The Indian Ocean Newsletter
February 01, 2013
President Hassan Sheikh Mohamud, appointed one of his old acquaintances, the economist Abdisalam Omer, to the post of governor of the Central Bank of Somalia (CBS) on 17 January. The two men have been rubbing shoulders since 2006/2007, when Hassan Sheikh was the dean of the private university SIMAD and Omer was at the head of the UNDP governance programme for Somalia. Omer then helped Hassan Sheikh develop SIMAD`s training programmes with the support of the United States International University (USIU) in Nairobi. A US citizen and former chief of staff of the mayor of Washington, Omer played a decisive role in the attribution in June 2009 of a contract toPricewaterhouseCoopers Associates Africa to manage the contributions from international donors to the Transitional Federal Government (TFG) in Mogadishu. The international consultancy then outsourced the control of the field budget to Hassan Sheikh`s SIMAD [Somali Institute in Mogadishu].*
In 2009, Omer was the advisor to the then finance minister, Sharif Hassan Sheikh Aden, whom he had met for the first time in 2001 when he was working at the UNDP with Somalian funds transfer companies.
*Note: Hassan Sheikh was the dean at the SIMAD Institute in Mogadishu and member of civil society groups. He is said to have the support of members of Al-Islah, an Islamic group in Somalia.
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US accounting firm said to start managing Somali government finances
BBC Monitoring Africa
July 31, 2009
Central Bank of Somalia in Mogadishu
Text of report by French state-funded public broadcaster Radio France Internationale on 31 July
[Presenter] Somalia has called on an outside contributor to manage its finances. The transitional government in power for six months, is seeking to reassure international donors. After 18 years of civil war, the administration is not functioning, therefore they have to resort to great means. It is thus a private firm that will be in charge of managing the country`s public finances, and not just any [firm], but PriceWaterhouseCoopers, the number one in the world whose headquarters are in the US.
RFI`s Jean-Pierre Boris spoke to Abdisalam Umar one of the advisor`s of the ministry of Finance[from Somalia].
[Umar in English, fading into French interpretation] PricewaterhouseCooperswill become the financial manager for the transition government, it is a solution which has already been used by several governments and entities for example in Sudan, Rwanda where there are agencies which operate in the same manner, and also in Kenya and Liberia. It is the beginning of the reconstruction of Somali institutions.
Fundamentally the agreement is that the money coming from France or US will be deposited in a bank account managed by PricewaterhouseCoopers. It is the Somali government that will decide how this money will be used and it is from this bank account that money will be taken out.
Somali civil servant who are paid on the base of port or airport revenue, will be paid by the government.
As for sums deposited by international donors, they will be paid out byPricewaterhouseCoopers.
[Presenter] Contacted in Kenya, PricewaterhouseCoopers officials preferred to remain silent for confidentiality and security reasons.
Source: Radio France Internationale, Paris, in French 0730 gmt 31 Jul 09
Somali finance minister hopes to rebuild institutions
June 30, 2009
* PricewaterhouseCoopers to manage government funds * Country hopes to rebuild financial institutions By Abdiaziz Hassan
NAIROBI, June 30 (Reuters) – Somalia`s finance minister hopes a deal with accountants PricewaterhouseCoopers to manage money given to the government will help the Horn of Africa nation rebuild its financial institutions.
“This is an international company. The donors and Somali government will monitor it, and I do not think there will be misuse of public funds,” Finance Minister Sharif Hassan Sheikh Aden told Reuters in an interview late on Monday.
“In the long term, the Somali government will take control of its financial institutions.”
After nearly 20 years of conflict, the Somali economy is almost entirely informal and the administration lacks most of the structures needed to deal with donor inflows, let alone collect taxes.
The government controls just a few blocks of the capital Mogadishu and is battling a hardline Islamist insurgency which has links to al Qaeda and is bent on toppling President Sheikh Sharif Ahmed`s administration.
International donors pledged some $213 million at a conference in Belgium in April, but the government complains that only a small proportion has yet been delivered.
So much donor money has gone missing over the years in Somalia, there is a deep mistrust on the part of some countries pledging support about whether it will be spent properly.
Much of the money is meant to pay the government`s security forces, but diplomats say making sure wages go to the right people is proving difficult.
TRACKING THE MONEY
Under the deal struck this week, PricewaterhouseCoopers will hold and manage the pledged and allocated funds for development and capacity building — and track how the money is spent.
Aden said parliament had approved a $3.6 million monthly budget to fund the administration and was paying staff, the security forces and other agencies via the central bank.
“The central bank governor is working and the ministry will equip the bank with proper infrastructure and personnel so that we can play our part of restoring the government agencies,” Aden told Reuters during a visit to Nairobi.
Remittances from abroad, estimated at some $1 billion a year, are an important source of support for Somalis, and the country also has an influential telecoms sector. Aden hopes these, and other sectors, can be brought on board.
“Our budget is based on international aid, but we plan to collect levies and run the country relying on local money. The only source now of government income is mainly the port,” said Aden, 62, who is a former parliament speaker.
“The council of the ministers will discuss the role of the remittances and telecom sectors in a broader plan for restructuring private sector, and set laws for how best these organisations can be line with the national laws.”
Aden acknowledged that for now the government`s chief priority was security. The insurgents stepped up attacks in the capital in early May and a series of government offensives has failed to drive them from Mogadishu.
“Though there was long civil war, the Somali economy is in good position but needs to be organised in a modern market, and we hope to do that,” said Aden, who built an import/export business trading in livestock, food and building materials.
“It is worthless to wage war to run business. You can run large, multi-million businesses in your country by abiding local laws. This is a rich country, and resources we have are sufficient. There is no reason to fight,” he said.
“You can get more than you have in peace.”
(Editing by David Clarke and Chris Pizzey)
Offering checking accounts and credits cards, a bank opens in Somalia
By OSMAN HASSAN
January 22, 2002
MOGADISHU, Somalia (AP) – There are a thousand businesses in Mogadishu,Somalia`s war-torn capital, selling everything from medicine to electronics goods. But most don`t take credit cards.
Executives at the brand new Universal Bank of Somalia are hoping to change that.
The bank – Somalia`s first in years – opened this week, with executives saying the new institution will offer transactions involving checks, foreign and local currency accounts and major international credit cards – standard services at most banks around the world.
But Somalia hasn`t had a government since the 1991 ouster of dictator Mohamed Siad Barre. Today, the country is a checkerboard of fiefdoms ruled by clan-based factions. Institutions that depend on stability, such as banks, collapsed long ago.
Somalia`s financial institutions have been replaced by a patchwork of money changers and transfer houses. Money changers at Mogadishu`s Bakara Market, Somalia`s largest, set exchange rates between the Somali shilling and the dollar. A handful of informal money-transfer companies are used by Somalis abroad to send desperately needed money home.
Universal Bank is expected to fill the gap left by the demise of Al-Barakaat, the largest Somali money transfer service. It was forced to shut down in November after the United States clamped down on al-Barakaat`s network of correspondents outside Somalia, alleging the company was funneling funds to international terrorist suspect Osama bin Laden.
Before al-Barakaat was closed, more than dlrs 100 million was sent annually toSomalia through that network, and the transfers amounted to about a quarter of all the money sent home by Somalis living abroad, according to company officials.
Universal Bank has connections with dozens of banks in other parts of the world and ties to major financial markets in Europe and the United States, said Mahad Adan Barkhadleh, an executive at the bank.
The bank says it has opened offices in the United States and some countries in Europe and the Middle East along with branches in other parts of the fractious country.
Seeking to maintain good relations with its competitors, Universal Bank has said it will cooperate with existing Somali money transfer companies.
The new bank – headquartered in a six-story building, one of Mogadishu`s tallest – has dlrs 10 million in initial capital and about 100 shareholders in Europe and the United States, said Ibrahim Rashid Mohamed, one of the investors.
Despite the optimism of Universal Bank executives, Mohamud Mohamed Ulusow (Uluso), the governor of the central bank – even though Somalia has no functioning central bank – says Universal has not been licensed and is urging Somalis not deposit money at the institution.
Ulusow has also called on Somalia`s transitional government to investigate the new bank and the investors behind it.
Bank executive Barkhadleh brushed aside the criticism, saying none ofSomalia`s financial companies are licensed.
“And, I am afraid, he is not even the one to (license) the banks if such (licensing) were to start now,” Barkhadleh said. “It should be at least the Minister of Finance to do such a job.”
The transitional government was elected at a peace conference in August 2000. It is Somalia`s first central authority since clan-based faction leaders ousted Siad Barre 11 years ago, but its influence is limited mainly to Mogadishu.
Central bank chief declares private bank illegal
BBC Monitoring Africa – Political
January 16, 2002
The governor of the Central Bank of the interim government of Somalia, Dr Mahmud Muhammad Ulusow (Uluso), disclosed in a press conference today [presumably on 15 January] that the newly-opened [private Somali] bank, Universal Bank, was not a legal bank and called on members of the public not to deposit with the bank. The bank did not follow the correct procedures required for any private financial institution before it starts its operations legally, the governor said.
The governor further said it was regrettable that some senior individuals of the interim government were party to the setting up of the said bank.
Source: Mogadishu Times, Mogadishu, in Somali 16 Jan 02.
Interim Government Buys Up Money to Fight Inflation
May 09, 2001May 09, 2001 (UN Integrated Regional Information Network/All Africa Global Media)-The Somali shilling has been gaining ground against the US dollar in the Mogadishu currency markets over the last four days, following a move on Sunday by the Transitional National Government (TNG) to fight inflation. In an effort to fight the importation of fake currency and resulting inflation, the TNG has pumped US dollars into the money markets. Mahmud MuhammadUlusow (Uluso), the governor of the Somali Central Bank told IRIN that the government had employed 16 agents to buy up old shilling notes from the markets. He said the action had enhanced the value of the Somali shilling against the dollar from 19,000 on Sunday to 16,000 on Wednesday. Money traders had become reluctant to accept fake currency since the move, in which an estimated US $100,000 worth of Somali shillings had been bought up,Ulusow said.
The government would continue the exercise until the exchange rate fell to 10,000 shillings to the dollar, he added. New currency would be introduced by the TNG, but no date had been set for the launch of the new currency.
Corruption Scandal Hits Transitional Governmnet
July 01, 2001
Jun 29, 2001 (UN Integrated Regional Information Network/All Africa Global Media)-Two MPs have accused the Transitional National Government (TNG) of embezzling donor funds, news agencies and local media said on Thursday. Finance Minister Sayyid Ahmad Shaykh Dahir confessed to being part of the scandal when the misappropriation of US $3.5 million was discussed in parliament on Wednesday. He admitted to putting US $200,000 to personal use, AFP said.
Quoting MP Hasan Ahmad Sadiq, AFP said the finance minister had told parliament on Wednesday that Prime Minister Ali Khalif Galaydh had obtained US $1 million from the national kitty. The finance minister reportedly also told parliament that the head of the recently established central bank, Ahmad MuhammadUlusow (Uluso), also obtained US $750,000. Some US $770,000 allocated for the payment of MPs` allowances was also handed over to Ulusow, while parliamentarians failed to receive their dues, AFP said. Dahir was unable to explain how a further US $780,000 had been spent. Earlier this month, the TNG told parliament it had received US $11 million from Saudi Arabia and another US $3 million dollars from Qatar this year.
Ulusow subsequently denied that he had been involved in misappropriation of funds. He told IRIN on Friday that the accusations concerned use of a fund for the auction of dollars “to fight inflation”. The auctions were managed by a committee consisting of the central bank, the finance ministry, the commerce ministry and members of the business community. All proceeds from the auctions were “in the government accounts and controlled by the finance ministry”, Ulusow insisted. Local sources told IRIN there had been some friction between the finance ministry and the central bank over who should control government funds.
Reacting to the reports of corruption, one member of the business community – which has been of critical support to the TNG from the beginning – told IRIN that there was concern about President Abdiqasim Salad Hassan`s “almost total lack of involvement in the management of donor funds”. “He is the one who went out to beg for this money, so he should show more interest in how it is spent.”
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