March 28, 2024

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World Bank reopens direct engagement with Somalia after three decades

Somalia has received succour from the international money lender, World Bank for the first time in over three decades. This historic support from World Bank is the second significant intervention by the global lenders in the horn of Africa within one month and this, in particular, will be injected into the economic recovery plan of the country’s central government.

The first historic move by the World Bank in the region is the provision of ‘direct budgetary support’ for Ethiopia after thirteen years of withdrawing its financial support for the country. In the same vein, the World Bank Group (WBG) Board of Directors approved two investment programs worth $80 million and also endorsed first four-year Country Partnership Framework (CPF) for Somalia.

The grant is expected to revitalize the economic, propel systemic change in all sector and revive the government’s recovery commitment. In 2014, the Somali government kick-started it country-wide economic recovery plan (ERP) in its bid to ‘alleviate poverty, recover household incomes, build trust in government and encourage social cohesion and integration’ in the face of constant conflict the country is plagued with.

According to World Bank Country Director for Tanzania, Burundi, Malawi and Somalia, Bella Bird the role of World Bank since re-engaging the Somalia government has been to help the country rebuild core institutions that can restore citizens’ trust and redistribute resources to address extreme poverty and begin to create opportunities for those who have been excluded.”

Somalia has been ravaged with crises in recent times but the government jumpstarted an economic recovery programme to get the country back on its feet in 2013. This is the ‘first development strategy’ from World Bank since civil war broke in the early 1990s in the country. The dawn of Somalia civil war in 1991 brought an abrupt end to the support the country get from World Bank, and despite efforts by the country to reignite the relationship it has with the global lenders some years ago through other means, there has not been any direct financial support since then.

In his own reaction, World Bank Vice President for Africa, Hafez Ghanem commend the government’s effort to restore peace and tranquillity in the country.  “Somalia’s stability and prosperity are key to the stability of the region as a whole. We applaud the government for their commitment to reform and the steps taken towards building a better future for the country,” he said.

Despite the persisting crisis in some parts of the country (Mogadishu) which has had many civilians killed in the country and the recurring drought and famine in the country, Somalia’s GDP according to African Development Bank (AfDB) is projected to recover to 3.5% by the end 2018 and 2019.

The World Bank also approved an additional $60 million for the recurrent cost and reform financing project and $20 million for the domestic revenue and public financial management capacity strengthening project. In due course, this new partnership on social services will help Somalia economy grow by an average of between 3.5 and 4.5 percent annually in 2019-2022.

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