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Financing for solutions to displacement: Somalia country study - Executive summary, March 2021

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Evaluation and Lessons Learned
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More than one in five Somalis are displaced within or outside the country.
Displacement in Somalia is driven both by conflict and disasters, with climaterelated disasters the primary driver of the dramatic increase in internal displacement since 2016. Displacement is also major driver of rapid and haphazard urbanisation. Displacement therefore is not a peripheral challenge for Somalia. Meeting the rights and needs of displaced people, and addressing the root causes of displacement, are fundamental to political, economic, and social progress in Somalia.

Substantial progress has been made in achieving an enabling policy environment for durable solutions under the auspices of the Somalia Durable Solutions Initiative (DSI) launched in early 2016. International partners have worked closely with the Somali government to establish key policy frameworks and commitments. The DSI hopes to continue to carry through this work by anchoring key rights in legislation.

Political engagement at the highest levels of government, along with technical support, has helped create an enabling policy environment and successfully embedded durable solutions in national development priorities. This is a major achievement in supporting a government-led durable solutions agenda. The establishment of coordination structures and tools that support government leadership, oversight, and the delivery of a whole-of-government approach also represent an important step towards a nationally led durable solutions agenda.

In practice, however, the capacity of government to ensure rights are upheld and aspirations towards durable solutions are realised remains highly constrained.
This places constraints on the pace at which durable solutions work can proceed.
An opportunistic and multi-level approach is required that targets opportunities at Federal Member State (FMS) and municipal levels, within national-level sectors and programmes, and at national legislative and policy levels on a whole-ofgovernment basis. Moreover, continued investment in the capacity of government at national, FMS level, and municipal level, alongside internationally financed programming, is required in order to ensure that durable solutions are led and owned by national actors.

Somalia also faces profound challenges in financing its development priorities. The scope of the Federal Government of Somalia (FGS) to increase domestic revenues is highly constrained and will continue to rely heavily on Official Development Assistance (ODA) and remittances in the medium term. Somali development ambitions require investment in infrastructure, capacity building, and policy reform, all of which require a transition from humanitarian towards developmental investments and approaches to financing, as well as substantial additional ODA financing. Somalia is currently grappling with two interlinked challenges in achieving this transition and scale-up: 1) resuming relationships with International Financial Institutions (IFIs) to increase access to development finance; and 2) reducing aid fragmentation and shifting towards use of country systems in the delivery of aid. Financing for durable solutions falls squarely within this incomplete transition from internationally driven project-based aid towards programmatic and nationally aligned funding and financing.

Since 2016, funding for durable solutions has largely comprised targeted support to the DSI and a number of multi-sectoral, multi-actor durable solutions consortia, with funding provided by a group of European donors and the UN Peacebuilding Fund. This funding has been catalytic in both establishing an enabling policy environment and demonstrating proof of concept around how durable solutions could be achieved. Multi-year funding, lesson sharing across an overlapping group of donors and partners, and commitments to invest in evidence have played an important role in enabling the relatively rapid evolution of durable solutions programmes in Somalia. Without greater coherence in terms of national-level development priorities, policies, programmes, and timeframes, however, the impact of durable solutions programmes and the return on investments will be limited.

Most of the durable solutions consortia programmes have been designed, funded, and managed largely outside government-led processes. There is also a perception that there is little appetite from development donors to support durable solutions beyond consortia programmes. A Durable Solutions Marker has been introduced to the government Aid Flow Mapping tool, enabling the identification of investments contributing to durable solutions and linking them to the strategic objectives of the National Development Plan (NDP). There is, however, no forward looking prioritised and sequenced plan to guide investments in durable solutions. Despite the existence of a donor working group on durable solutions, funding decisions are reportedly determined on the basis of donor priorities.

Somalia has established a well-functioning pooled funding architecture designed to support the implementation of the NDP, which includes an effective government and donor coordination platform. While a new fund for durable solutions has been mooted, there may be scope to use the existing funding architecture to target financing towards agreed priorities that support durable solutions. It is also possible to use the existing review and sign-off processes to ensure that future durable solutions programmes align with priorities established in the NDP.

The durable solutions agenda in Somalia straddles the humanitarian– development–peacebuilding nexus. Humanitarian assistance is still required for the foreseeable future, and the engagement of development and financing programming has increased. However, longer-term national-level programming and financing approaches will be needed to enable longer term solutions. There are emerging opportunities to pursue a more sustainable and coherent approach to durable solutions within emerging national development programmes and priorities, notably through the national social safety protection system and an emerging multi-stakeholder urbanisation strategy. In the interim, there may be a compelling argument for support to transitional activities that are underwritten by flexible multi-year financing. This could provide practical programming support to displaced communities so they can begin to pursue inclusion and self-reliance. It could also strengthen local and federal-level government capacities to manage durable solutions to displacement and support specific enabling activities.

Somalia aspires to deliver a unified national universal social protection system designed to protect the poor and vulnerable from shocks, and overcome poverty, vulnerability, and exclusion. A national social protection system also provides international actors an opportunity to shift from status-based targeting towards more equitable and inclusive responses.

In the current initial phase of international support to the nascent social protection system, the inclusion of IDPs is not a priority for the two recently created major social protection programmes. Donor support is currently spread across anarray of developmental, durable solutions, and humanitarian cash transfer programmes. Future harmonisation and scale up of these programmes provide critical opportunities to ensure that targeting is calibrated to capture the specific vulnerabilities of displaced people and to negotiate a sustainable financing package. The government has proposed a pooled fund to receive all financial contributions to support the national social protection system in future, which may be implemented by a variety of international partners. The design of a fund could provide an opportunity to address a range of harmonisation and accountability issues, including an approach to financing that aligns with the national budgetary and treasury systems. The fund could also be based on an agreed approach to targeting that ensures the inclusion of marginalised groups, including internally displaced persons (IDPs) and returnees.

Urban development in Somalia illustrates the depth and scope of the developmental challenges in Somalia. A coalition of actors committed to understanding and addressing urbanisation challenges in the country is emerging, bringing together the World Bank, UN agencies, donors, and NGOs. In October 2020, this group of actors convened to issue a “Collective roadmap towards a common agenda on urbanisation, land, and displacement in Somalia”. The roadmap identifies a sequenced set of actions over the short, medium, and long term. Durable solutions are an established priority theme in these discussions. This type of convening does not fall within the regular development or humanitarian coordination structures. Instead, it offers an indication of an alternative, more organic nexus approach based on a coalition of interested actors finding common cause in devising solutions to a set of particular problems.

While analytical work and reaching consensus on priority issues continues to advance, discussions on sustainable financing for both longer-term urban development ambitions and affordable housing solutions for displaced people are in relatively early stages. In the absence of an agreed strategy and leadership from government, discussions on financing are considered to be somewhat premature. There are opportunities for government to use regulation and tax incentives to improve the quality and accessibility of services to the poorest and most vulnerable, and to incentivise private sector investment with financing instruments. The latter include access to finance and risk guarantees, and leveraging finances from the future increases in land value generated by infrastructure investment. Although in the early stages of implementation, these innovative programmes illustrate the potential for using ODA-funded programming to mobilise alternative sources of financing. They also have the potential to provide sustainable financing for government-led durable solutions in urban settings in Somalia.

At the same time, ad hoc experimentation and piecemeal investments in the provision of shelter for IDPs continue across an array of UN and NGO programmes. This risks further fuelling the status-based separation of IDPs, rent-seeking, land speculation, and cycles of eviction. An interim or transitional strategy to target investments in more sustainable housing solutions for displaced people would help to both reduce the risks of costly short-term shelter investments, and prioritise and sequence investments in a broader framework of ongoing work on secure tenure, infrastructure development, sustainable financing, and institutional capacity strengthening.

Analysis and consensus around the structural barriers to durable solutions in the context of wider development and political challenges in Somalia will be fundamental to this process of integrating durable solutions into the development agenda. Linked to this, agreement on prioritisation and sequencing of necessary reforms, capacity strengthening, and investments will be key to ensuring the efficient use of limited resources.