Achieving a sustainable increase in revenue to support citizen’s needs in Somaliland

The Government of Somaliland is currently implementing a large scale public financial management reform programme to improve financial services promote greater financial inclusion, and increase domestic revenues. The aim is to improve the Government’s capacity to utilise public funds and meet the National Development Plan II goals.

Challenges

The Prosperity from Revenue programme (PROFR) supports Somaliland’s revenue services in the Ministry of Finance Development (MOF). It builds on the lessons and achievements of previous DFID support since 2015. The project aims to achieve a sustainable increase in revenues to help the Government of Somaliland to better meet citizens’ needs.

As an embedded technical assistance programme, PROFR lays the foundations of a more progressive revenue system by pursuing reforms in close collaboration with the MOF in three areas:

1. Enabling Somaliland’s revenue services to work with businesses on defining and introducing reforms to the revenue system.

2. Ensuring that policies relevant to revenue collection are formulated, and priorities implemented, in line with good practice.

3. Supporting Somaliland’s revenue services in becoming more efficient and transparent.

We are leading and managing a consortium to implement PROFR. We’re working together with the Academy for Peace and Development (APD), and ECORYS, with inputs from the Busara Centre for Behavioural Economics and Cornerstone International. PROFR is funded by the UK Department for International Development (DFID).

Our approach

To achieve the three core outputs, we have undertaken the following activities:

Revenue services enabled to work with businesses on revenue reform:

• Public-private engagements between the government and the business community: 16 formal engagements were held over the course of 2018
• Training of internal revenue department officials
• Taxpayers guidelines produced by the Ministry of Finance

Revenue policies formulated and priorities implemented in line with good practice:

• A review and streamlining of revenue exemptions and incentive policies
• Forecasting model utilised with revenue envelope incorporated

More efficient and transparent revenue administration:

• Taxpayer service functions introduced and strengthened. Standardised border station processes designed and introduced
• Introduction of self-assessment declarations and procedures for specific taxes
• Increase in the number of Taxpayer Identification Numbers issued
• Monitoring and penalisation of non-compliant taxpayers

Outcomes

Across a broad range of activities, PROFR has successfully supported the Government of Somaliland to deliver significant increases in revenue collections in a short space of time. PROFR has been a highly ambitious project from the start, due to a larger delivery scope than revenue reform programmes of a similar budget, and a highly complex and fast-changing economic environment. Discussions between OPM and DFID Somalia have outlined plans for an extension to the project to support the additional delivery of long-term activities.