmental needs of the region.
Security and Peace
“Divided we fall, united we stand.” The recent growth trends are undoubtedly a by-product of
the peace dividend. Conflicts inflict serious damage, accentuate poverty, and pull the economy
down the lane of further misery. Development and conflict do not go hand-in-hand. The state
needs to foster tolerance and respect for the rule of law and strengthen the consensus-building
process and the role of the state in cultivating peace.
25
Inter-ministerial Coordination
Every ministry is working hard with limited resources to establish governance standards and
systems that are striving toward stabilisation and growth. However, there exist significant inter-
ministerial coordination issues, including overlapping responsibilities and a lack of functional
clarity about roles, which lead to heavy transaction costs. This needs to be addressed
immediately by institutionalising appropriate mechanisms and redefining goals, objectives, and
functional assignments. In order to address the cross-cutting issues, effective platforms for
inter-ministerial coordination should be set up.
Monitoring Donor Activities/Humanitarian Assistance
The state receives humanitarian assistance and support for rehabilitation and development
from the UN system and the rest of the world. There is a need for increased harmonisation of
the ongoing programmes and coordinated monitoring. Working in partnership would build the
capacities of the government, reduce transaction costs, and institutionalise the programmes
for continued sustainability and downstream benefits. The government realises that the task is
more internal than external. It has to continuously improve governance standards, transparency,
and accountability to achieve the goal.
Key Challenges in the Medium Term
The key challenges for the economy in the medium term can be posed as questions:
• How can the government shift its role (quality of governance) toward facilitating and
creating an enabling environment?
• How can the spurt in the economy, especially since 2001, be leveraged for economic
growth?
• How can the financial sector be restructured to accelerate savings and investments?
• How can revenue expenditure be compressed as a percentage of the total budget
(qualitative shift vs quantitative growth)?
• How can the government commit 10–15 percent of the total budget towards the FYDP
and insulate it?
• How can additional resources mobilisation (ARM) be increased for development goals
using fiscal instruments?
• How can the poverty reduction and MDG targets be achieved?
• How can an effective monitoring system be institutionalised for development policies
and programmes?
Through the FYDP 2007–2011 and the Annual Plan 2007, the government intends to address
many of these development dilemmas.
26
PART II: SETUP AND APPROACH
1. Annual Plan 2007
Being the first annual plan of the first FYDP, the year 2007 may be a watershed in the annals of
the state’s development process. The plan is set against the backdrop of the broad strategies
and goals put forth in the FYDP in alignment with the RDP. Strategically, the annual plan should
be more of a preparatory exercise for laying the foundation for growth. As such, the emphasis
would be on putting right policies in place, creating an enabling environment for growth, building
capacities, strengthening institutional capabilities, developing human resources, and providing
the basic conditions for sustainable livelihoods, poverty reduction, and faster achievement
of the MDGs. In short, this would be a “soft plan” that is not heavily investment oriented, as
increasing the absorptive capacities of the economy and its institutions is a prerequisite for
growth. The persisting resource constraints also would not make it possible or feasible to go for
heavy investments in the public sector. However, it is envisaged that the improved governance
would spur investments and the growth of the private sector and accelerate aid and capital
inflows.
The annual plan is thus an opportunity for the state to demonstrate the feasibility of its development
choices, policy paths, and commitments toward fulfilling the aspirations of the people. This
would help the international community, especially the ongoing Joint Needs Assessment and
the RDP, to rally around the goal of fostering sustainable development in partnership.
There has to be a serious prioritisation of all programmes, schemes, and projects for the annual
plan, with a view to using the available resources in the most judicious and economically
efficient manner. In particular, serious attempts are to be made to outline the “core plan” for
the ministries and departments, highlighting the basic sectoral priorities and the minimum
programme for public action in the concerned sector.
Strategy
The annual plan follows the broad strategy of the FYDP 2007–2011. More specifically, it
involves:
• A pro-poor and labour-intensive development path based on primary sectors.
• Livestock and fisheries acting as leading sectors for growth.
• Foreign trade and export-led development.
These goals are to be achieved through:

• Creating an enabling environment that further strengthens the free market economy.
• Ring fencing budgetary support for development.
• Implementing the annual plan to leverage international support for the cause of the
state.
• Capitalising on and widening the role of the diaspora in the development process.
Assumptions
The basic assumptions for the plan are:
• Normal rainfall during the year 2007, considering the cycle of droughts being experienced
by Puntland.
27
• Continued external and humanitarian assistance, progressively linked to the RDP.

• Significantly improved peace and stability, as the state is marching toward a new dawn
and the TFG setup is gaining strength.
• Unchanged or improved capital output ratio and Incremental Capital Output Plan (ICOR),
due to better utilisation of resources and infrastructure (no estimates available).
• Continued and sustained export momentum.
• Population growth at the current rate (no large-scale migration from other regions, as
expected in the past).
2. Resource Mobilisation
As stated elsewhere, savings and investment in productive sectors are important factors
for economic development. The major investment sources for Puntland include domestic
savings and remittances from abroad in the short run – in due course, there will be access
to international capital markets and foreign direct investment. However, the capacity of the
public and private sectors to generate sufficient resources to address the socio-economic
development needs of the population is quite limited. In addition, there is the cost of restructuring
and maintaining Puntland’s public institutions and infrastructure in order to leverage its own
resource endowments. The state would need substantial donor assistance to undertake any
serious development efforts – the “pump priming” need of the economy. The overall strategy for
capital formation and investment for Puntland is to create and sustain peace and an enabling
environment towards a free market economy and a well-regulated financial market.
The emerging fiscal situation is marked by weak revenue sources and an overall imbalance
in available policy options on both revenues and expenditures. Aid inflows are directed mainly
through civil society and NGOs for humanitarian activities. The state has relied heavily on
indirect taxation, which dominates revenue generation but is regressive. While post-conflict
reconstruction, conflict prevention, reform of the security sector, and military expenditures
have taken priority in the fiscal policies of the last nine years of the Puntland government, this
squeezes not only other expenditures that could reduce poverty and promote growth, but also
potential revenue sources.
Remittances
Puntland has enjoyed substantial remittances from the Somali diaspora. Internally, a proxy
for the importance of this trust-based income source is underpinned by the results of the
2002 Socio-economic Survey, which sought data across Somalia on household incomes and
expenditures. The 2002 total household income for the country was US$1.5 billion, of which
$672 million was generated in urban areas and $875 million in rural and nomadic areas. Per
capita household income was US$226 and $195 in urban and rural areas respectively. On
average, about 50 percent of income came from self-employment and 14 percent from wage
employment. About 23 percent came from remittances and the remaining 13.5 percent came
from rent and various forms of assistance.
In Puntland, Somalis in the diaspora have led private sector investment. Remittances of the past
decade or so, estimated at between US$350 and $700 million annually, have partially offset a
larger drop in per capita output. Remittances are increasingly invested in small business, real
estate, and (to some degree) social services and therefore substitute for long-term and short-
28
term capital flows in Puntland’s regional balance of payments. The process should be further
facilitated and encouraged under the FYDP. A key task is to channel the resources towards
savings and investments in the productive sectors of the economy.
Strengthening Federalism
There apparently exists very little scope for revenue expenditure compression, considering the
development needs of the administration; however, there is tremendous scope for qualitative
improvement in the activities of the government toward effective governance and facilitation.
Strategically, the government would strictly adhere to the principles of federalism and support
the strengthening of the federal government. Once the federal government is stabilised, the
lion’s share of the revenue expenditure on national concerns (including security) would be
liberated for development.
Aid
An indirect fallout of the civil conflict is that domestic and external borrowing dried up. Public
debt has not played a significant part in financing government or gross investment in Puntland.
Taken together with the lack of regional central banking (save for the treasury role of the
State Bank of Puntland), the situation has promoted non-debt creating recovery and the
deepening of security and governance during the past decade. Yet, in the face of mass poverty,
a fragile revenue base, the growing share of allocations to maintain peace and security, and
the rebuilding of government services, it is realistic to seek external resources during FYDP
2007–2011. Investments need to be made toward programmes that will help reduce poverty
and achieve the MDGs.
Tax Realisation and Administration
As stated earlier, above 80 percent of the revenue originates from customs. It would be
highly essential to broaden the tax base, as overdependence on a single source would be
unhealthy in the long term. According to estimates, the total tax potential of the state within the
existing tax laws and tax rates would come to US$34.9 million, of which the current realisation
is US$19.7 million. This gap between revenue estimates and realisation needs, mainly from
inland taxes, is to be tapped effectively for development and for strengthening the fiscal base.
The obvious inference is that enforcing existing tax laws effectively could yield a significant
enhancement of the overall revenue, which could be used for development efforts. However,
taxpayer awareness, transparency, and credibility, followed by effective tax administration and
enforcement, would be necessary to achieve the goal. The government will make modest
efforts in this direction during the year 2007.
Rationalisation of the Tax Structure
Rationalisation of the tax structure and tax rates would yield better returns. The fiscal policy
would yield better resources if it adopted an appropriate policy mix and set rates using a
scientific assessment of the tax potential, income, and price elasticity of key sectors and
commodities. The tax rates would need to be fine-tuned to ensure increased elasticity of
revenue, in accordance with the fundamental canons of taxation. The state should appoint a
revenue commission to look into the entire gamut of fiscal administration, with a special focus
on resource mobilisation.
29
Khat Economy
Khat trade and consumption play an adverse role in the Somali economy in general and
particularly in Puntland. The commodity trade is a continuing business activity that generates
income and employment opportunities. However, it affects the economy as important remittances
are directed toward importing khat. It is estimated that 2,500 tons of khat were imported into
Puntland (1,088 tons of Meeru and 1,456 tons of Hareeri) in 2003 (Puntland Facts and Figures
2003). The annual drain of foreign currency out of the country is enormous. Assuming a 75–
100 percent markup along the supply chain from the point of import to retail, then consumption,
mainly in Bossaso, Gardo, Garowe, Las-anod, Buhodle, Baran, and Galkacyo, costs Puntland
about US$40 million annually, which is well above the size of state budget. It is observed that
about 25–30 percent of the Puntland population is addicted to khat. It destroys the family
structure of the addicted population, brings down productivity and health, and diverts scarce
family resources from essential economic and social consumption, among other things. Khat
leads to the use of other drugs such as amphetamines, which are often taken in combination
with khat. Khat consumption in Puntland constitutes a serious threat to an already delicate
economy.
It is necessary for the state to discourage this malady through continuous awareness creation,
education, and counselling, while also ensuring the productive engagement of youth. Increasing
the tax rate and preventing smuggling could act as supplementary efforts to discourage
consumption as well as provide additional resource mobilisation. This is to be prudently
administered.
Fishing Royalties
Another potential revenue source is the fishing sector. Large numbers of trawlers and boats are
illegally fishing in the waters of Puntland. Some of these operations are not licensed and do
not adhere to sustainable fisheries management and resource conservation practices. There
is no realistic data on the landings, species composition, or areas of operation. The general
free access to fishing in Puntland makes it very difficult to implement a comprehensive fishery
resource management plan. The situation remains unaltered in the absence of an effective
coast guard and in the absence of a strong national government to explore diplomatic and legal
channels toward regulation and control. The state should strengthen the surveillance system
and bring all vessels under the tax net for revenue mobilisation.
External Sector Assistance
The government has provided US$1.5 million as extra budgetary support towards social
development projects funded by the diaspora for 2005–2006. It is expected that the current
level of support will grow at a modest rate of 2 percent per annum during the plan’s five-year
period. Official development assistance to Somalia in 2003 was estimated at US$272 million,
which is $43 per capita. The total aid flows during 2004–2006 for Puntland were estimated at
the modest level of about US$40 per capita and were mainly to support humanitarian and relief
activities. From the year 2008, overall development assistance is expected to go up to US$150
million. This includes the proposed RDP assistance, of which 50 percent is expected to go
towards development activities that would continue during the plan period. These estimates
are used to arrive at the aggregate resource envelope and are not to be taken for the annual
plan resource availability, as they are outside the budgetary resources.
30
Aggregate Resource Envelope: FYDP and Annual Plan
The potential aggregate resource envelope for financing the FYDP and the Annual Plan 2007 is
presented in Table 9 below. The resolution of the government to push forward its development
process necessitates increased budgetary support for planning. External sector possibilities
are also taken into account to arrive at the resource projections.
Table 9: Aggregate Resource Envelope: FYDP 2007–11 and Annual Plan 2007
(Somali shillings billions; US$ in millions in bracket)
Base
2007 2008 2009 2010 2011
year 2006
252.2 269.3 281.23 293.2 307.49 323.1
A. Budget Total: 2007-20111
(16.81) (17.95) (18.75) (19.55) (20.5) (21.54)
Additional Resource Mobilisation
(ARM)
(8%) (3%) (2%) (1.5%) (1%)
1.Recapturing of uncollected inland
31.00
taxes (direct, indirect, property)2 2.5 0.93 0.62 0.47 0.31
2.Tansfers (fishery, bilateral grants);

10.30 18 18 18 18 18
fixed rate of 18 billion3
3. Development budget4 (increment of

6.36 7.8 9.3 10.8 12.3 13.8
1.5 billion per year)
Development Funds
28.30 28.23 29.42 30.77 31.31
Subtotal
Additional Taxes5 5.40 5.40 5.40 5.40 5.40
B. Development Funds 33.70 33.63 34.82 36.10 36.71
Total Budgetary Sources (2.25) (2.24) (2.32) (2.41) (2.45)
Development Funds
12.51% 11.96% 11.88% 11.74% 11.36%
as % of Total Budget
C. Diaspora Sectoral Development
11.3 11.53 11.76 11.99 12.23 12.48
Project Fund6
D. Aid/Humanitarian Assistance7 216 216 1275.00 1275.00 1275.00 1275.00
Potential Aggregate Development 261.23 1320.39 1321.81 1323.33 1324.19
Envelope (B+C+D) (17.42) (88.03) (88.12) (88.22) (88.28)
Source: base figures – MoF, 2006
Notes: (1) Total budget including development budget. (2) Effective tax administration and enforcement, which would bring
additional revenues of 2.5 billion in 2007 (8 percent increase from the baseline, which will be progressively declining to 1
percent by the terminal year 2011). (3) Bilateral grants and royalties from the fisheries sector would increase from 10.3 billion
in 2006 to 18 billion in 2011, at a fixed rate toll. (4) The development budget would increase progressively from the baseline
of 6.36 in 2006 to 13.8 in 2011. (5) Additional taxes on luxury items like cars, selected electronics, and tobacco and tobacco
products. (6) An amount of US$1.5 million has been provided by the government towards extra budgetary support of a social
development project supported by the disapora for 2005–2006; it is assumed that US$753,200 per annum for 2005 and 2006
would grow at a rate of 2 percent through concerted efforts of resource mobilisation towards the development cause. (7) The
total aid flow during 2006 is estimated at US$40 per capita, amounting to US$96 million – of which about 85 percent is assumed
to be used for humanitarian and relief assistance and operational expenses, while the remaining 15 percent is estimated
toward development activities (it is estimated that the official development assistance to Somalia in 2003 was US$272 million,
a per capita amount of US$43; this was taken as the base for 2006). From the year 2008, the overall development assistance
would go up to US$170 million, including the proposed RDP assistance, of which 50 percent would go toward development
activities and would continue during the plan period. This is in order to arrive at the aggregate resource envelope and is not to
be taken as the annual plan resource availability, as it is outside the budgetary resources.
31
3. Plan Financing: Growth of Development Funds
Against the backdrop of the above analysis, various resource possibilities are worked out
for plan financing. Scenario A highlights past trends and projections for the FYDP based on
the estimates arrived at with the Ministry of Finance. Under this scenario, only the budgetary
sources are taken into consideration. Under Scenario B, both budgetary and extra-budgetary
sources are reckoned for arriving at aggregate development funds for financing the plan. Neither
scenario accounts for the private sector, as it is outside the public finance net. However, it
realistically could be assumed that private investments will continue to grow, leading to further
growth momentum and multiplier effects, in terms of both income and employment.
Scenario A: With Budgetary Resources
FYDP 2007–2011, beginning with the Annual Plan 2007, will be marked by significant deviation
from the past, in terms of a visible increase in the developmental budget (DB) as a percentage
share of the overall budgetary allocation. In addition, there is a corresponding fall in the share
of non-development allocation, as can be seen from the graph below. In absolute terms,
however, both the DB and NDB trends are increasing, indicating increased outlay and resource
mobilisation efforts.
Figure 3: Development Budget Trend
Development Budget Trend 2004-11

(% Share)
120
97.5
100 97.5 88 88.2
98 88.6
Percentage
80 87.5 88
60 NDB
DB
40
20 12.5 12 12 12
2.5 2.5 11.4
2
0
2004
2005
2006
2007
2008
2009
2010
2011
Note: NDB is non-development budget; DB is development budget.
Scenario B: With Budgetary and External Resources
Under this scenario, realistic projections are made, incorporating external resource possibilities.
The assumption here is that the external support would almost double during the period from
2007, under the proposed RDP coupled with the development support of the diaspora.
32
Figure 4: Development Budget
Development Budget 2007-11
1400
1320.3 1321.8 1323.3 1324.2
132
24.2
1200
So.Sh billions
1000
800 NDB
600 DP
400 269.3 281.2 307.5
5
307.5 323
3.1
323.1
200 261.2
261.2
2 293.2
0
2007 2008 2009 2010 2011
It can be seen that incorporating the external sector support to the development process, the
size of the development plan (development budget plus external developmental assistance),
would substantially outpace the normal revenue budget – for example, 97 percent in 2007 to
around 469 percent during the rest of the plan’s five-year period, assuming the availability of
RDP assistance.
4. Sectoral Allocation
The broad sectoral allocation of the above 12.5 percent of the plan funds (excluding the revenue
or non-plan budget) will follow the macroeconomic development demands of the state and the
FYDP priorities, in alignment with the RDP. The topmost shares (30 percent) would go for
leading sectors such as livestock and fisheries, to generate momentum and to sustain steady
growth, income, and employment. This would be followed by governance (25 percent) and
institutional strengthening, which are vital for creating an environment conducive to sustainable
growth through supporting a free enterprise economy. The social sector programmes, which
essentially indicate the march toward poverty reduction and the MDGs, are equal to the
governance sector, with a share of 25 percent. Infrastructure would be the most important
ingredient for growth. However, on account of the resource crunch, the annual plan strategically
decided not to be investment-oriented regarding physical infrastructure, on account of obvious
trade-offs. Still, the allocation would grow steadily during the plan, especially after 2008 when
the RDP resources are expected to be forthcoming. In addition, once the federal government
is strengthened, it would substantially ease resource commitments towards security. The
allocation and sectoral share is given in the following graph.
33
Figure 5: Sectoral Allocation
Broad Sectoral Allocation: Annual Plan

2007 (% )
Governance &
5 Institutions
15 25
Social Services &
Livelihood
Leading Sectors
Infrastructure
30
25
Decentralization
Subsectoral Allocation
Further classification of the broad sectors into different subsectors and their respective shares
are provided in Table 10 below.
Table 10: Subsectoral Allocation for the Annual Plan 2007

Allocation
Sector Subsectors
(%)
Security & Judiciary*
o Peacebuilding, rule of law, and democracy
o Land and property rights 5
o Judicial reforms
o Disarmament, demobilisation, and reintegration
Creation of an enabling environment
o Policies, legislation, and laws
o Regulatory framework 5
Governance & Institutional strengthening & capacity building
Institutions o Institutional reforms & re-engineering
o Capacity building for line ministries 15
o Modernisation of government
o Decentralisation
Social Services & Education, health, water and sanitation, labour
Enhancement of Environment & disaster management 25
Livelihood Food security
Productive/ Livestock and agriculture 30
Leading Sectors Fisheries
Trade and commerce
Export /market development
Infrastructure Roads, ports, and harbours 15
Airport
Export/market infrastructure
Decentralisation District councils for local development plans 5
*This is in addition to the current level of the non-plan budgetary allocation toward revenue expenditure.
34
5. Implementation Arrangements
The FYDP would largely remain a theoretical construct if it were not effectively implemented.
Adequate resources must be made available in time, the physical and financial targets must
be achieved within the cost and time parameters, the sustainability of investments must be
ensured, and developments need to be monitored and impacts evaluated. Effective monitoring
and evaluation (M&E) would act as a potential tool for tracking the implementation process;
the results will be used for on-course correction and as inputs for further policy formulation
and development. The President and Cabinet would approve the plan, make decisions on
resource mobilisation and allocation, and set macro goals and strategies, as recommended by
the Cabinet Subcommittee for Economic and Social Development.
Sectoral Plans
The implementation of the annual plan at the respective levels would be the responsibility of
the nodal ministry. It will monitor the plan in all its aspects, especially with regard to physical
and financial achievements, outcomes, and impacts. It will use the results-based monitoring
framework developed for the FYDP. Accountability for the implementation of the plan would
thus be with the ministry concerned.
Monitoring and Evaluation System
Monitoring at the ministerial levels would be consolidated by MOPIC, which is the nodal
ministry for the purpose. The M&E Department at MOPIC would be suitably strengthened
and eventually could be turned into a programme monitoring and evaluation organization, to
produce independent assessments and evaluations. The overall monitoring framework would
have two critical elements: plan monitoring and poverty and MDG monitoring. As achieving
the MDGs and reducing poverty are inseparably linked with the effectiveness and outcomes of
the implementation of the plan in all ministries, poverty and MDG monitoring would be made
an integral part of plan monitoring in each ministry. The overall developmental impacts are
on account of the concerted efforts of the government at all levels, but also that of the private
sector, civil society, and external development partners and donors. The M&E framework would
be designed to be comprehensive in order to capture the economic developments of all sectors
at the macro and micro levels (to the extent that this is feasible).
Institutional Arrangements
Effective plan implementation requires effectual and well-coordinated institutional arrangements

with authorities at the state, regional, and district levels. This must be supported by strong
political commitment, capable of motivating, triggering, and sustaining collective efforts toward
the realisation of goals at both national and international levels. Most critical is the way the
quality of governance is used as an instrument to generate growth momentum across sectors
and societies. The following institutional arrangements are designed for this purpose and should
be suitably modified and strengthened from the lessons learned during the implementation
process.
35
Puntland Cabinet Sub-Committee for Economic and Social Development

Firstly, a cabinet subcommittee on economic and social development has been formed to
oversee the formulation and implementation of the FYDP. The subcommittee has the Minister
of Planning and International Cooperation as its chairman, the Minister of Finance as vice-
chairman, and the Ministers of Interior, Security, Women’s Development and Family Affairs,
and Labour, Sports, and Youth as members. The specific functions of the subcommittee are
to:
• Ensure that the FYDP and annual development programmes are formulated and
prioritised in a manner that is consistent with the government vision, policies, and
strategies.
• Ensure that the resources of the state are used and allocated efficiently and effectively
to meet the plan targets.
• Monitor the implementation of the Five-Year Development Plan and the annual
development programmes.
• Submit to parliament biannual reports on physical and financial progress made towards
the achievement of FYDP objectives and targets.
It has been suggested that the President of Puntland should chair the committee, with the
Minister of Finance still as vice-chairman, to ensure effective inter-ministerial coordination of
the national development plan.
Meanwhile, the M&E Commission constituted by the state, under the chairmanship of the Minister
for Planning and International Cooperation (with the Minister of Finance as vice-chairman, and
the Ministers of Interior and Women and Family Affairs as members) will continue to act as the
nodal institution for oversight and coordination. The commission sets policies and guidelines
for the approval of the cabinet. It would be supported technically by a committee comprising
of the respective directors general of the line ministries, experts drawn on the basis of proven
competence, and co-opted members from the UN system.
MOPIC would be the nodal anchor for the M&E architecture, with the central responsibilities
of coordination, implementation, dissemination, and all related activities. Networked agencies
engaged in M&E, mainly from international donor communities, will support the ministry.
Authorised M&E officers at the regional/district and community level will further support this
central backbone. At the village level, the data capturing would use both formal and informal/
participatory tools like participatory poverty assessments (PPAs)/participatory rural appraisal
(PRAs), social audits, public expenditure tracking, etc. The entire system depicts the vertical
and horizontal flow of information. For monitoring and evaluating the FYDP, a programme
monitoring and evaluation organization would be constituted within MOPIC by reengineering
and strengthening the current M&E Department.
Importantly, the institutional arrangements for effective plan monitoring shall be inclusive and
participatory, with clear definitions and assignments of functions and responsibilities. The key
institutional actors, desirable arrangements, and responsibility assignments are indicated in
Table 11.
36
Table 11: Institutional Responsibility Matrix
Institutions Tasks/Functions
-Parliament* Oversight & Approval
-Parliamentary committees Plan approval, policy development, monitoring development goals and
-Cabinet targets, advocacy.
-Cabinet Subcommittee
Plan Formulation
for Economic & Social
Finalisation of the plan, recommending it to Parliament for approval,
development
inter-ministerial coordination for plan implementation and monitoring.
-Civil Society
Policy, Planning, and M&E
Secretariat for cabinet committee, technical advice, macroeconomic
MOPIC/MOF*
planning, perspective planning, priority setting, resource estimation
and allocation with MoF, monitoring and evaluation.
Plan Implementation
Line ministries
Sectoral plan implementation and monitoring.
-MOPIC* Standardisation
-State Statistical Bureau Guidelines, processes, procedures, and standards.
Monitoring & Evaluation
-MOPIC*
Coordination and data collection, compilation, storage, analysis,
-Networks (donors/CSOs)
reporting, and dissemination.
-State Statistical Bureau* Capacity Building & Technical Assistance
-EAU, PIDAM, MOPIC, Training, skill upgrading, need assessments, curriculum development,
PRC, UNDP and networking research institutions.
Note: (*) indicates the lead institution. The SSB is to be formed during the course of the plan’s implementation.
During the initial phase, MOPIC can take the lead role in capacity building.
37
PART III: SECTORAL PRIORITIES FOR THE ANNUAL PLAN 2007
Resources for the priorities outlined hereunder for various ministries (in consideration of
development needs) would be allocated as part of the plan budget. The government would
decide this, based on recommendations from the Cabinet Subcommittee on Economic and
Social Development. This is the top-up resource earmarked for plan investments, over and
above the revenue budget allocation and the ongoing humanitarian/donor programmes (which
are especially in social service sectors like health, education, and water and sanitation).
1. Governance and Institutions
Improving the quality of governance is critical for sustainable peace, security, democracy,
and development. The government gives high priority to the establishment of effective
governmental institutions that embody good governance, justice, rule of law, accountability,
and transparency.
Ministry of Interior
In the aftermath of the civil war, the success of the people in the northeast Somali region and
the consequent national reconciliation efforts led to the formation of Puntland in August 1998.
It was established as an autonomous self-governing entity, albeit with the goal of Somali unity.
At the time, the key considerations in the minds of the national leaders were (a) security, peace,
and stability, (b) disarmament, (c) establishing rule of law, (d) supremacy of and adherence to
the constitution, and (e) free elections. The overall priorities of the government continue to be
the same.
Puntland communities have managed to reconcile their differences and the state has maintained
a degree of stability and law and order. The peace dividend has manifested itself in the steady
and sustainable growth of the private sector and a vibrant civil society. The Mudug peace
agreement, though fragile, maintains peace and tranquillity with the active participation of
traditional leaders. The situation has shielded the state from the ongoing conflict in the south,
allowing it to focus on strengthening its government institutions, including those related to
security, justice, and the rule of law.
Against this background, Puntland sees its democracy strengthening further, with plans to
carry out its first democratic elections in 2008/2009, along with the ratification of the 2001
constitution. It values the constitution as the instrument for legitimising and solidifying security,
deepening peace, and providing good governance to its people. The constitution is premised
on the principle of a decentralised governance system that transfers power and responsibilities
to district and local governments, supported by civil society and the private sector. The priorities
for the governance sector are set against the above backdrop.
Security and Stability
Puntland has a total geographical area of 212,510 km2, with a coastline of 1,640 km and a
population of about 3.96 million. There are 9 regions, 33 districts, and 135 service stations.
Peace and security are essential preconditions for growth, but there are sporadic internal and
38
inter-state conflicts. The extensive borders with the neighbouring zones and the open coastline
are posing serious security challenges and creating a potential source of illegal trade and
contraband. Adding to the problems, the state is being used as a transit route for people from
some neighbouring countries as a passage to the Persian Gulf in search of better prospects.
Certain segments of the community possess heavy weapons and the problem of small arms
is widespread. Centrifugal forces are getting reinforced. Both internal and external threats are
mounting severe strain on the fragile state, which is struggling hard to stabilise itself. Conflicts
cause irreparable damage to livelihoods and aggravate poverty. The projections and development
goals of the plan would be invariably affected if the state relapses into insecurity.
Puntland’s security personnel need qualitative upgrading in terms of equipment, training,

skills, combat capabilities, and high morale. This should be supplemented with well-defined
rules and regulations. There is an urgent need to protect the state’s territorial waters and the
Exclusive Economic Zone in order to safeguard its rich marine resources and ecology. Somali
waters have practically become a no man’s land, with many illegal activities. To safeguard the
coastline and the sea, coast guards are needed. Though territorial protection is a function of
the federal government, the state needs interim support from the international flotilla. Somalia
is a signatory to the law of the sea and needs international support in patrolling its waters and
protecting its legitimate rights.
Disarmament
The people having both heavy and small arms are to be disarmed for the sake of security,
stability, and peace. Strategically, the government proposes to undertake the task in two
phases: first the heavy arms, then the small weapons. This is to be achieved through a two-
pronged strategy involving consensus building and assurance of safety.
Approval of the Constitution
Approving the constitution is a serious task, as there must be consensus and approval from all
sections of the community and all layers of administration – regions, districts, political parties,
religious leaders, elders, and the various social groups. The process needs intensive awareness
creation and voter education, as well as the creation of an independent electoral commission.
In order to facilitate the process, the state will form a constitutional committee comprising of
experts from Somalia, Pakistan, Sudan, and Europe, as the draft may need revision. This
process will lead to the referendum, followed by a census and democratic elections.
The electoral process also needs powerful and transparent electoral laws and regulations in
place. It is expected that the elections will be completed by the end of 2008.
IDPs and Immigrants
Another priority for the state is to help immigrants by way of providing shelter and basic conditions
for livelihood and security. The IDPs need integration into the national mainstream. Significant
portions of the people are relatively young and seek opportunities. In order to intensively engage
them in nation building, skill upgrading is necessary. The existing skill upgrading programme
needs qualitative improvement toward higher level, more varied skills. Training facilities in
39
vocational skills (carpentry, construction, fitting and maintenance, mechanics, plumbing, etc.)
are key, but fishery and marine occupations, animal husbandry, and livestock are also critical
sectors, both for national integration and security and for accelerated development.
The Judiciary and the Ministry of Justice and Religious Affairs
The key priorities for the ministry for 2007 include (a) capacity building and training for teachers
in religious schools and (b) rehabilitation and improvement of basic facilities in prisons.
The Council of Justice is headed by the director of the high court, who is appointed by the
Council of Ministers, as approved by parliament. Independence of the judiciary maintains a
balance among the executive, the judiciary, and the legislature and the key to democratic
governance.
In Puntland State, there are proven regimes of traditional law (Xeer), Sharia law, and penal
law. There is clear functional demarcation and each law performs well in its own realm. Sharia
law is for family affairs, traditional law is for the resolution of disputes and the management
of commons, and the penal law is for crimes. Strategically, strengthening a different stream
(hybrid system) is preferable to replacing the cost-effective and credible existing systems. The
penal law would be expanded to govern contracts, international obligations, treaties, capital
flows, private investment, and business in general.
The priority of the council includes (a) extending the courts to the 14 districts that are not
covered at present; (b) improving the quality and capacity of the judges; (c) improving the
quality and capacity of the registrars of courts and subordinate staff; (d) improving the salaries
and conditions of service for better performance and integrity; and (e) improving tax (court
fees, fines, etc.) administration and collection.
2. Finance and Planning
Ministry of Planning and International Cooperation
The Ministry of Planning and International Cooperation (MOPIC) is the nodal sector ministry
for a number of tasks: institutionalising macroeconomic planning and policy formulation;
plan implementation and monitoring of progress; building a statistical base for the state; and
coordinating international cooperation for meeting the development challenges of the state.
The ministry has played a key role in designing and developing the FYDP and acts as the
counterpart nodal office for the formulation of the RDP. Empowering and strengthening the
ministry in discharging its key functional mandate is critical to the success of the ongoing
planning process. The priorities for the ministry for 2007 are listed below.
Institutional Strengthening and Capacity Building

There is an urgent need to strengthen the ministry with a core lean team of inter-disciplinary
professionals and to continuously upgrade the skills in macroeconomic planning and policy
formulation, perspective planning, resource mobilisation and allocation, and monitoring and
evaluation, as well as in planning tools and techniques.
40
Strengthening the Statistical Base

With modest means and support from UNDP and other agencies, the department has
succeeded to a great degree in building up its database (one product is Puntland Facts and
Figures 2006). However, critical data gaps exist and the baseline needs reconstruction and
upgrading. To support planning and policy analysis, there must be disaggregated data on
demography, sectoral aggregates, savings and investments, monitory and fiscal parameters,
inflationary trends, employment, poverty and livelihoods, MDGs, the external sector, etc. A
certain degree of methodology standardisation is necessary to facilitate the process; otherwise,
cross-comparison is difficult. The department needs training in statistical methodologies and
tools and information compilation and dissemination. It must develop standards and norms for
statistical activities and coordinate departmental and donor efforts to strengthen the national
statistical systems. The plan also proposes to establish the Puntland Statistical Bureau to
provide focal attention to the state’s needs and to build the statistical capacities of the state.
Monitoring and Evaluation

The M&E Department is yet to start functioning effectively and needs trained manpower and
resources, as well as capacity building in all elements of monitoring and evaluation. The
department needs to be strengthened effectively, as it will in due course form an independent
programme monitoring and evaluation organization. Technical assistance from the UN system
is envisaged to meet the needs.
Infrastructural Support
Basic facilities like computers and necessary software such as the Geographical Information
System (GIS) and Statistical Package for the Social Sciences (SPSS) could be acquired.
Personnel can be trained for the effective use of the tools and also for networking and building
the Plan Monitoring Information System.
Ministry of Finance
The key priorities for the Ministry of Finance in 2007 would be to rationalise the tax structure,
broaden the tax base, and institutionalise effective tax administration, in order to achieve
tax buoyancy and equity. It also aims to use taxation as an instrument for promoting savings
and investment towards productive sectors, discouraging conspicuous and unhealthy
consumption.
Secondly, the ministry would endeavour to build the capacities of its various functionaries
in public finance management, fiscal policies and tools, auditing and control mechanisms,
transparency and accountability of public expenditure, scientific accounting and budgeting,
budget consolidation, resource mobilisation, debt management, and the Financial Management
Information System.
The third priority would be to modernise the taxation system and network with regional offices
for effective planning, coordination, monitoring, and tracking. From 2007, the ministry also
proposes to introduce an ad valorem taxation system (volume basic) on a selective basis, to
obtain a larger aggregate surplus than unit taxation provides. However, the ministry needs
capacity building and a thorough analysis of the tax potential and implications before moving
toward the new tax system.
41
The ministry proposes to strengthen the monitoring systems for public expenditure by setting
up an effective Financial Management Information System. On a pilot basis, the ministry
proposes to introduce public expenditure tracking and participatory social auditing to selected
programmes at the local government level to improve transparency and accountability.
State Bank of Puntland
The State Bank of Puntland (SBP) was established in 1999 as an independent autonomous
entity. The goals of the SBP include:
• Controlling monetary charges for local and international circulation.
• Promoting the purchasing power of the Somali shilling.
• Printing new monetary notes.
• Seeking aid funds for development prospects in Puntland.
There is a strong working relationship between the SBP and the Ministry of Finance (MoF). The
MoF is the institution that sets the agenda and takes responsibility for controlling the monetary
policy of Puntland. The bank also supports the government by providing its operational
surplus.
In effect, the bank acts as a banker to the government mainly as a warehouse for finance.
The bank has seven departments and around 200 staff. Government agencies such as the
Puntland Highway Authority, Puntland State Agency for Water, Energy, and Natural Resources
(PSAWEN), line ministries and departments, local governments, and large exporters and
importers also maintain accounts with the bank. In terms of printing currency, the bank is
mainly doing replacement. Somalia’s money market is integrated with the network of Hawala
(remittance) companies. The development of the banking system is seriously constrained by
people’s lack of confidence after the Central Bank of Somalia failed and many people lost their
hard-earned savings.
There has been modest success in controlling inflation and the exchange rate of the Somali
shilling against the US dollar has improved from 20,600 Somali shillings in 2002 to about
15,000 in November 2006. The major constraint in development is the absence of a strong
legal framework and a capable central government to enforce it. The monetary and financial
market faces serious issues like the presence of counterfeit money, the failure of Hawala
companies (indeed, the failure of the biggest Hawala company, Dalsan), and weak regulation
and monitoring of their activities. In short, except in rudimentary, limited functions as banker to
the government, the SBP is yet to assume full charge of the monetary and exchange sector.
Priorities for 2007

• Activate the International Relations and Foreign Exchange Department by 2007.
• Put in place a monitoring and regulatory framework for Hawala and banking
companies.
• Construct buildings for three branches, which are currently functioning in rented
premises.
42
3. Social Services: Investment in Human Capital
To address the challenges of poverty, hunger, and inadequate service delivery, the government
places much importance on investing in human capital and human resource development.
Accordingly, one of the key planning priorities is to build the human resources for the future
of Puntland, in terms of empowerment, capacities, skills, health, and education. The aim is to
reduce poverty and achieve the MDG targets, leading to improved productivity, efficiency, and
development.
Ministry of Education
In the field of education, as in other sectors, the government lacks basic infrastructure, facilities,
and resources. There is a need for a quantum jump in literacy and education, both in terms of
quality and access. A substantial portion of children does not have access to educational facilities
due to lack of space, insufficient teachers, and prohibitive expenses. Access to education is a
fundamental right of the child and the government is committed to achieving this. The government
proposes exploring avenues of resource mobilisation from the diaspora and encouraging the
role of the private sector. Specific and targeted programmes will be dovetailed to enable the
poor and talented to have access to affordable education. Decentralised governance is the key
to achieving these goals. Education priorities for 2007 are listed below.
Key Priorities
Education Policy
The Puntland Educational Policy Paper 2005 needs to be implemented. It is comprehensive
and delineates both formal and informal education in the state, as well as cross-cutting issues
and related aspects.
Primary Education
The second priority is primary education. The government is committed to providing universal
primary education, improved access and quality to all schoolchildren. Primary education is
a more serious challenge in pastoral and nomadic communities. The government proposes
seasonal informal and formal centres to cater to their needs. As a strategy, the possibility of
integrating and using the wide network of Koranic schools will be actively explored.
Curriculum Improvement
The existing curriculum needs revision in accordance with the changing needs.
Vocational Training
Considering the emerging demands of the economy, there should be adequate facilities for
vocational training and skill upgrading in livestock, fisheries, and construction, as well as for
technical workers such as plumbers, fitters, carpenters, turners, electricians and mechanics.
Institutional Capacity Building

Capacity building for ministry officials, teachers, private sector management, and
Parent Teacher Associations is critical for achieving the targets (including MDGs).
43
Literacy
About 65 percent of the population of the state is illiterate. Literacy is primary to development
and the empowerment of the people. The government proposes accelerating the ongoing
literacy programmes with the involvement of civil society, religious networks, and the
international community. The aim is to establish adult literacy centres and launch a campaign
for improvement in the level of literacy, with total literacy the long-term goal. One key challenge
is the nomadic community, for which communication strategies would be developed (e.g.
education programmes through the radio).
Education Trust Fund

The government proposes to set up a credible, transparent, and independently managed
“education trust,” seeking skills and financial resources from the private sector and the diaspora
to support poor and talented children. An autonomous body under the chairmanship of the
Minister of Education or the President would administer the trust. It would comprise experts
and representatives from key stakeholders, including the diaspora and the private sector.
Information and Communication Technology (ICT)

The government proposes to expand the application of ICT on a selective basis, to achieve
greater integration with the rest of the world.
Ministry of Health
The fundamental objective of the ministry is to strive toward ensuring access to quality and
affordable health care to the people of Puntland and to achieve the ultimate goal of “health
for all” through sustainable and holistic health policies, development programmes, and
infrastructure.
Puntland’s overall health status is poor by international standards and also in comparison
to many countries in the region. In fact, on account of conflict and devastated infrastructure,
the state has regressed in its attempts to achieve the MDGs. The government is making all-
out efforts to reverse the process and has achieved significant strides with the support of the
international community and UN agencies.
The tables below provide an overview of the health infrastructure in the state, including
human resources.
Table 12: Health Facilities in Puntland, 2006
Health Regions and Number of Health Facilities

TOTAL
Facilities Ayn Bari Karkaar Mudug Nugal Sanag Sool
Hospitals 1 3 2 2 5 1 1 15
TB Centres 1 1 0 1 2 0 1 6
MCHs/OPDs 1 8 9 9 10 4 5 46
Health Posts 4 22 15 4 7 6 32 88
TOTAL 7 34 26 16 21 11 39 155
44
Table 13: Health Sector Human Resources in Puntland, 2006
Number of Staff
Description TOTAL
Public Private
Doctors 32 42 72
Qualified Nurses 128 208 336
Qualified Midwives 29 18 47
Pharmacists 14 3 17
Auxiliaries / Assistant Nurses 160 140 300
Health Technicians - - 75
Traditional Birth Attendants - - 447
Other Supporting Staff - - 412
TOTAL - - 1,076
It can be seen that the current status is very low in comparison to the acceptable benchmarks.
The doctor-person ratio is 1 to 35,000.
The maternal mortality rate is very high in Puntland, as can be seen from the 2004–2005 graph
below. Though there is an overall improvement, the rate has increased in Bari, Mudug, and
Ayn regions.
Figure 6: Puntland Maternal Mortality Rate
Puntland Maternal Mortality Rate, 2004 and 2005
30
25
# of Cases
20
15
10
5
0
Nugal Bari Sool Mudug Sanag Ayn
Regions
In terms of child immunisation, again despite the recent progress, concerted efforts are needed
to achieve the MDGs. At present, only 64 percent of the 35 MCH facilities receive regular
Extended Programme for Immunisation (EPI) supplies and 77 percent have functional cold
chains. The DPT3 coverage is still very low; in 2003, it was 12 percent. However, recently it
has improved to 28% (2005).
45
The major sector concerns are the following: lack of a holistic and integrated health systems
policy, inadequate financial resources, poor infrastructure, lack of qualified health personnel,
weak institutional capacities, the high cost of service delivery too remote areas, weak
institutional/stakeholder coordination, the absence of a proper drug policy, and weak information
management and disease surveillance, cumulatively leading to high morbidity and mortality.
Puntland is a large and hostile geographical area with very poor connectivity, which adds to the
broader problem, as do illiteracy and lack of awareness.
In considering the guiding principles of health sector development, the government has
decided to shelve all high investment-oriented programmes. It will instead give emphasis to
education and awareness creation, decentralised service delivery, the improvement of health
infrastructure, better quality manpower, the integration of scientific and traditional health
systems, the regulation of private initiatives in the sector, a comprehensive health policy, drug
control and quality assurance systems, and the institutionalisation and coordination of ongoing
health sector programmes of various stakeholders.
Priorities for 2007

Health Financing
• Conduct a health expenditure review.
• Encourage private investments.
• Ensure cost recovery and financial sustainability.
Human Resources
• Establish an autonomous certification body.
• Build the health information system and database.
• Design a common salary scale, standard contracts, and incentive packages.
• Conduct a training need assessment and formulate a capacity building strategy.
Medicines
• Establish an independent, non-profit drug-purchasing agency.
• Encourage the establishment of regional drug supply agencies.
• Finalise and implement essential drug list(s) and standard treatment guidelines.
Health Care Infrastructure
• Rehabilitate and better utilise the existing health care network.
• Develop standard layouts for health facilities, offices, stores, and warehouses,
along with standard tender documents.
Health Care Provision
• Formulate a basic service package.
• Conduct a study of private health providers.
• Explore health service provision options for nomadic populations.
• Identify realistic measures to improve the quality of care.
• Integrate and strengthen scientific and traditional health care systems.
Ministry of Women and Family Affairs
The ministry has developed ambitious plans for gender development and family welfare.
Developing gender policy forums, advocacy toward gender-sensitive policy development,
gender budgeting, etc. is a key priority for the ministry.
Though women contribute significantly toward family development and perhaps are the main
breadwinners at large, their problems have not received adequate attention. They are relatively
46
backward in terms of literacy, education, access to health, training, and employment in the
organized sectors. The government is making concerted efforts to bring them on par with men
as partners in development and to better harness their talents and creativity toward national
growth. The ministry has developed a three-year work plan from 2004 to 2007 and most of the
tasks are getting completed.
Women constitute only 10 percent of the seats in the council of ministers, 10 percent of those
in parliament, and 20 percent of those in town councils. In government service, the military,
and the police, their representation is minimal. Early marriage and illiteracy are widespread
and girls need to be protected from abuse. Girls do most domestic chores and do not complete
school mainly on account of their domestic responsibilities.
Priorities for 2007
The priorities for 2007 include the establishment of seven regional women’s development
centres and the recruitment of seven regional coordinators. To augment income generation
opportunities, there will be capacity-building and training programmes for women in leadership
qualities, decision making, microfinance, vocational skills, microenterprise management,
entrepreneurial development, office management, etc. There is a need to establish counselling
centres, particularly for those who have undergone FGM; orphanages for girls are also
needed.
The quality and status of women will automatically increase if they are supported with meaningful
income generation opportunities and access to capital. There are many good practices emerging
in the state, and the Puntland microfinance institution that started eight years ago now has
more than 1,500 women beneficiaries. The institution provides credit at a service cost of 16
percent, and the repayment is reported to be good. The experiment needs to be replicated and
expanded in both urban and rural communities across the state, using a selective expansion
strategy. This could be linked with the formation of women’s self-help groups, thrift societies,
and cooperatives to support women’s activities and foster women’s enterprises.
Ministry of Labour, Youth, and Sports
The key objective of the ministry is to promote nation building and integration through enabling
labour laws for greater employment opportunities and improved productivity and quality. It aims
to create well-disciplined, high-quality youth through proper education, training, social guidance,
recreation facilities, and sports activities. However, on account of the resource crunch, the
budgetary support to the ministry is limited to salaries and other current expenditures. Priorities
for the year 2007 are detailed below.
Priorities for 2007
Capacity Building
Considering the significance of the ministry, the existing capacities and facilities are grossly
inadequate to address the growing challenges. The ministry needs capacity building, basic
facilities, and training for its own staff to perform well.
Implementation of Law No. 65 and Law No. 5

Law No. 65 and Law No. 5 govern the philosophy, approach, strategy, and guidelines for
the sector, including labour rights and the role of the private sector. The law needs to be
implemented and enforced.
47
Youth and Sports

Although about 80 percent of the population is young, only a very limited percentage has
adequate opportunities and access to education, training, and creative work. They need
vocational training and life skills to create a sense of self-worth and importantly to find a
meaningful occupation for a decent living. In the absence of opportunity, the youth are driven
toward illegal and anti-social activities. As they are the future of Puntland, it is critical that the
state evolve policies and programmes to address their dreams and aspirations. Critical to this
is the provision of quality skills and vocational training in fisheries, livestock, construction, and
other related areas. There is a growing mismatch between the quality skills demanded by the
market and the existing supply trends.
Sports and recreation facilities are critical for self-expression and channelling youthful energy
into creative pursuits. During the civil war, the state’s facilities were either destroyed or damaged.
Strategically, the state intends to support sports activities in school (to “catch them young”) and
create well-equipped youth centres that combine vocational training and sports. This could be
developed through community and participatory involvement, with the government facilitating,
supporting, and coordinating the process.
4. Leading Productive Sectors
Ministry of Livestock, Agriculture, and Environment

The ministry’s three important portfolios – livestock, agriculture, and the environment – are
the mainstay of the Puntland economy. There currently exist considerable functional overlaps
with the roles and responsibilities of related ministries and departments. This needs to be
addressed on a priority basis to create a climate conducive to effective coordination, functional
clarity, and accountability.
There are a number of national and international agencies and NGOs supporting the
development activities of the sector. There is a strong need to strengthen the coordination
and monitoring of these activities, to ensure capacity building and institutionalisation of the
programmes for sustainability. Coordination with the government right from the planning phase
would also further harmonise the development priorities of the government with those of the
non-governmental programmes.
The budget for the ministry for 2006 came to about 2,440 million Somali shillings, which was
almost fully absorbed by non-plan expenditure (e.g. salaries and wages). Strategically, the
budgetary support for development needs, along with levies from rangelands and international
support, shall have to be brought under the umbrella of the ministry. The 2007 priorities for the
ministry are detailed below.
Environment
An environmental law has been in place since 2000 – this is Puntland Law No. 2, dealing
mainly with the development of rangeland and water. The law needs to be implemented and
enforced. Clearly, a comprehensive law in place will not guarantee good governance without
the institutional capacity for enforcement. The process needs awareness creation, stakeholder
consultation, and consensus building. The Puntland Environmental Protection Law was also
ratified in November 2006 and is now ready for presidential approval. The law envisages,
inter alia, the establishment of a pastoral association, afforestation, wildlife protection, and
compliance with the Rangeland Management Law.
48
Fodder Production
Drought and depletion of natural grazing ranges leads to potential conflicts and adversely
affect livestock production and productivity. Exploration of new technologies and options for
livestock production would be one of the main priorities for the sector. The sharp fluctuations of
pasture productivity, depending on seasonal and degradation processes – occurring under the
influence of pressure on the vegetative cover due to animal overgrazing – and disturbance of
ecological balance has led to the necessity of the development of natural resource-preserving
technologies of fodder production. The pasture lands provide the livestock with cheap fodder,
and are the basis of Puntland livestock. At the same time, the sharp fluctuations of weather
– climatic conditions and anthropogenic influences – strongly influence pastural productivity.
Various technologies are being developed by international agencies such as ICRISAT, Livestock,
Environment and Development Initiative (LEADS) etc. and need to be explored, and adapted
for improved productivity.
Prevention of Desertification
A major thrust under the programmes would be strict regulation regarding the illegal trade in
charcoal. This is possible mainly through the provision of alternative livelihood and employment
generation opportunities for the people already engaged in producing charcoal. The process
will need to create awareness and encourage participatory forest and natural resource
management, involving both communities and law enforcers.
Land and Water Conservation

Based on data from Somalia Water and Land Information Management (SWALIM) and
traditional knowledge, land and water conservation measures will be promoted through
participatory approaches. Communities, civil and religious institutions, and the private sector
will be involved in water harvesting and halting surface runoff and the loss of topsoil. The
efforts would significantly enrich soil nutrients, improve water availability, diversify agricultural
practices, and improve livelihoods. To a large extent, despite the arid conditions, improved
water management (including harvesting runoff) could go a long way toward national growth,
development, and poverty reduction. During 2007, the initiative needs to be implemented and
piloted in selected basins and watersheds.
Agriculture
Land and water conservation programmes, along with the implementation of Law No. 3
(which regulates land use), hold the key for agricultural development. Empirical studies have
demonstrated the potential of appropriate and enforceable land tenure and management
systems in transforming economies and societies. During the year, the government will identify
potential catchments and areas for diversified, water-saving crops. It will encourage conjunctive
water use and management by promoting the registration of private farms and the construction
of Berkeds, cooperatives, and mixed farming.
The government will set up the Office for Seed, Food, and Agricultural Quality Control,
Quarantine, and Inspection. In the long run, it will help the state harmonise standards and
ensure environmental protection. It will increase market confidence through the enforcement
of quality control and inspection procedures, including mechanisms that allow traded products
to be traced.
49
Livestock
Priorities for 2007

The livestock sector dominates the economy of Puntland. It not only contributes to the livelihood
of the nomadic population but is also a major source of food security for both the rural and urban
areas. The sector contributes about 40 percent of the GDP, 80 percent of export earnings, and
about 60 percent of employment. Improved livestock productivity and quality are crucial, along
with value addition and the promotion and diversification of markets. Such actions promote
economic growth and livelihood support, increase employment, and reduce poverty.
Drought and the depletion of natural grazing land lead to potential conflicts and adversely affect
livestock production and productivity. Exploration of new technologies and options for livestock
production would be one of the main priorities for the sector. The sharp fluctuations of pasture
productivity are seasonal but also result from degradation processes. These occur when there
is pressure on the vegetative cover due to animal overgrazing and the disturbance of the
ecological balance. There is a need to develop resource-preserving technologies for fodder
production. Pastures providing livestock with cheap fodder form the foundation for Puntland’s
thriving livestock sector, but climatic conditions and anthropogenic influences strongly affect
pasture productivity. Various technologies are being developed by international agencies like
ICRISAT and the Livestock, Environment, and Development Initiative (LEADS) and need to be
explored and adapted for improved productivity.
Disease Surveillance System

The design and operationalisation of an effective disease surveillance system is very critical
for the development of the sector. On account of effectively open borders and cross-grazing,
livestock are under constant threat. Developing, collecting, and using data through a well-
established reporting and analysis framework (preferably by using GIS and tracking cattle
movements) is indeed critical. The state will explore possibilities for international support from
agencies like FAO.
Infrastructure for Livestock

The state needs investments in critical livestock infrastructure, including certification facilities,
quality control and auditing, quarantine stations, marshalling yards, and holding grounds. These
would be set up in strategic locations.
Veterinary Law and Institutes

The law delineating the mandate of the ministry, regulations, professional qualifications, disease
reporting and surveillance, etc. urgently needs to be implemented. The state needs to set up a
veterinary institute to meet the growing needs of veterinary doctors, livestock inspectors, and
the like. There is also a need to set up manned extension services from the regional and district
level on down, for the speedy development of the sector.
Ministry of Fisheries, Ports, Sea Transport, Marine Resources

Puntland is blessed with an extensive coastline of about 1,640 km, rich in marine resources. It
extends from Garaad in the Indian Ocean to Laaso Surad in the Gulf of Aden. It has a flourishing
and vibrant port at Bossaso, as well as minor fishing harbours. The rich and varied species of
marine resources are facing depletion on account of illegal fishing and overexploitation. It is
reported that about ten tons of fish per day are thrown into the sea, thanks to poor domestic
markets and international preference for specific varieties. The unregulated fishing is slowly
50
leading the state into a “tragedy of the commons”. Though the state has legitimate authority
over its territorial waters and the EEZ, because of the absence of an enforcement mechanism
(e.g. a coast guard), the sea is under the de facto control of unauthorised and illegal elements.
The overall priorities for the sector are detailed below.
Infrastructure Development
The state needs significant investments in developing fishing harbours, coastal roads, freezing
facilities, and cold chains in selected locations. Since the needs cannot be met through budgetary
resources alone, opportunities to mobilise resources from the international community and
the diaspora will be explored. The state would create an environment conducive to private
investments in infrastructure (including harbours), preservation, processing, and value
addition.
Market Development
Promotion, development, and diversification of markets, both national and international, are
critical for the survival and growth of the sector. Most of the catch is traded through middlemen;
a large quantity is thrown into the sea, as the domestic market is small. A systematic market
intelligence system would help the fishermen get the best prices.
Management of Marine Resources

Sustainable management of marine resources, including conservation and protection, is
critical for long-term growth. The ministry is facilitating the process of participatory regulation
and resource management through a programme of Marine Protected Areas, involving local
communities up to 10 km inland. In the absence of an effective coast guard, the experiment is
becoming popular among the fishing communities. Concerted efforts in awareness creation and
education are essential for the success of the programme, which needs to be supplemented
with conflict resolution systems.
Coast Guards
In the absence of an effective coast guard, the rich coast has become a real management
challenge for the state. The government has decided to go ahead with setting up its own
modest coast guard. It will use specially trained local police and is seeking private sector
support for providing equipment and gadgets. It will also explore all the diplomatic options
through the TFG; it hopes to get the support of the international flotilla to protect the EEZ, as
Somalia is a signatory to the Convention on the Law of the Sea.
Cooperatives
The coastal communities of Puntland, particularly the traditional fishermen, have always faced
serious livelihood problems. It is the intention of the government to strengthen cooperatives,
women’s self-help groups, and microfinance institutions to alleviate the hardships of the
community and ensure basic services, including water and sanitation.
Human Resource Development and Institutional Strengthening

Despite the significant contribution the sector makes to the economy, there are no marine
training institutions. Training and capacity building are needed for both government institutions
and fishing communities. Capacities are also to be built for resource estimation, integrated
coastal zone management, monitoring, marketing, and entrepreneurial development.
Ports
The main port of Bossaso needs rehabilitation, modernisation, and expansion. To achieve
this, plans are in place for private sector participation; innovative financing and investment
51
instruments will be adopted. The major thrust would be to rehabilitate existing facilities and
acquire modern equipment for productivity, storage, and cargo handling.
Ministry of Commerce and Industries
The key mandate of the ministry is to implement the Commerce and Industries Law, facilitate
private sector development, regulate industrial and commercial activities, and encourage
investment for the accelerated development of the state. The ministry is working towards the
establishment and strengthening of a free enterprise economy through designing the appropriate
legal framework, simplifying procedures, and rationalising tax and incentive structures. It strives
to build credibility, security, and peace, in order to facilitate investment.
Comprehensive industrial and commercial laws (dealing with export promotion, import
rationalisation, technology absorption or collaboration, institutional roles, the role of the private
sector, public-private partnerships, quality control, etc.) are expected to be passed during
2007.
Puntland’s economy is dominated by the private sector and the state depends on the rest
of the world for many of its requirements. Excessive dependency on selected markets and
primary exports has lead to high susceptibility to the fluctuations of international markets.
It is thus necessary to encourage local value addition and the diversification of markets.
The recent buoyancy in the private sector (especially in trade and commerce), along with
the remittances of the diaspora, need to be capitalised on and leveraged toward furthering
growth and industrial development. The state is reported to have rich reserves of oil, gas, coal,
limestone, and other minerals. This resource base needs to be sustainably exploited for rapid
development, considering the needs of the present and the future. There is tremendous scope
for small- and medium-sized enterprise development, especially in the livestock, fishery, and
leather sectors.
The industrial potential of the state is constrained by a weak overall business climate, weak
credibility regarding security of investment, very poor banking and institutional finance structures,
and poor infrastructure. Though the economy is largely dependent on foreign trade, there are
few facilities for opening a letter of credit.
As a long-term strategy, the government intends to develop the Bossaso-Galkacyo Corridor

as an industrial lifeline and promote Exclusive Export Processing zones. It will also champion
growth centres for processing fish and livestock in the private sector and explore potential
mineral and oil wealth in collaboration with international companies. The government will work
toward improving the investment climate and developing financial markets, instruments for
foreign trade, and investments in infrastructure.
The role of the government will strictly be one of facilitation, creating an enabling environment for
channelling investments through establishing regulations and a legal framework that can ensure
a level playing ground. It aims to build confidence and increasingly make use of the disapora’s
skills, exposure, experience, enterprise, and earnings for rapid industrial advancement.
The government would work toward designing a modest and growing “investment trust fund”
for development finance, to be managed by a trust representing the government, the chambers
of commerce, and the diaspora. The policy would encourage the growth of the banking system
and, in consultation with the Hawala companies and the Islamic bank, the establishment of
52
facilities for letters of credit and export financing. The key sectors for the economy during
the FYDP would be exports, small- and medium-sized enterprises, value addition, livelihoods,
employment generation, and poverty reduction. Fundamental to this is a strong and transparent
government that can instil trust and confidence in the minds of investors, both national and
international.
The state has six chambers of commerce, which are now under an umbrella organization
to ensure coordination among the livestock, fisheries, industry, general services, import, and
frankincense sectors. The chamber proposes to develop its own five-year development plan,
with the support of external consultants and in alignment with the national FYDP framework.
Priorities for 2007

• Implement the Commerce and Industries Policy and Law (including export-import policy)
with guidelines and rules, in alignment with international benchmarks and mechanisms
for enforcement.
• Ensure institutional strengthening and capacity building for the ministry, entrepreneurs,
and other trade and commerce actors, through suitably designed development
programmes.
• Strengthen cooperatives in selected sectors through pooled funding, and help them
through entrepreneural development programmes (EDPs) and training programmes.
5. Infrastructure Development
The rehabilitation and building of physical infrastructure is one of the basic requirements for
economic growth and the development of productive sectors and human resources. Such
actions also maintain peace, security, and stability and to a large extent effectively address
disasters. Better infrastructure improves access to basic services and markets and promotes
exports and balanced regional development.
Puntland Highway Authority
The Puntland Highway Authority (PHA), previously known as NESHA, is an autonomous

agency set up by the government to be in charge of the development, rehabilitation, and
maintenance of the road networks in the state. PHA has an independent board of directors for
overall management and policy decisions. The authority receives revenue from fuel taxes, as
well as 50 percent of the taxes on vehicles and spare parts collected at Bossaso Port. The tax
receipts go directly to PHA, which allows ring fencing of the budget. The authority is in charge
of the highways, feeder roads, and the coastal roads. There are about 50 staff members, of
whom only 5 are engineers. Most of the development works are carried out in coordination with
donors (UNHCR, ILO, European Commission, etc.).
Developing the roads network is critical to the rapid progress of the state, as its backbone for
poverty reduction, access to markets and basic services, rural connectivity, and employment
generation. Importantly, it provides security and stability and helps protect the borders, including
the coastline.
Community Efforts
The state has excellent social capital; community efforts should be capitalised on and
increasingly used for development in partnership. There is one road developed by the local
53
community, where the monetised cost of construction would come to US$3 million for about 24
km. PHA is taking on the remaining stretch on account of the high cost and the magnitude of
technical resource requirements.
Development Strategy
The strategy followed by the PHA is basically to act as a facilitator and provider of technical
guidance, supervision, and quality assurance, encouraging the private sector to carry out
the works. The authority does not own roads and equipment. In many cases, donors provide
development funds, which are pooled with those of PHA; the work is then entrusted to contractors
through standard bidding processes. The payments would be made in phases, after quality
assurance and certification by PHA. The priorities for the transport sector during the FYDP are
presented below.
Table 14: FYDP Priorities for the Transport Sector 2007–2011

Total
Unit price Implementing
Item Quantity cost (US$
(US$) agency
millions)
Rehabilitation/ construction of National/
2,000 km $40,000/km $80.0
feeder roads international firms
Resurfacing part of the Bossaso-
200 km $200,000/km National/ intl. $40.0
Garowe Road
Improvement of airports at
Lump sum National/ intl. $5.0
Bossaso and Garowe
Construction of three jetties: Alula,
Lump sum National/ intl.
Qandala, and Las Qoray
Capacity building Lump sum International $5.0
Training Lump sum Contracting firm $2.0
Total Lump sum Total $132.00
Priorities and Strategies for 2007

In terms of overall priorities, about the 60 percent of the allocation will be earmarked for
highways, followed by 20 percent for feeder roads, and 20 percent for coastal roads. The
overriding priority for the state is to repair, rehabilitate, and maintain national highways, which
act as a lifeline. The highway completed decades ago has been damaged by calamities and
is poorly maintained. This would be followed by the development of feeder roads connecting
rural communities with the highway. This rural connectivity is central to developing access to
markets and basic facilities, which would help to substantially reduce poverty. The development
of coastal roads is of equal priority, in terms of security and socio-economic development of the
coastal areas. A major constraint for the development of fisheries and safeguarding the shores
of the state is the lack of serviceable roads.
National Roads Policy

By the end of 2007, the government plans to announce a National Infrastructure Development
Policy, delineating the overriding vision, goals, priorities, implementation and institutional
arrangements, private-public partnerships, procurement and contractual obligations,
participatory approaches, and rules of engagement.
54
Rural Infrastructure Development Fund (RIDF)

The government proposes to set up the RIDF for faster development of rural connectivity
to improve access to markets, generate employment, and reduce poverty. This could be a
modest pooled fund from donors and government, with community cost sharing. It could also
be supplemented with contributions from the diaspora.
Development in Partnership
Road construction, especially of feeder roads, is very labour intensive. Though skilled manpower
and the financial resources for materials and equipment must be brought from outside, local
communities could contribute labour. If feasible, they could also explore the possibility of cost
sharing, both in terms of labour and cash. This should be linked with the ongoing poverty
reduction and social safety net programmes the donor community (WFP) is implementing.
Considering the resource crunch it faces, the state would be able to move ahead in partnership.
Participatory approaches need further deepening through the involvement of civil society; the
government would explore possibilities for participatory maintenance and ownership. Local
government would be actively involved in playing a lead role in the development of rural
infrastructure.
Public-Private Partnerships
Puntland road development is in partnership, as all the works are carried out by the private
sector (through contracts). The partnership is to be further strengthened in terms of financing.
On a selective basis and after a viability assessment, PHA will explore the possibility of private
engagement by way of BOOT, concessions, viability gap funding, etc.
The priority for 2007 is the rehabilitation and construction of feeder roads (1,565 km) at a cost
of US$62.6 million, resurfacing part of the Galkacyo-Garowe Road (235 km) at a cost of US$47
million, and rehabilitating the Galkacyo Airport (civil works) at a cost of US$2.5 million.
Table 15: Puntland Transport Sector: Priorities for 2007–2008

Unit cost Implementing Total cost (US$
Item Quantity
(US$) agency millions)
Rehabilitation and
construction of feeder 1,565 km $40,000/km International $62.6
roads
Resurfacing part of
235 km $200,000/km National/Intl. $47.0
Galkacyo-Garowe Road
Airports – Galkacyo Lump sum National/Intl. $2.5
Bossaso Port Civil works Lump sum National/Intl. $2.0
Construction of four jetties:
Garad, Eyl, Bayla, and Lump sum National/Intl.
Hafun
Capacity building Lump sum International $5.0
Training Lump sum Consulting firm $2.0
Total Lump sum $121.1
55
Drinking Water and Sanitation

The provision of drinking water and sanitation is one of the fundamental prerequisites for
poverty reduction, improved livelihoods, health, and well-being. It reduces morbidity and
mortality and cuts across all the MDGs. Water stress is a serious development constraint
necessitating improved management practices. Education, awareness, and participatory/
community management (based on the principle of subsidiarity and supported by governmental
interventions) could go along way in the sector. The government is following prudent policy
measures: (a) the government acts as a facilitator rather than a provider; (b) demand-response
approaches must be used; (c) community efforts and partial capital provision result in near full
operation and maintenance cost recovery. Though drinking water is a basic social service, it is
included under infrastructure for administrative reasons.
Puntland State Agency for Water, Energy, and Natural Resources
Puntland is arid and semi-arid; approximately 52 percent of the population is rural and nomadic,
dependent on oasis agriculture and livestock production for a livelihood. Poverty is widespread,
particularly in the rural areas where livelihoods are more directly dependent on access to water.
There is an urgent need to increase access to safe water and sanitation, both for the rural and
urban populations, with a particular focus on women and children. Target communities and
local authorities must be empowered to manage these resources in a sustainable way.
Basic water sector institutions, replete with regulations and a division of responsibilities, are in
place in Puntland. The main body is the Puntland State Agency for Water, Energy, and Natural
Resources (PSAWEN); ministries and the private sector are also involved in the urban water
supply.
The government still lacks the sufficient financial resources to develop the urban water supply
to the required extent. Donor-supported community-based operations and maintenance
interventions form part of a rural coverage and water provision strategy, implemented by NGOs
and UN agencies. The public water supply system is weak or very poorly maintained in most
of Puntland, and only 26 percent have access to safe drinking water. Access to safe water for
vulnerable groups is below survival needs and is therefore life threatening. Rural and nomadic
inhabitants, who need water for personal use as well as for their livestock, face the greatest
challenges. Rural water sources are scarce, unreliable, and unsafe; new sources are often
unaffordable. Lacking permanent water sources, significant competition for scarce water is
compounded by the large numbers of livestock en route to export facilities on the coast.
Table 16: Water Supply Coverage: Puntland, 2005
Urban/Rural % Served % Not served
Puntland 26.0 74.0
Urban 46.8 53.2
Rural/nomadic 14.5 85.5
The strategy for the state’s rural areas shall focus on:
• Rehabilitation of existing drinking water sources and 24 mini-water supply systems.
56
• Construction or improvement of pastoralist wells.

• Improved sanitation coverage.
• Capacity building in management, operations, and maintenance of water and
sanitation systems.
• Hygiene and sanitation awareness.
The major sources of drinking water in the state are shallow wells, Berkeds, springs, and bore
wells. In rural areas, protected and safe water supplies are very limited; the urban coverage
level is progressively improving through private involvement. The privatisation experiments in
Bossaso, Galkacyo, and Garowe have yielded good results in terms of coverage, quality, cost-
efficiency, and improved reliability. This needs to be fostered in the urban centres.
Holistic Approach
Somalia is one of the most water-stressed countries in the world. Though drinking water is the
first priority, sustainable availability is possible only through comprehensive water management,
with watershed and catchment improvement programmes. In order to improve water availability,
quality and saline intrusion, water harvesting, and ground water recharge cum conjunctive use
pattern is indispensable. Currently, there is no reliable estimate of surface runoff, but this could
be arrested through appropriate land and water management. The government proposes to
develop a comprehensive water and land development framework, once the SWALIM database
is made available, along with a prospective plan for the water sector.
Role of the Private Sector

The main private supplier is Golden Utilities Management Company (GUMCO). It was granted
a ten-year contract by the municipalities of Galkacyo and Bossaso to operate the water
supply system. GUMCO reports to a board of directors and to PSAWEN. With some success,
it has invested in system improvements in Galkacyo. GUMCO has also constructed water
kiosks in poorer areas of the city and provided cleaner and more affordable water for a larger
population.
Since taking over the water supply management system in 2003, the Galkacyo water company
has connected 2,300 houses to a piped supply and constructed 50 water kiosks and 7 truck-
filling points. In addition, the network was extended from 25 km to 150 km. The price of water
as been reduced from US$8/m3 to US$1/m3 for those connected to the pipeline and to US$0.6/
m3 for those using water kiosks. GUMCO has prepared a complete, costed plan for further
extension of the supply system.
There are about 11,000 Berkeds in Puntland, most of which are private. The water table has
fallen sharply in many areas – as deep as 450 metres.
Participatory Approaches
With PSAWEN taking the lead, a number of water committees have been established in rural
areas for participatory systems management. The committees work on the basis of standard
agreements, indicating the key roles of the stakeholders and members. The communities
contribute well above 20 percent of the total cost of the systems and about 80 percent of
the operation and maintenance costs through cost-recovery principles. Public water posts are
provided for inclusion of even the poorest and there is willingness to pay, despite poverty being
57
very high. A decentralised service delivery mechanism has also been institutionalised by taking
the district councils on board.
PSAWEN, in collaboration with UNICEF and other humanitarian agencies, has designed a
4-year development plan for 2004–08. The key targets for the period include (a) additional
coverage of 5 million people with improved access to safe drinking water and (b) the number of
households with access to improved sanitation facilities increased by 40 percent. If the current
support level continues, the achievement of the MDG water and sanitation targets is within
reach.
Priorities 2007
• Finalisation of the Puntland water policy paper.
• Establishment of a water data collection centre and water-testing laboratory.
• Strengthening public-private partnership management of the existing urban water
systems.
• Scaling up management of rural water supply schemes and introduction of a public-
private partnership management system.
• Enhancement of the institutional development of PSAWEN.
• Continuing construction or rehabilitation of water supply schemes in Puntland, with
particular emphasis on solar/wind-driven mini-water systems in the rural areas.
• Creation of an effective coordination mechanism for water and sanitation sector
stakeholders.
• Continuing the provision of a hygiene and sanitation package for primary schools,
communities, and IDPs.
• Encouragement of WASH and government-community joint partnership agreements,
including the co-funding of projects.
6. Decentralisation and Rural Development
Ministry of Local Government and Rural Development
Out of the 33 district councils, selections have been completed in 11; by the end of 2007, the
process will be completed in the remaining districts. All 11 councils are functioning well and, as
envisaged under the decentralisation framework, they are increasingly fulfilling and discharging
their mandatory responsibilities, overseeing basic services like education, health, security,
garbage disposal, water supply, etc. They manage the civil service within their respective
jurisdiction. The district councils of Bossaso, Garowe, and Galkacyo are performing well above
the rest on account of the urban character. The councils have been divided into three categories
on the basis of population and budget size. The average budget size of category A comes to 1
billion Somali shillings, category B: 700 million shillings, and category: C 400 million shillings.
It is reported that Bossaso has a budget of 8 billion shillings.
The district councils have been mandated to mobilise a wide range of taxes and levies, which
they have started collecting. Overall fiscal performance of select councils for 2005, as indicated
in the table below, shows promising developments.
58
Table 17: Fiscal Performance of District Councils in 2005

Wages & Salaries as Estimated Budget /
District Budget
Salaries % of Total Population Habitant
Galkacyo 360,000 106,800 29.7 137,667 2.62
Garowe 82,470 38,700 46.9 57,991 1.42
Burtinle 30,960 13,230 42.7 34,674 0.89
Bossaso 664,610 114,965 17.3 164,906 4.03
Qardho 52,133 15,600 29.9 70,825 0.74
Total/average 33.3 1.94
Note: Monetary amounts are in US dollars.
Notable features of decentralised governance are cost-effectiveness, participation at the

grassroots level, and the outreach of government to remote areas. The share of salaries and
wages for the district councils are at 33 percent, compared with nearly 80 percent (including
operational expenses) at the state level. Even after making allowances for the security needs
at the state level, the share at district level is very low. Decentralisation has also emerged as a
tool for empowerment and participation at the local level.
The key role of the ministry with respect to decentralisation is to facilitate the democratic
decentralisation process and monitor the performance of the councils. The priority is to complete
the formation process of all the district councils by December 2007, paving the way for elections
in future. Key priorities are detailed below.
Selection of all District Councils

The selection and strengthening of the remaining 22 councils are to be completed on a priority
basis by the end of 2007. As a modest beginning, the local governments would be encouraged
to develop district plans through participatory resource mapping, including a sector-specific
asset inventory and the preparation of rehabilitation and maintenance plans to ensure technical
and financial sustainability of investments.
Capacity Building
An urgent prerequisite for deepening the decentralisation process is to significantly improve the
capacities of the selected/elected functionaries, to empower them to discharge their mandated
responsibilities. They are to be trained, inter alia, in urban management, town planning, the
preparation of city development plans, taxation and resource mobilisation, tax administration,
cost recovery and user charges, public-private partnership, land management, regulation, and
good governance.
The councils of Bossaso, Garowe, and Galkacyo have already undergone some training.
However, considering the progressive growth in urbanisation and the challenge of exponential
growth in demand for basic, quality services, it is imperative that the local administration is
adequately equipped to plan, implement, monitor, and regulate the development process.
Capacity building is also required for the ministerial functionaries and the civil service.
59
Though there is a need for an exclusive centre for training and capacity building for local
government, the existing network of institutions (e.g. East Africa University, Puntland Institute
of Development Administration, SHILOM, etc.) could be used for this purpose, under the
coordination of the ministry. Toward this end, a training need assessment is to be conducted
urgently, a suitable curriculum developed, and core institutions networked.
Registration of Urban Citizens

Registration of urban citizens is a basic precondition for formulating the city development plans.
This is to be done on an urgent basis to create the baseline information. Council elections are
to be conducted on the basis of the inclusive electoral roll.
Review of Rules and Regulation

A comprehensive review of the existing rules and regulations governing both the urban and
rural sectors is also essential. Most of the regulations and the existing framework have been
inherited from the erstwhile government and need thorough renewal to make them inclusive
and acceptable to all segments of the society. A steering committee must be set up, comprising
of internal and external experts, through which suitable modifications and amendments could
be effected. Critical to the process is the incorporation of appropriate guidelines for public-
private partnerships in the development process (towards a free market orientation), as well as
the delineation of the roles and responsibilities of the key stakeholders and various tiers of the
government, including those of the ministries.
Development of Urban Markets

Significant segments of immigrants, including IDPs and members of the diaspora, have set up
small trade and service centres. The sector is booming and contributes to economic growth
and employment opportunities. As a result of unplanned growth, many urban streets have been
turned into markets. The cities need support in setting up market centres or hubs.
Rural Connectivity and Livelihoods

A major reason for the exponential growth of urban centres and consequent development
challenges is the steady rural-urban migration. People are searching for sustainable livelihoods
and a better life after experiencing the increasing resource depletion and loss of livelihood in
the rural areas. Strategically, the process needs to be moderated by providing better living
opportunities and basic services like health, education, water and sanitation, and livelihood
support to the rural communities. The rural areas are also being linked with urban centres
through improved connectivity (mainly feeder roads) to improve their access to markets and
reduce poverty.
Strengthening SWALIM
Somalia Water and Land Information Management (SWALIM), which serves communities
whose lives depend directly on water and land resources (as well as administrations, NGOs, and
partner organizations) needs further strengthening. It is necessary to enhance data collection
networks in order to facilitate better assessment of rainfall, river flow, groundwater resources,
land characteristics, degradation, and land suitability, as well as improve flood warning systems
and flood management. This database, along with scientific early warning systems, would
significantly improve development planning for rural communities. The Puntland administration
is to be supported to increasingly use the information in the planning process and to develop
appropriate disaster management systems.
60
HADMA
Puntland, along with the rest of Somalia, is an area prone to disasters. Among the major risks
are drought (which occurs every three to four years on average), floods, and disease outbreaks.
Internal conflict and influxes of IDPs from other areas add to the problem. In December 2004,
the Puntland coast was badly affected by the tsunami generated by an earthquake off the coast
of Indonesia. Three hundred people died and several thousand others were directly affected.
This worsened the situation for already vulnerable communities affected by other recent shocks:
prolonged drought, torrential rains, and freezing temperatures that killed hundred of thousands
of livestock. The Government of Puntland, which has managed to maintain relative peace and
order in northeast Somalia since 1998, was not prepared to cope with these sudden events or
the unprecedented international response. In order to focus attention on disaster management,
the need was felt for an exclusive state agency, and in March 2005, on the strength of a
presidential decree, Humanitarian Affairs and Disaster Management Agency (HADMA) was
established.
The key roles of the agency in humanitarian assistance are: supervision; coordination and
monitoring; functioning as a humanitarian information centre; and establishing an early
warning system in close cooperation with local and international partners like FSAU. In disaster
management, the major responsibilities are to declare emergencies on behalf of the government,
conduct disaster assessments, and set preparedness and management plans.
HADMA Strategic Plan 2005–2008

HADMA had developed a strategic plan for 2005–2008 and operational plans to support it,
with the goal of establishing sustainable local capacity for emergency responses and crisis
management.
Under the strategic plan, the agency has developed clarity of mandate and responsibilities, set
up an independent office with a database management system, and achieved partial financial
viability. The agency has also succeeded in setting up emergency operations and humanitarian
information centres; it has undertaken a skill and capacity upgrading programme and created
the state contingency fund.
HADMA Priorities
• Build capacities of the government at all levels, aiding institutional agencies and staff
in strategising, planning, implementing, and monitoring humanitarian assistance and
disaster management programmes.
• Create and build basic indigenous capacities for crisis and emergency management.
• Map disaster-prone areas and resources and prepare the Puntland Eco-Zone Disaster
Management Plan.
• Encourage decentralised disaster management strategies involving the district councils
and other relevant stakeholders and communities.
• Facilitate better coordination – inter-ministerial and among the donor community.
• Collaborate with internationally known disaster management agencies and seek
technical support in disaster preparedness, response, surveillance systems, mitigation
strategies, management, and monitoring.
• Create a Calamity Relief Fund managed at the presidential/government level and
accessible by all levels of the government for crisis management. This could possibly
be achieved by imposing a small surcharge on luxury items and conspicuous
consumption.
61
7. Information and Culture
Ministry of Information, Communication, Culture, and Tourism
The total budget of the ministry in 2007 is estimated at 3.4 billion Somali shillings. The priorities
for the government in these sectors are detailed below.
Puntland Printing Press

The government is currently relying on the private sector for publications and materials are
being printed in Nairobi or Dubai. It proposes setting up a modern offset press for meeting its
printing needs – most importantly, school textbooks, official materials and forms, and journals.
At present, significant money is being spent on printing, which could be reduced if a press is
established under the government. Official secrecy would also be ensured. The total estimated
cost is US$200,000–300,000.
Short Wave Radio Station

There are many reasons to set up a short wave radio station urgently, the most important being
education and the promotion of national unity and integrity. The existing radio stations are in
the private sector and hence heavily oriented toward commercial gains. The coverage is now
largely limited to the urban areas. The existing system of regulation is not very effective and
needs review; the enforcement mechanism should be strengthened. The estimated cost of the
project is US$300,000.
Capacity Building
The ministry and officials need capacity building and training in media management, regulation,
and information management.
Communication
In Puntland, the communication sector is ensconced in the private sector. There are no
government-run communication facilities and postal services. The government’s role is to
facilitate, monitor, and regulate, to prevent unhealthy competition. There is a strong need to
stabilise the common service area and service sharing among the operators. The total revenue
through tax collection (comprising of connection charges for telecommunication and Internet)
was estimated at 2 billion Somali shillings during 2005.
The priority is to review the Law of Communication passed in 1999, as there has been much
transformation in the sector; all actors must be brought under a single area code.
Culture
Puntland has a rich cultural heritage, including literature and age-old traditions. The priorities
are to keep the heritage and value systems from eroding, promote research, and encourage
healthy fusion that can lead to greater tolerance and integration with the rest of the world. It is
necessary to use the traditional value systems for nation building.
ANNEXES
A detailed Annual Plan and priorities for the ministries are consolidated and provided in Annexes
I and II.
62
ANNEX I
Aggregate Budget Proposal for 2007 Annual Plan

MOPIC, Puntland State of Somalia
(all figures in US dollars)
Total 2007 State Budget Budget

No. Organization Budget Proposal Allocation Contribution Gap
1. Presidential Office 1,390,000 209,000 10 % 90 %
2. Minerals and Petroleum Agency 100,000 100,000 10 % 90 %
3. Magistrate of Accounts 138,000 70,000 10 % 90 %
Puntland State Parliament 2,500,000 200,000 10 % 90 %
679,000 194,000
4. Ministry of Planning 1,250,000 481,000 10 % 90 %
5. Puntland State Bank 392,000 90,000 10 % 90 %
6. Ministry of Public Works
Civil Aviation 500,000 500,000 10 % 90 %
NESHA 800,000 65,000,000 800,000 10 % 90 %
PSAWEN 200,000 5,600,000 200,000 10 % 90 %
7. Ministry of Local Government and Rural Development 1,980,000 374,000 10 % 90 %
8. Ministry of Finance 400,000 210,000 10 % 90 %
63
64
9. Ministry of Education 300,000 300,000 10 % 90 %
10. Ministry of Health 76,800,000 5,000,000 10 % 90 %
11. Ministry of Women and Family Affairs 886,500 256,000 10 % 90 %
12. Ministry of Commerce 790,000 150,000 10 % 90 %
13. Chamber of Commerce 675,000 135,000 10 % 90 %
14. Ministry of Information, Tourism, & Culture 900,000 150,000 10 % 90 %
15. Ministry of Justice 3,200,000 300,000 10 % 90 %
Ministry of Livestock, Agriculture, and Environment

16. • Livestock 180,000 1,725,000 400,000 10 % 90 %

• Agriculture & Environment 220,000
17. Ministry of Labour 1,300,000 250,000 10 % 90 %
18. Ministry of Fisheries and Ports 5,400,000 1,389,000 10 % 90 %
19. Ministry of Interior (Security Forces) 28,420,000 4,000,000 10 % 90 %
Total 193,876,500 14,414,000 1,441,400 12,972,600
Notes:
• … Stands for departments within ministry.
• … Stands for related agencies of that ministry or government institution.
• State budget contribution will be in cash; aid is also expected to come in cash.
• The responsibility of aid coordination should be in the Ministry of Planning and all development funds should go into one account, whether state contributions
or external aid; responsibility is shared by the Ministries of Planning and Finance.
• Summary attached to the proposal from the FYDP consultants through MOPIC.
ANNEX II
2007 Annual Priorities and Budgets

(all figures in US dollars)
Name of the Agency: Puntland State Parliament
Budget
Budget Budget
No. Development Head Priority Programmes/Activities Head Total
Support Gap
USD
Upgrading of members and

80,000
committees (Security,
transparency and accountability,
1. Parliament Members Capacity building judicial system, women and family, 100,000
and media)
Skill training for employees
20,000
Furnishing offices and conference 30,000

Office equipment and hall
2. Physical Facility 100,000
facilities Office equipment 35,000
Library and transport 35,000
Total 200,000
65
Name of the Agency: Presidential Office
66
Development Budget Budget
No. Priority Programmes/Activities Total Gap
Head Head USD Support
Improving the quality of public officials

Governance & Staff training on public administration
1. Human capacity building
Institutions Long-term human resources development
40,000 40,000
plan
Construction of housing for presidential 45,000

security forces in the presidential

compound
Computerising the presidential office 20,000
Improvement of working
2. archive
conditions and facilities
Construction of website, office furniture
and equipment 44,000 169,000
Construction of generator house, including
provision of generator 60,000
Total 209,000
Name of the Agency: Ministry of Justice and Religious Affairs
Development Budget
No. Priority Programmes/Activities Budget Head USD Total Gap
Head Support
Institutional and Training the ministry administration and

Ministry capacity building staff
1. Administration for new Ministry Constructing and equipping ministry HQ
100,000 100,000
and Staff of Justice and in Garowe
Religious Affairs Educating the society
Model prison construction continuation

in Gardo; improvement of Bossaso
2. Prisons constructed 50,000 50,000
prison; cost-shared support for Las-
anod prison
Assessment done by the ministry and

UNDP ROLS
Training for law; training of paralegals;
Access to justice legal clinics
Departments of strengthened, Support to juvenile justice, including
3. 100,000 100,000
Justice/Courts including support for juvenile victims, witnesses, and
institutions offenders
Legal support/reform, including
harmonisation of three sources of law;
legislative process
Institutional capacity Court of Las-anod constructed, equipped,

4. 50,000 50,000
building and functioning
Survey Quranic schools and Islamic

learning
Access to Islamic
Train teachers in methods of passing on Budget not available
Department of learning and
5. knowledge and teaching Quran (UNICEF may
Religious Affairs practice; evolving
Construction and rehabilitation of contribute)
endowments
Quranic schools
Total 300,000
67
68
Name of the Agency: Ministry of Planning and International Cooperation
Budget Budget
No. Development Head Priority Programmes/Activities Total Gap
Head USD Support
Finalising and
Finalising & printing FYDP, translating
translating FYDP into
Planning FYDP 50,000
1. Somali and printing
Department
Socio-economic Survey of major towns in Puntland
impact of khat 87,000
Capacity building for Puntland statistic 75,000

Capacity building; collection staff
Statistical strengthening and Maintenance and sustainability of the 20,000

2.
Department increasing scope of data
statistics Commodity prices and exchange rate 48,000 143,000
information
Monitoring and Monitoring project prioritisation,

Monitoring &
3. evaluation of all ongoing planned activities, and actual 36,000
Evaluation
projects performance
4. Administration MOPIC HQ Construction of MOPIC HQ 165,000
Total 481,000
Name of the Agency: Ministry of Finance
Expand the economic

Increase and improve standardised legal
Revenue sources of income of
1. application government tax collection at
Department government, especially
the Puntland State level
government taxation 20,000 20,000
Capacity building for the Upgrade the professional skill of the civil
2. Personnel
ministry staff servants in the ministry 50,000 50,000
The ministry should coordinate and

Network for all regional
harmonise the activities of those involved
3. Administration financial offices 30,000 30,000
in revenue collection at regional financial
offices
Prepare and establish or introduce the

To establish or introduce
Taxation volume basic taxation system instead of
4. volume basic taxation
Department the current unitary basic one
60,000 60,000
General Review all existing accounting and financial

5.
Accounts Financial laws laws 50,000 50,000
Total 210,000
69
70
Name of the Agency: Ministry of Interior, Public Security, and DDR
Monthly food allowance for 2,500 police

trainees within shifts of four months
150,000
Monthly management allowance
International trainers (salaries,
180,000
allowances, and travel expenses)
Puntland police uniforms
144,000
The documents and other accessories that
Implementing rule of law 350,000
1. the 36 police stations in Puntland require:
and security in Puntland
• 1,000 case registers (OP books)
• 40 fingerprint recording kits
• 5 fingerprint detection kits

• Ample quantity of documents related
General to police service (e.g. referral slips)
Directorate 327,000 1,151,000
• Formation of a central crime
of Interior & investigation archives centre
Public Security
Police HQ 226,000
Infrastructure for security Two new regional police divisions 130,000
2.
administration offices Rehabilitation of five police divisions 66,000
581,000
Four new police stations 159,000
Small vehicles, trucks and motorcycles for

Capacity
3. divisions, stations, finance control police, rapid 200,000 200,000
building(transportation)
deployment police, traffic police
VHF radio covering Puntland police stations

4. Communication equipment 250,000 250,000
Subtotal 2,182,000

43,700
Office capacity building for the military &
regional administrations
176,000
Constructing ministry office compound
5. Capacity building Rehabilitation and furnishing of Nugaal, Sool
41,400
and Sanaag, Karkar, Bari, and Mudug regional
administration offices 275,000
Building & furnishing Eyn regional office
13,900
Ministerial Reviewing and finalising the temporary

& Regional constitution; submitting it to the public for ideas
Administration and views before the constitution referendum
Security sector &
Department take place
constitution review
6. International constitution lawyers, including
and awareness 100,000 100,000
Sharia law experts
programmes
Monthly awareness for the community
regarding political stability, security, law &
order, and the constitution programme
Construction of orphanage centre 113,000

7. Orphanage centre (ten dormitory rooms, eight classes, kitchen, dining (lump sum 113,000
hall, managerial compound and other assets) budget)
Subtotal 488,000
71
72

Puntland has nearly 200,000 small automatic guns;

8. Disarmament 190,000 190,000
80,000 small guns will be collected in 2007
Demobilisation programme: men and women from

9. Demobilisation 300,000 300,000
Darawish forces will be reintegrated
Technical survey 200,000

Mine clearance of Mudug, Bari, Nugal, and

General Karkaar 300,000
10. De-mining
Directorate of MRE, Mine Risk Education 60,000 710,000
DDR Land Mine Impact Survey for Sool, Sanaag, and
Eyn 150,000
Rehabilitation and expansion of Bossaso Disabled

11. Reintegration 80,000 80,000
Centre
Immigrant All Ethiopians and other nationals will be registered;

12. 50,000 50,000
stoppage identification cards will be delivered to those selected
Subtotal 1,330,000
Grand Total 4,000,000

Name of the Agency: Ministry of Women and Family Affairs

Physical structure of women’s development centres 30,000

Provision of furniture for the five major towns of
Ministry of Puntland 10,000
Women’s Capacity building, training, and furnishing for the
Institutional
1. Development regional offices of the selected networks 45,000
development
and Family Operational vehicles for the regional development
Affairs centres and the department of regional affairs 20,000
Data collection concerning gender disparities and
IDPs in Puntland 30,000 135,000
Consultant to assist the ministry’s decentralised

24,000
programmes
On-the-job training for the regional women’s
development coordinators
10,000
Human Gender monitor training
2. 5,000
development Furnishing offices for gender monitors in the
Puntland ministries
15,000
Support for high school and university fees for
girls who discontinue their education because their
32,000 86,000
families are unable to pay
Development of Livelihood Seed money for the 70 women training to start a

3. 35,000 35,000
Family Affairs improvement business
Total 256,000
73
Name of the Agency: Ministry of Commerce and Industries
74
Budget Budget
Head USD Support
15,000
Ministry of Commerce Completing Puntland One consultant
1. and Industry commerce and industry Printing of the rules and regulations
15,000
rules and regulations Ratification workshops
10,000 40,000
Repairing and furnishing

the ministry’s main Repairing and furnishing the
40,000
offices ministry’s main offices in Garowe,
Ministry of Commerce Bossaso, Galkacyo, and Las-anod
2.
and Industry
Ten computers, five printers, three
Equipping the ministry’s scanners, and three photocopiers

25,000 65,000
main offices
Training the ministry staff in

Ministry of Commerce Capacity building for the organizational management and
3. and Industry ministry staff administration, marketing, planning, 30,000 30,000
statistics, and promotion of industrial
production and export
Ministry of Commerce Workshops, seminars, and mass

Awareness and
4. and Industry media awareness programmes and 15,000 15,000
orientation for traders
booklets
Total 150,000
Name of the Agency: Chamber of Commerce and Industries
Budget Budget
Head USD Support
Chamber of 10,000
Chamber of commerce One consultant
Commerce and
1. and industry rules and Printing of the rules and regulations
Industry 15,000
regulations Ratification workshops
10,000 35,000
Chamber of Chamber’s exhibition Constructing and equipping

2. Commerce and centre commerce and industrial production
60,000 60,000
Industry in Bossaso exhibition centre
Chamber of
Training chamber’s management and
Commerce and Capacity building
3. staff and different trade associations
Industry 10,000 10,000
and industrial unions
Chamber of
Commerce and Marketing and
4. Conducting research and studies 30,000 30,000
Industry investment
Total 135,000
75
76
Name of the Agency: Ministry of Information, Communication, Culture, and Tourism
Budget Budget
Head USD Support
10,000
Launching social Peacebuilding programmes
1. Information Materials
awareness campaign Awareness on wildlife protection
10,000 20,000
15,000
Office establishment (equipment)
Public printing press and its
2. Capacity building
equipment
37,000
Vehicle for the ministry 60,000
8,000
Collection and printing of cultural 40,000

books and heritage items
3. Culture and Tourism Revival of culture
Activation of cultural group; profiling
of cultural places 30,000 70,000
Total 150,000
Name of the Agency: Ministry of Livestock, Agriculture, and Environment
Budget
Development Budget
No. Priority Programmes/Activities Head Total Gap
Head Support
USD
Establishment of regional & district level vet

service (6 RVOs & 15 DVOs)
Disease-reporting system in place
Animal health Emergency and early warning unit in place
1. Livestock service delivery Credible professional association 50,000 50,000
Effective vet board
Effective private vet services (ten drug stores)
Carrying out three research projects on three
diseases
Quarantine centres (three)
One central laboratory and three satellite labs
Holding grounds (three)
Rules and regulations
2. Certification system 130,000 130,000
Efficient marshal yards
Effective livestock export trade union
Well-trained personnel
Capable institutional infrastructure
Standard slaughter houses (four)

Chilled meat Regulations in place
3. 40,000
exportation Trained meat inspectors (12) 40,000
Empowered managers (four)
Total 220,000
77
78
Budget
Development Budget
No. Priority Programmes/Activities Head Total Gap
Head Support
USD
AQI office
1. Food control 5,000
establishment
2. Food testing lab Technical assistance to Port Food Testing Laboratory 45,000
Agriculture
Law No. 3
3. Agricultural development 20,000
enforcement
Administration 90,000
4. Establishment regional offices 20,000
expansion
Training human resource environmental skill and

5. Capacity building 10,000
profession
Environment
Environmental 90,000
6. Prevention of desertification; range management 80,000
protection
Total 180,000
Grand Total: 400,000

Name of the Agency: Ministry of Labour, Personnel, Youth, and Sport

Equipment and material

Establishment of the
Capacity building of public database and personnel file
administration systems
Right person on the right job at Recruitment of consultants
the right time (rightsizing) (human development and
1.
Entrenching professionalism in policy reform experts)
the civil service by improving job- Defining roles and 50,000 50,000
related skills responsibilities and job
Equipments and material descriptions
Identifying entry skills and
examination exercises
Prepare and produce public
Labour and administration training
Personnel course manuals
2. Capacity building for civil servants
Support the professional
70,000 70,000
schools for training civil
servants
Procurement of two pickup

3. Capacity building for the ministry 20,000 20,000
vehicles for the ministry
Rehabilitate two football 40,000

fields and three basketball
courts
Youth and Support development of sports and Establishing a library and
4.
Sports youth recreational centres gymnastic centre 60,000
110,000
Procurement and
distribution of youth and
sports supplies to groups 10,000
Total 250,000
79
80
Name of the Agency: Ministry of Local Government and Rural Development
Budget Budget
Head USD Support
Decentralisation of
Establishment of 18 district councils for
1. the administration and 100,000 100,000
local councils
Local Government governance
and Rural 50,000
Training for state’s 32 district councils
Development
2. Capacity buildings Office equipment for the districts/
councils 80,000 130,000
Seven water truck tanks 60,000
Response to the
3. Rural Development Ten transport facilities for rural
drought
development 84,000 144,000
Total 374,000
Name of the Agency: Magistrate of Accounts
Budget Budget
Head USD Support
Provide long and short training courses

Magistrate of Human resource to all magistrate staff and partners
1.
Account capacity building Develop auditing training guideline
25,000 25,000
manual for the staff
Expansion of the magistrate of

30,000
accounts office (additional construction
Hardware capacity of two offices, a multi-purpose hall,
2.
building toilets, and fencing with necessary
45,000
equipment)
Old office furniture and audit equipment
15,000
Total 70,000
Name of the Agency: Humanitarian Affairs and Disaster Management Agency (HADMA)

Enhancing indigenous Construct central reserve storage and

1. capacity for disaster contribution of food stocks and non-food
HADMA 81,000 81,000
preparedness items
Establishing three
epicentre offices in Las- Equipping, staffing, and renting office
2.
anod, Galkacyo, and space 30,000 30,000
Bossaso
HADMA coordination Conduct monthly sectoral ordinary

3. 18,000 18,000
meetings meetings
Mapping for disaster Conduct surveys on the vulnerability of all

4.
vulnerability survey Puntland settlement areas 30,000 30,000
Prepare five-year plan for disaster

Revision of strategic plan
5. preparedness (external consultant and 5,000 5,000
HADMA staff)
Seeking opportunities for Seeking and implementing new projects

6. disaster preparedness (community awareness, staff training, and
30,000 30,000
regional visits) for disaster preparedness
Total 194,000
81
82
Name of the Agency: Puntland State Bank

Trainings (short and long Term)

Puntland State
1. Capacity building Workshops 20,000 20,000
Bank
Seminars
Rehabilitation and
Office furniture and hardware equipment
2. renovations for bank 20,000 20,000

for all the branches of the bank
branches
Technical support and

Setting up a modern computer network
3. introduction of modern 20,000 20,000
system and branch reporting system
system
Opening foreign exchange department for

Establishing new four branches
4. 30,000 30,000
department Establishing standby funds for unexpected
needs
Total 90,000
Name of the Agency: Ministry of Public Works – Civil Aviation
Development Budget Budget Budget

No. Priority Programmes/Activities Total
Head Head USD Support Gap
1. Bossaso, Garowe, and Galkacyo 400,000

Airports Airport construction
Aerodrome and meteorological equipment 60,000
2. Aerodrome controllers, aeronautical

Airport Services Capacity building 40,000
information, meteorological services
Total 500,000
Name of the Agency: Ministry of Public Works – Puntland State Agency for Water, Energy, and Natural Resources
(PSAWEN)

1. Boreholes and equipment Drilling boreholes 60,000

supplies Equipment supplies 20,000
Water Section
Water dams (water
Construction of large-scale catchments
harvesting systems) 100,000
2. Personnel Section Capacity building Skill training 20,000
Total 200,000
83
84
Name of the Agency: Ministry of Public Works – Puntland Highway Authority (NESHA)

Garowe-Galkacyo
Road
Garowe-Las-anod Resurfacing and resealing of Garowe- 400,000
Rehabilitation of Road Galkacyo Road
1.
Puntland State
Roads Garowe-Las-anod Road
Construction of Dumdum and Buran 100,000 500,000
Dumdum-Buran
Bridges
Bridges
2. Rehabilitation of
Bossaso Airport Construction of Bossaso Airport runway 300,000
Airports
Total 800,000
Name of the Agency: Ministry of Education
Budget
Budget Budget
No. Development Head Priority Programmes/Activities Head Total
Support Gap
USD
Education policy Policy review, translation, and printing 20,000

Education Policy and
1. New organizational chart, job
Restructuring
Restructuring descriptions, and training 30,000 50,000
20,000
Non-formal and Equipment and Education for all
2.
Informal Education training TVET and literacy for women
60,000 80,000
35,000
Primary education Curriculum and printed materials,
awareness materials
Secondary education Construction of schools 60,000

3. Formal Education Curriculum review
Teacher training and equipment
Curriculum materials
Teacher training Special English courses 30,000
20,000 145,000
Personnel/ Skill training

4. Capacity building 25,000 25,000
Administration Office equipment
Total 300,000
85
86
Name of the Agency: Ministry of Fisheries and Ports
Budget Budget Budget
No. Development Head Priority Programmes/Activities Total
Head USD Support Gap
Provide in-service training to the

Personnel/ Capacity building for staff and partners
1. 60,000
Administration human resources Develop training guide for the
managing staff
2. Ports Bossaso Port Dredging and excavation 600,000

100,000
Comprehensive Capacity development through
technical capacity staff/personnel training and skill
development for development
the Directorate of Puntland marine resource database
Fishery to strengthen assessment,
monitoring, and reporting 70,000
mechanism
Fishery and Marine Feasibility study on industrial salt
3.
Resources production in Hafun and marketing 50,000
Office facilities & equipment

Navigational aids and lighthouses
Office facilities/ (Las-koreh, Alula, Qandala, Hafun, 40,000
equipment and Eyl, Gra’ad)
navigational aids
70,000 330,000
Name of the Agency: Ministry of Fisheries and Ports
Budget Budget Budget

No. Development Head Priority Programmes/Activities Total
Head USD Support Gap
Feasibility on socio-economic
impact of Puntland fishery and
community awareness
Socio-economic 44,000
study Rehabilitating existing cooling and
freezing facilities
Fishery and Marine

4. Rehabilitating cold 100,000
Resources Information gathering; consulting
storage facilities
stakeholders
Marine regulatory and legal
Puntland fishery framework and environmental
vision 55,000 199,000
impacts
Consolidating the resources in a
open workshop and creating the
vision
Rehabilitating and expanding

Establishing marine
5. capacity of Eyl marine vocational 200,000
academic institutes
training schools
Total 1,389,000
87
Name of the Agency: Ministry of Health
88
Budget Budget
No. Development Head Priority Programmes/Activities Total Budget Support
Head USD Gap
1. Planning Planning and Health planning and 100,000

Coordination coordination mechanism for
health activities and aid
2. Human Resource Capacity Build a database of health 400,000

Building services, disease, medical
and drugs, etc.
In-service training for health 800,000

workers Including Study

tours and scholarships
Capacity building
of Puntland Health 100,000
Commission 1,300,000
Health institutions policy
development 100,000
100,000
3. Medicines Drug quality Organize essential drug
Control list(s) and standard
treatment guidelines, and
introduce into practice
Drug quality control centre, 3,500,000
National Referral Laboratory,
and improvement of 7
regional laboratories 3,600,000
Total 5,000,000

Puntland Annual Plan - 2007

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Puntland Annual Plan - 2007

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Ministry of Planning and International Cooperation

Puntland State of Somalia

For additional copies, please contact:

PUNTLAND STATE OF SOMALIA

FYDP First Year Annual Plan, 2007

PART II: SETUP AND APPROACH 27

PART III: SECTORAL PRIORITIES FOR THE ANNUAL PLAN 38

ARM Additional Resources Mobilisation

Governance is the exercise of economic, political, and administrative authority to manage a

Abdi Salad Ali

2. FYDP and State Development Policies

• To ensure good governance by enhancing the capacity and efficiency of government

The Rationale for the FYDP

Rationale for the FYDP

The broad strategy outlined in the FYDP is as follows:

• Create an enabling environment for growth and development.

Comparative Advantage: Unlocking the Potential

Monitorable Targets: FYDP and Annual Plan

Alignment with the Reconstruction and Development Programme

• Deepen peace and security and establish good governance;

4. Political Context and Governance

Peace and Conflict Resolution

Puntland’s structure of government harmonises with the decentralised system of administration

5. The Macroeconomic Setting and Development Challenges

An assessment of macroeconomic performance is rendered difficult on account of the absence

Table 1: Selected Macroeconomic Indicators for Puntland

Macroeconomic Indicators: Puntland, 2005 Status

Geographical area 212,510 km2

Sectoral Contribution to GDP

Fiscal deficit (average surplus 1999–2004) 10.2%

Table 2: Budgetary Trends

Budget Allocation by Sector: Puntland State 2003–2004 (US$)

1 Presidency 830,148 830,148 986,358 986,358

2 General Expenditure Of State 4,160,214 4,160,214 5,040,256 5,040,256

3 Parliament 209,900 209,900 438,036 438,036

4 Auditor 51,176 51,176 98,185 98,185

5 Military (Darawish Defence) 4,294,496 4,294,496 4,915,896 4,915,896

6 State Lawyer 16,208 16,208 21,008 21,008

7 Ministry of Finance 1,144,335 1,144,335 582,226 582,226

8 Ministry of Education 132,930 132,930 177,106 177,106

Budget Allocation by Sector: Puntland State 2003–2004 (US$)

21 Custodial Body (Prison Guards) 322,160 322,160 341,976 341,976

22 Police Forces 1,953,540 1,953,540 2,522,460 2,522,460

Grand Total 14,291,919 14,291,919 17,549,681 17,549,681

Budget Allocation by Sector: Puntland State 2005–2006 (US$)

2005 2006 (8 months)

1 Presidency 987,790 987,790 1,282,602 1,282,602

4 Auditor 101,048 101,048 145,804 145,804

5 Military (Darawish Defence) 6,373,296 6,373,296 5,148,526 5,148,526

6 State Lawyer 21,008 21,008 16,219 16,219

7 Ministry of Finance 738,919 738,919 687,248 687,248

8 Ministry of Education 193,106 193,106 299,510 299,510

Budget Allocation by Sector: Puntland State 2005–2006 (US$)

2005 2006 (8 months)

Grand Total 19,314,760 19,314,760 16,799,999 16,799,999

Source: Ministry of Finance, Puntland, 2006

Sectoral Expenditure Pattern

External Sector: Exports and Imports

Table 3: Export Trends

Major Exports 2000 2005

Goats/sheep (in heads) 571,455 1,594,859

Cattle (in heads) 27,604 91,910

Camels (in heads) 8,177 26,109