The need for a harmonised delivery mechanism to drive Somaliland's development forward is underpinned by a mutual desire on the part of the GoSL and donors to see improved core state functions, increased public service delivery, enhanced aid effectiveness and strengthened mutual partnership and accountability.
For this to be achieved, the extent to which external support increases the capacity of government institutions and promotes the use of government systems for delivery of these objectives is a key determining factor. The SDF presents the most suitable option for achieving these objectives, and is the only cross-sectoral programme disbursing funds and giving technical assistance at the central level. The GoSL and its development partners, based upon the targets and gaps identified by the NDP, decide priorities for SDF funding jointly. The SDF therefore provides the appropriate vehicle for enhancing the much needed and indispensable role of the GoSL.
A key and innovative feature of the SDF is its integration into the government's planning and budgeting processes and the gradual transfer of fund control from the Fund Manager to the GoSL. This will be done in distinctive phases based upon monitored progress against public financial management and revenue benchmarks.
The GoSL has expressed a preference for the use of SDF as a way to channel external support. This commitment to SDF is unsurprising since the fund was set up in large part because of willingness by the GoSL to improve aid effectiveness and move to innovative delivery mechanisms in ways that are tailored specifically to the Somaliland context. The advantages attributed to the channeling of funds through SDF include:
- Provides for a shift in thinking and approach towards development cooperation in Somaliland. The aid effectiveness agenda requires development partners to work with national authorities to increase ownership, mutual partnership and trust, and this mechanism achieves that.
- Strengthens state-building by enhancing core state capacity.Makes greater use of government systems and processes to ensure better alignment with Somaliland priorities.
- Presents much lower transaction costs for donors and therefore better value for money. The Fund Manager is already in place.
- Lowers overhead means that projects supported through the SDF are guaranteed to have a greater impact, as a larger percentage of the support can be directly invested in a projects.
- The SDF reflects improved targeting through a prioritization process of the NDP, ensuring that the available resources are spent in areas in the greatest need.