As the World Bank predicts a brighter economic prospect for Somalia, there is one nagging problem that must be resolved if the quality of life is to improve as the economy grows: Cost of fuel.
In the absence of a downstream oil regulatory regime, fuel pump prices in Somalia have remained high in disregard of the drastic fall in global oil prices. For a country that relies heavily on electricity produced by diesel generators, its high power tariffs, indeed the highest in Africa, have stayed put and continue to frustrate businesses and households.
These are all the result of poor regulation of the two important industries. It is time the Federal Government of Somalia (FGS) stepped in to regulate oil and power with a view to passing down the benefits of reduced global oil prices.
Tapping into the oil bonus could help Somalia to meet budgetary deficits and fill the huge infrastructure gaps. Mogadishu has recently tarmacked 23km of road through support from the Turkish government at a cost of over US$10 million. Such infrastructural projects could be readily financed by revenues generated through appropriate regulatory policies and laws.
The concerned government arms must act with speed on this so that the citizens of the country and the business community may enjoy the benefits of the prevailing drop in global oil prices.
Somalia is more reliant on donor pledges than domestic revenues, yet the former is not always guaranteed. In 2013, for instance, donors pledged â‚¬1.8 billion at a conference in Brussels to help Somalia end more than two decades of conflict. Little of that pledge has been actualised. Clearly, donations alone cannot build a nation.
The federal government must seriously consider inland revenues in the form of taxes in order to cushion its budget from frequent arrears, valued at US$ 24.9 million as of December 2014.
Although taxation is a sensitive matter, it cannot be wished away. Inland taxation is a priority for sustainable state building in Somalia.
The World Bank, in its latest economic update for Somalia (2015), says the country needs to organise its internal revenue collections to realise any substantial income.
The 2014 and 2015 budgets have been characterised by overly optimistic revenue forecasts â€“ mainly pegged on donor pledges that donâ€™t always materialise. The huge budgetary shortfalls being experienced could come to an end if revenue collection was handled with more attention, discipline and professionalism.