Somalia receives $55 million for reforms, fighting multiple crises

MOGADISHU, Somalia - The World Bank has approved a $55 million International Development Assistance [IDA] grant for Somalia, it said in a statement on Monday, which will now help the Horn of Africa nation fast track economic recovery and policy reforms.

For decades, Somalia has struggled to instigate credible reforms in social-economic and political arenas, leading to frequent support from various international players, who are determined to see tangible results in the coming years.

And Tuesday's aid would help the country battle devastating effects of Coronavirus pandemic, which has left over 2,700 people infected and close to 90 dead. Further, World Bank said, the monetary aid implementation of reform program supported by Development Policy Financing [DPF].

According to World Bank, the DPF delivers critically needed financing for Somalia’s revised 2020 budget, which allocates funds for an integrated and national response to the pandemic, including increased grants to the sub-national government to ensure continued service delivery.

“Our revised budget expands cash transfers to vulnerable households and provides a substantial increase in grants to subnational governments to help them respond to the pandemic in the face of declining revenue,” Abdirahman Beileh, Somalia's Minister of Finance said.

“The supplemental financing will help in plugging our public expenditure gap given the 29% domestic revenue shortfall and 2.5% GDP contraction in 2020.”

Earlier this year, World Bank and the International Monetary Fund [IMF] approved the country's eligibility for Heavily Indebted Poor Countries [HIPC] initiative, a move which effectively removed constraints on economic growth and poverty reduction and providing access to IDA instruments to mitigate the impact of multiple crises in Somalia.

“The budget support will help protect lives and livelihoods and strengthen the capacity of Somali institutions to respond to the triple crisis of COVID-19 pandemic, locust invasion, and flooding that threatens to derail Somalia’s reform program and its emergence from fragility,” said Hugh Riddell, World Bank Country Manager for Somalia.

Locust invasion has also continued to wreak havoc in Somalia, damaging millions of hectares of crops, with floods also subjecting the country to possibilities of hunger and feminine in the coming months.

The DPF, World Bank said, is one component of the World Bank Group’s comprehensive response to the multiple crises Somalia is facing and includes investments in health systems, support for livelihoods threatened by locusts and flooding, improved fiscal coordination between federal and state governments, and financing of direct cash transfers to poor and vulnerable households.

COVID-19 has spread rapidly in Somalia, which now has one of the highest infection rates in the region, with 18.7 cases per 100,000 people. Decades of conflict and state fragmentation have left Somalia’s public health system constrained and unable to mount an adequate, timely, and effective response to manage the COVID-19 crisis.

Inter-clan conflict and Al-Shabaab militants are also some of the crises that have derailed efforts to build a strong and cohesive country. But despite the unending conflicts and crises, Somalia's international partners have continued to invest millions to the economy with the sole aim of restoring order.

The country is expected to hold elections later on this year but stakeholders are yet to settle on the model to be used, further, causing a standoff. The international partners have been pushing for dialogue between the federal government and member states but no agreement has been reached yet.

The World Bank’s International Development Association [IDA], established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives.

IDA is one of the largest sources of assistance for the world’s 76 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.6 billion people who live in IDA countries. Since 1960, IDA has supported development work in 113 countries. Annual commitments have averaged about $21 billion over the last three years, with about 61 percent going to Africa.

GAROWE ONLINE