MOGADISHU – Somalia’s Federal Ministry of Finance and the Central Bank are grappling with a series of unsettling issues that have raised concerns over financial transparency and independence, leaving the institutions in a state of turmoil.
Over the past year, the Ministry of Finance, entrusted with collecting the country’s revenues and managing foreign reserves through the Central Bank, has faced significant challenges, including blatant interference that has brought the Ministry to a critical juncture.
A senior official, speaking on the condition of anonymity due to the matter’s sensitivity, revealed that substantial withdrawals, totaling millions of dollars, have been made from the Central Bank’s reserves in recent months. However, these withdrawals remain unexplained, perplexing international partners and financial experts who are demanding answers.
LAVISH TRAVEL EXPENSES
Adding to the controversy, sources within the government disclosed a dramatic surge in presidential travel expenses over the past year. The frequency and scale of these trips, often accompanied by a large entourage, have raised eyebrows among watchdog groups and opposition figures, who question the justification for such extravagant spending amidst Somalia’s economic challenges.
For instance, the President’s recent trip to Italy incurred expenses of $110,000, while the Prime Minister, due to participate in the African Human Capital Summit in Tanzania and his Deputy Prime Minister, traveling to Moscow, have collectively processed over $150,000 for their respective trips.
According to the Horn Examiner’s findings, it appears that travel expenses in 2023 have been inflated, particularly in the context of presidential trips.
Here are a few examples of such expenses;
working Visit to Washington for US-Africa Summit on late January 2023: $195,000, Initial Italy trip in February 8, 2023: $180,955, trip to Baidoa in January 16, 2023: $110,000, trip to Baidoa on February 2023: $70,000, trip to African Union, Summit in Addis Ababa on Feb 2023: $110,000, trip to Uganda in March 2023: 70,000, State Visit to Qatar in May 16, 2023: $130,000 and finally trip to Italy in July 23, 2023: $110,000.
These figures represent some of the highest travel expenses incurred for both domestic and international trips by a Somali President, at least in recent history.
Some of these trips, notably the bilateral visits to Qatar and UAE, had their expenses covered by the host states. However, despite that, the withdrawn travel costs have not yet been returned to the Central Bank from which they were taken.
Moreover, reports of external interference by individuals closely associated with President Hassan Sheikh Mohamud have raised concerns about the financial institutions’ independence. Allegations suggest that powerful figures have exerted undue influence on the Ministry’s decision-making processes and the Accountant General Office, casting doubts on their ability to operate free from political pressures.
Financial experts warn that the current turmoil within the Ministry of Finance, the Central Bank and the Office of the Accountant General has significant implications, not only for Somalia’s economic stability but also for its standing in the international financial community.
Potential investors and foreign partners may hesitate to engage with a nation embroiled in such a financial crisis, jeopardizing the country’s prospects for economic growth and development.
The struggle faced by Somalia’s key financial institutions has also resulted in increased scrutiny from international financial institutions and donors.
Concerns have been raised about transparency, accountability and the overall efficacy of the government’s financial operations. As a result, some foreign aid and investment that Somalia relies on to support its economic development have been withheld or reduced until a resolution is reached, officials told the Horn Examiner.
GROWING DISCONTENT
In a startling development , three out of the five members on the board of the Somali Central Bank tendered their resignations on Sunday, citing escalating interference by President Hassan Sheikh Mohamud. This development has sent shockwaves through the financial sector, prompting concerns about the autonomy and transparency of the nation’s financial institutions.
The resignations have raised serious questions about the overall financial stability and governance of the war-torn country. The Central Bank of Somalia plays a crucial role in managing monetary policy, regulating financial institutions and safeguarding the national currency.
However, recent allegations of corruption have cast doubt on the institution’s integrity and triggered a crisis of confidence among both local and international investors.
Speculations regarding embezzlement and mismanagement have been circulating for some time, prompting demands for increased transparency and accountability within the Central Bank.
Despite the severity of the situation, the Somali Government has yet to issue an official statement.
This crisis has garnered international attention, with organizations such as the International Monetary Fund (IMF) and the World Bank reportedly expressed concern over its potential impact on Somalia’s already fragile economy. The nation is already grappling with the devastating effects of armed conflicts and poverty, making further setbacks to its financial institutions highly undesirable.
Somali citizens have taken to social media to voice their frustration and anger at the alleged corruption within the Central Bank.
Calls for accountability and change are resonating throughout the nation, with civil society groups urging the government to address the root causes of the problem and ensure transparency and fairness in all financial matters.
The resignations have created vacancies on the Central Bank’s Board of Directors, which require urgent filling. However, concerns have been raised about the government’s potential lack of adherence to a merit-based selection process when appointing new board members, raising doubts about the institution’s ability to rectify its governance issues.
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