Somalia joins Multilateral Investment Guarantee after reconciliation with World Bank

MOGADISHU, Somalia - Somalia's road to economic recovery is gaining momentum on a daily basis, following dramatic clearance by the World Bank and International Monetary Fund [IMF] in debt relief exploits.

The Horn of Africa nation, which has battled inter-clan conflicts and terrorism for three decades, owes international partners close to $4.8 billion, thus the inability to get financial aid.

But after World Bank's recent clearance, the country became 182nd nation to join the Multilateral Investment Guarantee Agency [MIGA], which could boost its economic gains.

Prime Minister Ali Hassan Khaire, observed the latest positive strides in the country, arguing that Somalia is in the right path for "full" economic recovery.

"Somalia readies itself for debt relief and our economic recovery,” Kheire tweeted, noting the importance of joining MIGA, a major investment world partner.

Formed in 1988, MIGA promotes direct investment to emerging markets, besides offering political risk guarantee to international investors and lenders.

Conflict-affected countries and Sub-Saharan nations form a special focus for the agency, with interests in infrastructure and investment for development growth.

Also, the agency provides mediation in dispute-prone nations. For instance, Ethiopia is one of the beneficiaries in the Horn of Africa, following a deal with the military regime and foreign nationals whose properties had been seized during the conflict.

The membership enables eligible foreign companies seeking to invest in Somalia to receive MIGA’s guarantee coverage, which protects investments against the risks of transfer restriction, expropriation, breach of contract, and war and civil disturbance.

Early this week, World Bank and African Development Bank [ADB] were among partners who pledged $334 million towards Somalia's debt relief under the HIPC initiative, IMF said.

David Malpass, the World Bank president, hailed Mr. Kheire and finance minister Dr. Mohamed Beileh for streamlining Somalia's financial sector, paving way for radical reforms.

"After 30 years, the @WorldBank Group and Somalia took an important step today toward reestablishing financial relations and increasing WBG support for the Somali people," he noted.

The significant decisions by the two international lenders paved the way for full operations in Somalia, a move that would tremendously revamp the economy which has been in recession for decades.

“Today’s decision paves the way for a full resumption of operations so the World Bank Group can provide the strongest possible support to Somalia’s efforts toward economic and social recovery,” said Axel van Trotsenburg, World Bank Managing Director of Operations.

“This milestone is the result of several years of close cooperation with the Federal Government, and we now look forward to taking our relationship to the next level with deeper and broader financial and technical support from across the Bank Group.”

Previously, the Horn of Africa nation had struggled to seal loopholes within its financial sector, leading to massive corruption and money laundering, thus affecting donor confidence.

In December, Somalia is expected to hold universal suffrage polls, with international partners exuding confidence that the political development could finally put the country on the right path towards economic growth.

GAROWE ONLINE