MINUTES OF THE SFF OVERSIGHT BOARD MEETING HELD ON NOVEMBER 27, 2013 AT AMISOM CONFERENCE CENTER MOGADISHU-SOMALIA

Transcription

1 MINUTES OF THE SFF OVERSIGHT BOARD MEETING HELD ON NOVEMBER 27, 2013 AT AMISOM CONFERENCE CENTER MOGADISHU-SOMALIA ATTENDANCE 1. Mr. Mohamoud Hassan Suleiman Minister of Finance and Planning (Chairperson) 2. Mr. Aden Mohamed Deer Chairman, Parliamentary Committee on Finance 3. Mr. Hussein Yusuf Representative, Office of the President 4. Mr. Farahan Mohamoud PFPM Reform Coordinator, MoFP 5. Ms. Hodan Osman Change Manager, Central Bank of Somalia 6. Ms. Rina Kristmoen Senior Advisor/SFF Team Leader, Ministry of Foreign Affairs, Norway 7. Ms. Astrid Lervåg Counsellor. Royal Norwegian Embassy, Nairobi 8. Mr. Ivar Strand Monitoring Agent, PWC 9. Ms. Marit Strand NORAD, Norway 10. Mohamednoor Mohamed Sheikh IIDA Woman Development 11. Mr. Phillipe Lazzarini HR/RC United Nations Development Group 12. Hanna Schmitt United Nations Development Group 13. Bella Bird Country Director, World Bank 14. Hugh Riddell Sr Operations Officer, World Bank 15. Chris Carter DFID 16. Auricchio Valentina Head of Section EU, Kenya& Somalia Operations 17. Ms.Van Den Eede Fabienne Head of Finance Department, EU 18. Mr. Abdirizak Hassan Head, Financial Management Unit (FMU) 19. Mr. Ali Haji Aden Head, Temporary Implementation Unit (TIU) 20. Su'ad Egal Operations Manager, TIU 21. Mr. Abdilahi Saad SFF, FMU 22. Ahmed Hagi Abdulle Observer, MoFP 23. Hassan Abshirow Observer, Civil Service Commission 24. Abdi Hussein Observer, Civil Service Commission 25. Osman Haji Ali Observer, Member of Parliament 26. Sharif Mohamed Hassan Observer, Member of Parliament 27. Ms. Mariam Mohamed Head, SFF Secretariat (Taking Minutes) 28. Mr. Abubakar Hussein SFF Secretariat 1 P a g e

2 AGENDA 1. Brief introduction and history on the SFF. 2. Status briefing on SFF by Ministry of Finance & planning including progress on salary payments made so far role of CBS as transfer and payments agent emerging quality/implementation issues vis-a-vis civil service register Plans for Inception of Project Phase: Policy and Plans. 4. Strengths and Weaknesses of SFF. Discussion on the major risk factors and how to manage such risks. 5. Role of Oversight Board in publicizing SFF with various stakeholders in terms of transparency. (MOFP) 6. Harmonisation of SFF Salary Pay Scales 7. Any Other Business. WELCOMING AND OPENING REMARKS 1. The Chair, Mr. Mohamoud Suleiman, Minister for Finance and Planning called the meeting to order at a.m. The Minister took the opportunity to welcome all participants to the first Oversight Board Meeting of the Special Financing Facility (SFF). He thanked all present for making the time to attend the meeting. In addition, the Minister recognized and appreciated the continued support of the Government of Norway and all other donors who were committed to providing assistance to the Somali Federal Government. 2. The Minister informed the meeting about the High Level Committee (HLC) held the previous day and was able to update the participants on discussions of that meeting including the approval of the budget. Once the opening remarks were done, the floor was opened to allow participants to introduce themselves. AGENDA ITEM 1: BRIEF INTRODUCTION AND HISTORY OF THE SFF 3. Ms. Rina Kristmoen provided the meeting with a brief introduction and history of the SFF. The meeting was informed about the basis of the SFF, its objectives, structures in place and how the tool is currently working. Ms Kristmoen was also able to update the meeting that the various units/arms of the SFF including the Financial Management Unit (FMU), Temporary Implementation Unit (TIU) and Secretariat were already operational with key staff having being recruited. 2 P a g e

3 4. The introduction presented also covered a brief description on the SFF funds transfer process. AGENDA ITEM 2: STATUS BRIEFING ON SFF BY MINISTRY OF FINANCE & PLANNING PROGRESS ON SALARY PAYMENTS MADE SO FAR 5. The FMU was able to report to the meeting that it had so far made 2 payments for civil servants salaries for the months of August and September It was reported that for the month of September 2013, payments were made to 11 government institutions covering a total of 1,639 civil servants. The payments were made through the Central Bank of Somalia. 6. It was also reported that for the October payroll, the FMU was seeking to add another three government institutions to its payroll. A further 6 eligible institutions are currently undergoing verification processes and it is anticipated that by January 2014, a total of about 3200 civil servants would be paid through the SFF. 7. FMU was also able to report that it currently uses the data registry provided by the Civil Service Commission. 8. Questions raised by Ms Auricchio Valentina, EU sought further explanations on the payment procedures on the civil servants salary payments and the required access conditions. Both the FMU and Monitoring Agent were able to respond that there was available a detailed map of how the payments are to be made in the Operations Manual and in the Advisory report prepared by the Monitoring Agent (MA). It was noted that the current payment process is working well and areas for improvement had been captured in the Advisory Report by the MA. 9. Further points discussed and clarified at the meeting centred on the eligibility criteria for civil servants payments, verification procedures and the reliability of the civil service register. ROLE OF THE CENTRAL BANK OF SOMALIA AS A TRANSFER AND PAYMENTS AGENT 10. Ms Hodan Osman representing the Central Bank of Somalia (CBS) was able to highlight the role of the CBS in the SFF process. It was reported that the Bank had to undertake significant preparations to enable it act as both a transfer and 3 P a g e

4 payments agent. Some of the process undertaken by the Bank to prepare it for its role as a payments agent included the hiring of several new cashiers, provision for extra security and a number of other back office operations. To enable it become an effective transfer agent, the Bank reported that it had to set up international correspondent bank accounts, enable swift transactions and adopt international standards and practices to allow it interact with international financial institutions. Some of these later processes have proved to be a challenge for the Bank and Technical assistance on the same was sought. 11. The Central Bank was also able to report that it was in the process of setting up its supervision unit to allow for the licensing of formal financial institutions such as banks and hawalas. It was noted that once these institutions are licensed, the Bank would be transferring the role of payment agent to these licensed institutions. This will then free up the Bank to concentrate on its core function of settlements. EMERGING QUALITY /IMPLEMENTATION ISSUES VIS A VIS CIVIL SERVICE REGISTER FOR Given that the number of civil servants to be paid through the SFF was set to increase to over 3200 in January 2014, it was recognised that there was a need to continue improving the systems and processes currently in place. 13. Representatives from the Civil Service Commission were able to provide a brief update on the process of the creation of the civil servants registry database. It was noted that further assistance and coordination was required to improve the civil servants register. 14. The Monitoring Agent (MA) was able to inform the meeting that some classic HR and payroll issues and bottlenecks had been identified in the payments systems. It was reported that recommendations for improvements had been captured in the 1st Advisory Report prepared by the MA. 15. The advisory reports would be made available to all HLC participants. 16. The Central Bank in addition reported that it was enhancing its capacity to enable it handle payments for more civil servants. 17. Some of the questions raised by World Bank representative and discussed included whether the Central Bank was using the SFF process to trigger reforms within the financial sector and whether the SFF process was being used to mainstream reforms within the public financial management sector. 4 P a g e

5 18. The Minister was able to point out that the CBS had already established relationships with some financial institutions such as Dahabshil and this will be enhanced once such entities are licensed. The CBS also responded that it was working towards improving its standards to meet international thresholds. 19. It was also clarified that the resignation of the last CBS governor did not affect the last SFF payment given that the funds transfer had already been initiated at the time of resignation. CBS was able to provide reassurances that it was putting in places systems and controls to secure SFF funds. 20. The inclusion of payments for the security sector within the SFF was discussed. This suggestion was raised by Mr Lazzarini of UN. It was noted that at present it was the policy that SFF funds may not to be used for the payment of security forces, parliamentarians, and government ministers. AGENDA ITEM 3: INCEPTION OF THE PROJECT PHASE: POLICIES AND PLANS 21. The Temporary Implementation Unit (TIU) was able to provide the meeting with a brief overview of its implementation plan and policies surrounding project development. 22. The Unit reported that it had been working closely with PWC to establish an identification and prioritization procedure for implementing its projects. It was also reported that the Unit had prepared draft guidelines on procurement procedures in line with international standards. The meeting was also updated that the Unit was in the process of finalizing recruitment for 4 staff members and it was anticipated that the new staff would begin work in early December. 23. The meeting was also informed that the TIU had already engaged and consulted a number of stakeholders including government ministries, NGO's and regional leaders in identifying projects. TIU's plan is to implement its project in phases and the development of these projects will be led by the needs of the local community. 24. The meeting was informed that so far a budget of USD 10 Million had been allocated for project development. Out of which 90% had been set aside for small scale works projects and another 10% for employment creation projects. The policy in undertaking these projects was to make the Government relevant and visible in areas outside of Mogadishu. 5 P a g e

6 25. Questions were raised centred on whether the projects are to be undertaken in consultation with the relevant line ministries and NGO's in place already, and it was confirmed by the Ministry that this was so and that the consultations were underway. It was recommended that the TIU can link up with other donors in order to accelerate development. 26. Further suggestions raised were for the TIU to establish the recurrent expenditure related to projects being undertaken to ensure the sustainability of these projects. It was agreed that going forward, the TIU would be making consultations on recurrent costs with the relevant line ministries and with local regional leaders. AGENDA ITEM 4: STRENGHTS AND WEAKNESSES OF SFF: DISCUSSIONS ON THE MAJOR RISK FACTORS AND HOW TO MANAGE SUCH RISKS 27. The Monitoring Agent (MA), Mr Ivar Strand highlighted to the meeting some of the identified strengths and weakness of the SFF. It was reported that the MA had prepared its 1st Advisory Report setting out these issues. It was noted that the Report was now available for anyone interested in viewing its content and recommendations. 28. Also reported was the fact that the MA function had been changed and the approach was now to retain more than one MA. This will reduce the restrictions previously experienced and should add to the credibility of the MA function. 29. It was also reported that version 9 of the Operations Manual was now available and the manual was still work in progress. Input into the Manual had been obtained from EU, DFID and World Bank. It was further noted that sections 5 and 6 on procurement and financial management were yet to be inserted pending its completion. It was also agreed that the manual would be made available on the SFF website. 30. Both the FMU and TIU were able to highlight identified specific risks and the mitigants to be put in place to address those issues. 31. On the risks associated with procurement, it was reported that the national government was in the process of finalizing its procurement laws. Once this law is passed, the TIU will be aligning its standards to the existing national law but with additional safeguards. At present, the TIU has aligned its standards on international best practices set by the World Bank. In addition, it was reported that the MoFP through the assistance of the World Bank and DFID was 6 P a g e

7 obtaining a Procurement Specialist who will be available at the Ministry to advise on all government procurement issues. 32. Other areas of concern highlighted was the limited SFF funds available for development projects. It was noted the budget of USD 10 Million was small in comparison to the needs of the various regions in the country. 33. The issue of how the SFF will work with other Donors and the World Bank in 2014 was raised by DFID. Discussions on this topic also centred on how the SFF Fund can be phased into the World Bank Multi Donor Fund in future. Rina Kristmoen was able to respond that there already exists a good working relationship with the World Bank. It was noted that the SFF Manual is in line with World Bank procedures and this fact should make any alignments or shifts easier to proceed. AGENDA ITEM 5: ROLE OF OVERSIGHT BOARD IN PUBLICISING SFF WITH VARIOUS STAKEHOLDERS IN TERMS OF TRANSPARENCY 34. MoFP was able reiterate that the issue of accountability and transparency was a priority agenda for the current government. It was noted that the SFF was part of ongoing capacity building for government institutions and was complementary to the reforms in the public financial management. 35. It was reported that all dealings of the SFF including income and expenditure details will be made public. In addition the minutes of all High Level Committee and Oversight Board meetings will be made available on the SFF website. 36. To enhance transparency, it was reported that SFF functions will be audited by an independent auditor. Additional checks and balances to be put in place includes the creation of Auditor General and Accountant General offices. It was noted that the frequent reporting of the SFF will also add to its transparency. 37. The World Bank was able to emphasise the important role of the Oversight Board (OB) in enhancing transparency. It was noted that the OB can provide useful input and advise on a number of issues pertaining to the SFF and Public Financial Management Reforms. The discussions in the OB should also refer to the more general macro economic policy challenges and efforts to raise domestic revenues, at least until a more high-level consultation forum is in place. 7 P a g e

8 38. It was recognized that the role of the OB was to advise on issues of transparency and implementation. OB can identify issues that may block the effective implementation of the SFF and suggest solutions in order to enhance the value of using the SFF instrument. Additionally, it was proposed that OB members could be assigned specific tasks to assist the SFF. 39. Finally, it was noted that the governance function of the OB should be aligned with that of the SDRF, the Somalia Development and Reconstruction Facility to avoid duplication given the cross cutting set of issues dealt with at both forums. Suggestions were made to the effect that perhaps the OB should coordinate or even merge with the SDRF. HARMONIZATION OF SFF SALARY PAY SCALES 40. Ms Kristmoen was able to put this agenda item into context. It was explained that this item related to the SFF salary pay scales for the different SFF units. It was recognized that there was a need to harmonize salaries with other expert units working in other development sectors. It was reported that the current scales proposed in the Manual had been drafted based on survey undertaken of salaries on offer at various NGO's/development partners currently working in Somalia. The SFF sought advice from other donors/development agencies on how best to tackle this issue. 41. The EU representative was able to report that it had also commissioned a study to harmonize salaries within the government sector. The study sought to establish whether systems, rules and procedures were encouraged in setting salaries. It was reported that the report had highlighted issues donors could adopt in their endeavour to providing capacity to the government of Somalia. Some of the issues the highlighted from report was the discrepancy in salaries between Somali locals and those from the Diaspora. 42. It was noted that the SFF salary scale had factored in the payment for a 15% income tax payment. This move was hoped to encourage other players to factor in the payment of income tax as income generation for the government. 43. The issue of the harmonization of salaries was considered important and it was agreed that there was a need to harmonize all salaries in donor funded project. However some concerns were raised that this consideration should factor in items such as the living costs in Somalia. It was noted that hotel accommodation, the most viable option for accommodation due to security concerns was normally expensive and prohibitive. In addition it was highlighted that obtaining the right pool of persons with the necessary 8 P a g e

9 qualifications who are willing to work in difficult and unsafe conditions required adequate compensation. AGENDA ITEM 7: ANY OTHER BUSINESS 44. Ms. Bella Bird of the World Bank congratulated both the Government of Somalia and Norway for the successful implementation of the SFF and steps taken so far. It was noted that the SFF was a useful learning tool and forum which provided a window for interaction between the Somali government and donors. She reiterated the World Bank's continued support for the SFF. CLOSURE OF THE MEETING 45. The Minister in his closing remarks once again thanked the government of Norway and all other donors for the continued support of the Somali government. He observed the SFF was a pilot project and the lessons learnt from this tool will be applied throughout the government sector. 46. There being no other business the meeting was adjourned at 1.15 p.m. CONFIRMATION OF THE MINUTES: Signed and dated this..day of CHAIRMAN 9 P a g e