Somalia’s Cash Pipeline: Billions in Aid, Little Change at Home as Trust Deficit Deepens  

MOGADISHU, Somalia - Despite receiving millions of dollars from the donors and other international multilateral financiers, Somalia’s economy has struggled significantly, leading to the loss of jobs, delays in payment of salaries and delivery of services.

The country receives money from lenders and other international donors, but it has been eclipsed by opaqueness and poor service delivery, leading to outcry by locals and members of the international community.

Recently, some donors stopped funding important sectors of the economy due to mistrust and lack of accountability — a claim the federal government of Somalia has frequently denied despite evidence from auditing agencies in the country.

But Central Bank of Somalia Governor Abdirahman M. Abdullahi, while writing in a recent publication in a paper titled De-risking Somalia is a false economy — says the failure of the international community to trust government systems could be the direct blame for the misfortune.

According to him, Somalia receives around $4.2 billion in inflows per year, consisting of $1 billion in aid and $3.2 billion in remittances. This is injected directly into the country’s economy, but there has not been any significant change.

Approximately $210 million of this amount is lost each year because the funds move through multiple intermediaries in East African regional hubs before they can be used in Somalia, with each step adding cost, delay, and opacity, he said.

This is happening despite Somalia rebuilding its financial system—law by law, rail by rail—to meet international standards and position itself for global connectivity, writes Central Bank Governor Abdirahman M. Abdullahi.

Mogadishu is trying to showcase the revival of the economy, but President Hassan Sheikh Mohamud is accused of failing to act on the challenges facing the economy. The government is currently facing stiff opposition ahead of the upcoming elections.

GAROWE ONLINE