Opinions

Somaliland Business Fund: Unequal Opportunity, Unequal Outcome

October 7, 2012   ·   3580112 Commentshttp%3A%2F%2Fsomalilandpress.com%2Fsomaliland-business-fund-unequal-opportunity-unequal-outcome-35801Somaliland+Business+Fund%3A+Unequal+Opportunity%2C+Unequal+Outcome+2012-10-07+23%3A35%3A06SomalilandPresshttp%3A%2F%2Fsomalilandpress.com%2F%3Fp%3D35801

Somaliland Business Fund launched in Hargeisa, the capital of Somaliland administration as component of the Private Sector Re-Engagement Program Phase II ), is one of the most commendable efforts to commit time and resources to enhancing the private sector in Somaliland. The collapse of state in Somalia in 1991 adversely affected south-central Somalia which, for three decades after independence, benefited from centralised administration remembered for, among other things, leaving a large parts of Somalia under-developed.

In Somaliland, where people have chosen locally conceived reconciliation over warlordism to solve political problems, development initiatives and the private sector are making impact on the lives of the people. The United Kingdom’s DFID Operational Plan 2011-2015 for Somalia underlines how positive political developments in Somaliland is taken into account when formulating development assistance strategies: ” with five successful elections behind it, a functioning and quite stable central authority, and relative stability and absence of daily conflict in most localities, [Somaliland] represents both an opportunity for delivering development results, and a challenge to reinforce its relative stability for the benefit of its people and of the region and the UK.” DFID, the World Bank and Danish Development Agency are financing Somaliland Business Fund. Landell Mills – a UK-based development consultancy manages the fund.

Competition for funds will be intense as both small and medium-sized enterprises will apply for grants. There will be external reviewers made up of expert pool of sector, environmental and social specialists, as well as by a Grants Advisory Panel tasked with screening applications.”Based on these inputs the Fund Manager will make final grant recommendations to the World Bank.”

This process shows that there will not be a role for Somaliland administration to influence the grant-making process. However, it is the eligibility criteria that skew the process to applicants in Hargeisa and other major towns close to it.

Of the six criteria laid out, two— (1) “the applicant must be registered with the appropriate registration authorities and have the appropriate sector licence for the activities described in the concept note; and (2) the applicant must be solvent and not in administration or receivership or similar state, whether voluntarily or compulsorily and have the appropriate sector licence for the activities”— put some potential applicants at disadvantage.

Regulatory issues

Some businesses will not be able to meet the regulatory requirements. Only established companies with stand-alone business unit will stand a better chance to be shortlisted or win a grant. One of the “broad development impact” any project should potentially have is to help “producers by increasing the marketability of horticultural products.” Women constitute a large number of horticultural product sellers in Somaliland. What effort has been made to help female grocery owners to write the concept papers, to help with articulating their business propositions to be able to show in writing familiarity with market segments and the competition and to suggest innovative ways to improve their business or introduce a new line of horticultural products?

Owning a license is one of the regulatory criteria that will affect different businesses in different ways. Las Anod district of Sool region, is a relevant example about issues arising from trade licenses. Las Anod has been under Somaliland administration since October 2007. A horticultural seller in Las Anod with a licence, assuming that Somaliland administration has instructed businesses to register with the local authorities, has a little chance of being shortlisted for a grant compared with a horticultural seller in Bura’o, Hargeisa, Gabiley or Boorame because those four districts have been under Somaliland administration for more than 10 years before Las Anod was captured by Somaliland forces. The length of time a horticultural seller owns a licence translates into business experience, one of the eligibility criteria.

In the Fund Overview paper, we are told “the private sector applicants are encouraged to apply for grant funding towards innovative projects that make commercial sense and will address obstacles to inclusive economic growth” and that ” applications are assessed on the basis of the experience and commitment of the applicant, the viability and relevance of the business idea and likelihood and scale of developmental outcome.” By including the word experience the application process likens experience to innovation. Not all innovative businesses are created by experienced people. A person with no ‘market presence’ may identify a niche in a market and develop a business plan or create a business to address that need.

Mistranslation leads to misinformation

Somaliland Business Fund donors commissioned the translation of Somaliland Business Fund literature into Somalia. The Round One term sheet and guidance notes and the fund overview contain mistranslations that discriminate against potential applicants. Wrong information about who can apply for a grant has been included in Somali version of Round One paper. “Waxaanu bixinaynaa deeqo u dhexeeya $5000 ilaa $150,000 mashaariicda maalgalinaysa hanti maguurto ah ama wanaajinayas habka ganacsiga ama labadaba” We give grants ranging from $5,000 to $150,000 to finance a fixed asset or to improve the business method or both” Any potential applicant with no fixed asset will hesitate to apply for a grant. The sub-heading “Incentivising enterprise growth and development” has been translated into Somali as “Maalgalin Naasnuujin ah oo loogu talo galay in lagu hagaajiyo korna loogu qaado wax soo saarka. ” ( Favouritism-based investment for improving and raising productivity” . In Somali naasnuujin ( breastfeeding ) is a metaphor for financial favouritism or crony capitalism.

Ensuring that unequal opportunities do not lead to unequal outcomes depends on, among other things, a review of the Fund’s communications strategies and eligibility criteria by Somaliland Business Fund donors.

Liban Ahmad

libahm@gmail.com

 

 

Follow @somalilandpress

By SomalilandPress

Tags: foreign aid, SBF, Somaliland