By Dan Honig, Assistant Professor of International Development, Johns Hopkins SAIS, and Sarah Louise Cramer, UN-World Bank Aid Coordination Officer for Somalia

“The credibility of the Somali Government hinges largely on its ability to deliver for the Somali People.” International partners clearly recognise the importance of using country systems to achieve broader statebuilding goals, as this line, taken from the May 2017 Communiqué of the London Conference on Somalia, indicates. Yet, international partners continue to deliver aid primarily through parallel systems, as the Government struggles to raise sufficient domestic revenue to deliver tangible results for its people.

Of an estimated USD 1.75 billion in official development assistance (ODA) for Somalia in 2017, only USD 103.9 million was delivered on budget (approximately 6% of total ODA). Excluding humanitarian aid from this calculation, the proportion of on budget aid rises to 14%, which still lags significantly behind the use of country systems in other fragile states. For example, donors delivered between 28-44% of development-focused aid on budget in the Central African Republic, Mali and Liberia in 2015.[1]

Why the inconsistency? International partners appear to be stuck in a “chicken or egg” conundrum in Somalia. On the one hand, they recognise that using country systems is critical for building national capacity and achieving broader statebuilding objectives. Yet, on the other hand, the weakness of these systems is often the excuse donors cite for avoiding the use of country systems. Given the explicit focus on statebuilding in Somalia, prioritising short-term operational concerns over the long-term benefits of government systems building appears to run counter to the international community’s stated objectives.

Our recent World Bank and United Nations joint report examines donors’ decision making about the use of country systems, exploring both the perceived and actual risks and benefits associated with such use.[2] We find that a number of factors related to internal donor decision-making practices preclude using country systems in Somalia. These include:

A narrow focus on fiduciary risks. Fiduciary risk is an important, but far from the only, consideration in determining which tools are best for achieving desired outcomes. Moreover, the risks and benefits of using country systems should be considered not in isolation but, rather, alongside those of alternative delivery channels, like the use of nonprofit, private sector or multilateral implementers. Fiduciary risk and spending efficiency are real concerns in Somalia, whatever the implementation modality. It is less obvious that these concerns, taken as a whole, augur clearly for or against the use of country systems. In short, donors’ internal “plumbing” may be undermining their own higher level policy ends and commitments.[3]

An asymmetric focus on short-term risks. Short-term risks with the potential to grab domestic headlines, like the misappropriation of funds, often weigh heavily on international partners’ decision-making when it comes to using country systems. If Somalia were to slip backwards into conflict, it would not be seen in donor capitals as an aid success story. Its collapse would also not be directly attributable to a particular donor project or even a particular donor. The mechanisms for realising reputational risk and attributing success may lead to an asymmetric focus on short-term risks, making the tactics of international partners unduly conservative.

Insufficient focus on the benefits. Using country systems can focus both donor and government attention on the quality of those systems, both financial and non-financial (e.g. payroll, human resources). Where used in Somalia, international attention and resources shift from the operational challenges of a parallel system towards those of government, creating “positive spillovers” for country systems. This approach not only uses the muscles of government systems, but also actually strengthens them, like exercise for the human body. Using country systems can also, in many cases, provide better value for money than alternatives. This is a critical consideration in a high-cost, fragile environment like Somalia where an estimated 30-60% of project funds are consumed by additional overheads related to project monitoring and delivery.

To overcome these pitfalls, international partners could pursue a more constructive way forward by replacing technical assessments of Somalia’s country systems in isolation with an explicitly comparative approach for choosing delivery modalities. Putting the short- and long-term costs, benefits and risks side-by-side of NGO implementation and government implementation, for example, and then choosing which is best, may lead to a gradual increase in the use of country systems.[4]

No delivery modality is without risk; both country systems and alternative delivery channels have drawbacks. But these options have differing strengths, depending on the type of project, sector or situation. In finding the right mix of tools, both government and international partners need to focus more on the goal to which they are jointly committed in Somalia: statebuilding.

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Sarah Louis Cramer co-facilitates the Somalia Use of Country Systems Working Group made up of government and international partners, which works closely with the OECD-hosted Secretariat of the International Dialogue on Peacebuilding and Statebuilding, to keep members informed and committed to tracking and advancing progress on using country systems.

Use of country systems refers to a variety of ways in which international partners can engage with national counterparts to deliver aid ranging from alignment with national priorities to direct implementation by government.

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Notes

[1] Humanitarian aid was excluded from these calculations.

[2] Members of the International Dialogue on Peacebuilding and Statebuilding recommitted to the need for greater use of country systems in the Stockholm Declaration in 2016. International Dialogue on Peacebuilding and Statebuilding 2016.

[3] This image draws from Bain, Booth, and Wild 2016.

[4] Use of Country Systems Working Group 2017. Interview #15; Interview #36.