DAWLAD G.

PUNTLAND PUNTLAND STATE

EE SOOMAALIYA OF SOMALIA

Ministry of Planning & International Cooperation

Wasaaradda Qorsheynta & Iskashiga Calamiga

Puntland Poverty Reduction/Elimination Concept Paper

11th June, 2008

Garoowe, Puntland

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 Table of Contents

1. Introduction............................................................................................................................ 3

2. Global Food Crisis.................................................................................................................. 3

2.1 Soaring World Oil Prices .................................................................................................... 3

2.2 Bio-fuels ............................................................................................................................... 3

2.3 The Specific Case of Rice................................................................................................. 4

2.4 International insurance premium .................................................................................... 4

3. Implications ............................................................................................................................ 5

4. Suggested Solutions .............................................................................................................. 6

5. References ............................................................................................................................. 8

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1. Introduction
Today, the 3rd of June 2008, marks the summit on Global Food Crisis convened by the United
Nations’ Food and Agriculture Organisation in Rome. The Global Food Crisis has impacted
negatively especially on the progress of implementing the MDGs package.

The President of Puntland State of Somalia, H.E. Mohamud Musse Hersi, having been
enlightened by the ongoing Global Food Crisis, has called upon, after thorough consultations
with all Puntlanders of all walks of life, Hon. Ali Ahmed Gamuute, Deputy Minister of Planning
at the Ministry of Planning and International Co-operation (MOPIC) to draft a concept paper on
this issue.

The Minister has, in next to no time, started acting on the inspirations of the President to
nominate a technical team of experts to come up with a concept note.

The team has elaborated the first draft for discussion and presented it to the President who agreed
upon the main points to be expanded for a fully fledged concept paper to be submitted in 24
hours. The team considering the high priority of the matter has worked around the clock to
finalise the paper.

2. Global Food Crisis

Sharply rising prices have triggered food riots in recent months in Mexico, Morocco, Senegal,
Uzbekistan, Guinea, Mauritania and Yemen, and aid agencies around the world worry they may
be unable to feed the poorest of the poor.

2.1 Soaring World Oil Prices

With crude oil soaring above US$140 (08.06.2008) a barrel, higher fuel prices have driven up the
cost of production and increased transportation costs for all foods.

2.2 Bio-fuels

Also influencing the food crisis is the move in North America and Europe to bio-fuel in an effort
to ease global warming and reduce reliance on imported energy.

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A surge in demand for bio-fuel has resulted in a sharp decline in agricultural land planted for
food crops. About 16% of U.S. agricultural land formerly planted with soybeans and wheat is
now growing corn for bio-fuel.

2.3 The Specific Case of Rice

Rice is a staple food for half the world's population, including Puntlanders (UNDP-MOPIC,
2007). But the sudden surge in prices and restrictions on exports comes at a time when stockpiles
of rice are at their lowest level in decades.

At the moment, world rice inventories are said to stand at a mere 72 million metric tonnes --
about 17% of what the world consumes annually.

The low stockpiles create a market in which any supply disruption will result in radical price
swings.

The WPF, which feeds 73 million of the world's most destitute each year, says its costs have
increased 55% since June 2007. Unless it gets US$500-million (without considering the pledges
of Saudi government during the recent FAO Meeting in Rome) in emergency funding, it may
soon have to reduce feeding programmes.

Experts predict world food markets will be locked into an inflationary spiral for at least four
years, but some say the crisis could linger for a decade or more.

2.4 International insurance premium

What is more, the international insurance companies increased their premium because of
increased sea piracy incidents, especially in the Indian Ocean and the Gulf of Aden, which have
direct negative bearings to food import prices in Puntland. This will also increase the already far
above the ground food prices in local markets.

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3. Implications:
The implication of the Global Food Crisis will only translate into inflation rate hikes in
Puntland. This will definitely intensify the extent of poverty incidences. Moreover, Puntland has
witnessed recently stagnant local production because of recurrent droughts and livestock export
ban imposed, by its major market, Saudi Arabia as well as the suspension of community
recovery projects for the last one and half years by the international community. If added by the
lack of emphasis of poverty eradication projects, the consequences are therefore only an
amplified insecurity situation in Puntland State of Somalia.

The MOPIC (2008) report has calculated the Consumer Prices Index (CPI) for the cities of
Garoowe and Bossaso. The percent change in the CPI is a measure of inflation. Inflation is
calculated annually using the CPI at city levels and at Puntland level as shown on the Table
below:

Table 1 – Inflation in Puntland with Base Year 2005 in %

Area/Year Garoowe Bossaso Puntland

2006 43.32 16.11 29.72

2007 86.65 15.55 51.10

2008(Jan-Mar) 102.01 5.83 53.92

Table 1 shows the domestic inflation rates. The major items responsible for this high increase in
prices are due to food items according to the statistics department of the MOPIC.

Inflation in Puntland has two major sources: domestic and International:

(i) The domestic is being contained to some extent by positive steps taken by the
Puntland Government such closing all money printing establishments within Puntland
as well as setting controlling for incoming banknotes from elsewhere. The
Government has also set clear cut pro-poor policies such as reducing taxes by 20% to
all imported necessity goods (mainly food items).

(ii) On the international front, there is a real concern about the high energy prices
(already at three digit figures in US$), the new strategy for bio-fuels, and declaration
that a number world food exporters are on the brink of withdrawing and restricting
their export policies, will have direct effects to local consumers everywhere.
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4. Suggested Solutions:
Some recommendation are sought to relieve much of the suffering of the poor categories of
Puntlanders and strengthen the rule of law, security in general, and good governance as well. The
most daring ones, among other things, are:

• Commodity import programmes and cash grants from donors should be a good initiative
to support and secure the purchasing power for poor categories of the society
• Inland security should be strengthened
• Increased and enlarged oil and mineral explorations should be effectively enhanced
• Enhance recovery and development Projects.

In addition to the above mentioned measures the report UNDP-MOPIC (2007) provides
proxy indicators for many aspects of poverty as well as key benchmarks for measuring
progress in poverty reduction. Indeed, the data contained in this report provides a useful
platform for informed needs assessment as well as the basis upon which the progress
towards poverty reduction can be monitored and evaluated.

Reduction of absolute poverty is the overarching goal of the FYDP for Puntland State of Somalia
(MOPIC 2007). The development goals of growth with justice and equity, peace and security,
good governance, improved livelihoods, better employment opportunities, targeted food security,
access to resources, and environmental protection all have a central focus on poverty reduction
and improved well-being for the people of Puntland. The National Poverty Reduction Strategy
(PRS), together with the MDGs, is the key to achieving sustained reduction in poverty.
Strategically, the state would strive for modest yet sustainable growth in the medium term, along
with resource conservation and the creation of opportunities for the poor to participate in the
development process. This shall have to be supplemented with a “targeted social security net”,
where the efforts of the international community are expected to supplement the efforts of the
state. Comprehensive efforts to significantly increase savings and investment through the
creation of an enabling environment would be the focal theme of the plan in achieving
sustainable reduction in poverty.

However, poverty reduction is a very challenging task that requires a systematic and integrated
approach. Substantial and sustained actions are called for on the part of the functional
administrations and development partners to invest more resources in designing appropriate
policies and implement programmes aimed at alleviating the suffering and indignity caused by
mass poverty. This requires commitment to restore lasting peace and promoting good
governance at all levels in order to deliver basic economic and social services including more
and better equipped and staffed schools, affordable and widely available quality health care
systems. This could be in the form of targeted programmes that benefit the marginalized and
vulnerable groups within the regions.

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The main agricultural activities include maize, sorghum and cow peas with main staple food
consumed being rice while livestock reared include camels, cattle and goats/sheep. The residents
of Puntland rely upon own business, livestock and remittances for their income.

The main hazards faced by the settlements in Puntland include drought, lack market access and
livestock diseases. These have implications on food security and sustainability of income.
Puntland suffers from purchasing of most of their food requirements while livestock herd sizes
per family exceed the number required for economic sustenance. All these affect economic well
being of the settlements leading to increased poverty.

Major challenges facing the social sector in the region include lack of health facilities, access to
water, educational facilities and opportunities to generate income. Education, health and water
are basic requirements in every society because they positively have an impact on people’s lives.
Community or a region which is well endowed with these facilities performs well in economic
development. On the other hand, quantity and quality of water affects human welfare, while
availability of water determines the patterns of human settlements and the distribution of
development activities like agriculture and industries.

Based on the above findings of the report, efforts should be directed, among other things,
towards improving the livelihood of the Puntland settlements through:-

• The region requires drought preparedness strategy, which otherwise remains a major
internal and external shock. This will save on animal loss and displacement of people.

• Food poverty was identified as chronic problem in the region. The long-term solution
would be to address food security through increased production of staple food crops and
improvements in the income for farmers. There is need therefore to ensure agriculture
(with emphasis on fishery and livestock sectors) is developed and is largely exploited.

• Increase and improve educational facilities and trained personnel since the level of
education has a direct link to the level of poverty or development of an area

• Enhance provision of safe and accessible water to the community. Puntland relies on
shallow wells, Water reservoirs (berkads) and ponds as their water sources which are not
safe for human and animal consumption.

• Micro finances institutions need to be established to provide capital to the community of

which majority rely on own business as source of income.

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 • Efforts should be made to come up with diversified income generating activities (e.g.
encouraging self-employment through small enterprise development) in addition to
livestock and crop sales which are prone to calamities of weather.

• As result of environment degradation, a holistic approach to sustainable natural resource

management biodiversity, conservation, reforestation and habitat development, in
consideration of the socio-political and economic situation of the region and Somali
population at large.

• Improve infrastructure e.g. road network to enhance rural areas access to the nearest
markets.

5. References

1. MOPIC (2007), Five Year Development Plan 2007-2011, Ministry of Planning and
International Co-operation;

2. UNDP-MOPIC, (2007), Participatory Community Census for Poverty Assessment and

Mapping, Ministry of Planning and International Cooperation, Puntland (Draft);

3. MOPIC, (2008), A Consumer Price Index. Ministry of Planning and International

Cooperation, Puntland (Draft).