Somalia hires PwC to monitor aid

From FT.com
Somalia hires PwC to monitor aid
By Barney Jopson in Nairobi
Published: July 8 2009

PwC, the world's biggest accountancy firm, is making a move into the world's worst failed state. Somalia's interim government has asked PwC to bring bookkeeping discipline to a country where lawlessness has reigned for nearly two decades.

At the demand of international donors, the besieged government has asked PwC to set up money tracking systems to ensure that aid sent to Somalia, including $67m (€48m, £41m) pledged in April, is spent as intended and not stolen by corrupt officials.

Somalia is in the latest phase of an 18-year civil war as Islamist insurgents, including some allegedly linked to al-Qaeda, seek to topple the western-backed government. Shoot outs, mortar attacks and suicide bombings have become so intense that aid agencies and the United Nations no longer base foreign staff in the country.

Abdulrahman Adan Ibrahim, Somalia's first deputy prime minister, said his government's efforts to tackle the Islamists and piracy had been constrained by the slow delivery of funds from donors nervous about their money going astray in the absence of a formal banking system.

"We want to be different from other African countries. We want to show the world that the money given to us will be going to where they want it, to be used in a transparent way," he said.

PwC has undertaken similar work monitoring donor payments in Afghanistan and Sudan. It declined to discuss details of the Somalia project, citing client confidentiality and security issues.

Abdusalam Omer, a senior adviser at Somalia's finance ministry, said PwC would set up and act as the trustee of an account in Mogadishu, the capital, for donor funds, most of which are intended for security, health and education.

He said the mechanism to be set up by PwC should speed up the arrival of the $67m pledged by donors, including the US and the European Union, to strengthen security forces. It was part of a broader $213m package that included funds for a 4,300-strong African Union peacekeeping force. A little less than half has been disbursed, partly because the alternative disbursement mechanisms - via a UN trust fund or the central bank of Djibouti - are considered by some donors as too slow or too leaky.

Mr Omer said he expected PwC to send staff to Mogadishu from Nairobi, capital of neighbouring Kenya. But it is likely that the only people on the project to be based permanently in Somalia will be local agents who deliver small cash payments and record them in electronic ledgers.

The process will begin with PwC informing the relevant ministries when funds arrive. It will verify that their spending plans match donor objectives, release funds and ensure they get into the hands of intended recipients.

"If the money is for salaries it will be transferred to the Somali employees and PwC will get receipts and signatures to show they got it," Mr Omer said. The money flows will be recorded in a new computer system and reports sent back to donors every 15 days. "The bottom line has to add up," he said.

PwC is not being paid a retainer but will receive a commission of between 2 per cent and 4 per cent on all funds that reach their intended destination, Mr Omer said.

In common with most accountancy firms, PwC is renowned for its extreme aversion to litigation risk in developed markets. In Somalia it will face physical risk. Many non-Somali diplomats and aid workers who go to the country restrict their visits to a day or two and travel in armoured vehicles with Somali guards carrying machineguns.

"We need to make people confident the money will not be used to buy a house in the UK," said Ahmedou Ould Abdullah, UN envoy to Somalia, alluding to the UK connections of many senior Somali officials.

Somalia has not had an effective central government since 1991. The interim administration controls only a few blocks of the capital, which are defended by AU peacekeepers. Islamist insurgents -surround it led by a group called al-Shabaab, which the US says has ties to al-Qaeda.

The US has admitted to supporting the interim government by supplying it with 40 tonnes of arms and munitions in the past two months.

UK Aid: £9bn to help 20 war-torn countries

From www.publicservice.co.uk, Monday, July 06, 2009:
£9bn to help 20 war-torn countries

A new poverty action plan to help the world's poorest people cope with the economic crisis has been announced by [UK] International Development Secretary Douglas Alexander.

Launching the White Paper Building our Common Future, Alexander said there was a fundamental shift in the way the UK delivers development aid, refocusing resources on to fragile countries and for the first time treating security and justice as a basic service alongside health, education, water and sanitation. Fifty per cent of new bilateral funding will be committed to fragile countries, he said, with £120m being spent by 2014 on training police officers, setting up law courts and protecting women from violence. There would also be a sharper focus on creating jobs in five of the most vulnerable countries – Yemen, Nepal, Nigeria, Ethiopia and Afghanistan.

The White Paper underlined the UK's commitment to spending 0.7 per cent of Gross National Income on international development, equating to around £9bn per year by 2013, while also cutting maternal mortality rates with the aim of potentially saving the lives of six million mothers and babies by 2015, helping eight million more children in Africa go to school, doubling funding to £1bn for African infrastructure including transport, energy and trade in the region, tripling of funding to support developing countries recover stolen assets, and giving more to the Central Emergency Response Fund for humanitarian aid at the UN.

Alexander said: "We have made great strides over the past decade in tackling global poverty but there is much still to do. The economic downturn has had a devastating effect on the developing world, while millions live surrounded by conflict and violence. And we must face up to the havoc climate change could cause in the poorest countries. "

He added: "We will take action to save lives, put children in school and give mothers access to much-needed healthcare. But we will also support economic growth and tackle climate change – for many developing countries not a future threat but a current reality."

The changes will be backed by new branding under the name of 'UK Aid' to make people more aware of what efforts the government is making to aid international development.