On 5th September 2021, UNCDF organized a robust one-day virtual training workshop on revenue mobilization attended by 15 representatives from Somalia’s federal member states and Banadir Regional Administration (BRA) including the following: director generals of state ministries of interior, mayors of Baidoa, Jowhar and Adado districts, BRA director of planning, and technical advisers.

This virtual training was jointly led by UNCDF and experts from the Puntland Ministry of Interior with an aim of sharing with the FMS the experiences and approaches to local government owned revenue mobilization and enhancement based on the similar initiative undertaken by the Puntland State.

The Local Revenue Mobilization Initiative reflects the relevant Somali-specific experiences and practices from the Puntland State applicable to other member states. Peer-to-peer learning and exchange are designed to facilitate similar initiatives in the members steps following in the footsteps of successful implementation in Puntland with technical and financial assistance from UNCDF. The workshop was part of the UNCDF work on deepening fiscal decentralization, fiscal health and financial sustainability of Somali local governments in the framework of the UN Joint Programme on Local Governance and Decentralized Service Delivery (JPLG).

The training session was unique in presenting the lessons learned from the challenges faced by the districts in Puntland in their successful revenue mobilization. The training focused specifically on the theme “Kick-starting revenue mobilization for potential but under-utilized local sources”. For instance, in Garowe the baseline of the LG annual revenue before the support from UNCDF in 2016 was Shilling 26.4Bn and last year (2020) the district financial report showed an increase of the revenue to Shilling 99.8Bn annually, which is almost a 4-time increase . Carmo district, which was recently constituted, had no revenue collection before but with the help of the revenue mobilization initiative implemented last year it has raised Shilling 2.9Bn in own source revenues in 2021, which is good progress and still improving.

Thus, the proceedings of the training helped the participants to obtain necessary information about the potential obstacles and best ways to tackle them. In the training the experts presented the experiences of Garowe and Carmo districts. Garowe was the example of a district that never utilized its potential despite collecting revenues for decades. However, the district improved dramatically after receiving revenue mobilization support from UNCDF. Carmo district was the example of a district that had a potential but never utilized/collected revenues. As a result of the Revenue Mobilization Initiative of the Puntland Ministry of Interior and using the lessons learned from UNCDF support, Carmo district was able to mobilize revenue on their own. Thus, these practical sessions provided two concurrent advantages for the participating districts. Such districts as BRA, Baidoa and Kismayo that collect some revenue were able to learn how to leverage their potential from the experiences from Garowe district. On the other hand, districts that haven’t had experience of collecting revenue could learn from the practical experiences from Carmo district that through the support to the revenue mobilization plans has managed to successfully collect revenue income sufficient at least to cover the districts operational expenses.

The key takeaway by the FMS and BRA from this virtual revenue mobilization workshop was that districts needs to become committed to revenue collection by implementing the following preliminary steps:

1) Establishing revenue administration structure at district level including the director of revenue, tax collectors, tax inspectors etc.
2) Developing a draft tariff bylaw that would help both citizens and the districts legally know what specific amount is taxed for each item,
3) Promoting revenue mobilization awareness at district level, and
4) Establishing a district revenue mobilization task force with disciplined tax collection enforcement police.

Moreover, districts also emphasized the need to further elaborate the following key steps to make their revenue mobilization process robust and sustainable:

1) Delineation of revenue assignment between the local government and the state ministry of finance so that each level of government knows which type of revenue that they are entitled to according to the law.
2) Strong focus on selected potential sources in the beginning and gradual extension to other sources accordingly.
3) Make sure that the revenue mobilization plans to be developed with UNCDF support target specific sources to maximize the available limited support and human capital available to them.
4) The revenue collection automatic system should start in parallel with the revenue collection process to mitigate the challenges faced in Puntland where the system was firstly initiated as manual and took years for the automated system to work.

The training workshop was successful thanks to a well-elaborated revenue mobilization manual developed by UNCDF/JPLG for Somalia local authorities that supported many districts to enhance their revenue and their fiscal performance and share with one another their best practices.

Moreover, after the training a four-step action plan was agreed as follows for the districts: 1) map potential revenue sources; 2) assess the mapped sources to estimate their potential and feasibility, 3) develop robust action plans and implement them accordingly, 4) conduct assessment of the performance of the selected revenue sources at least once every four months to identify the emerging problems, come up with corrective action and document lesson learned.