Somalia has historically been divided into three heterogeneous regions - Somaliland, Puntland and South Central Somalia - with a history of internecine violence. Following the collapse of the Siad Barre regime (1969-91) the country descended into civil conflict with devastating results: gross domestic product (GDP) per capita and human development outcomes are now among the lowest in the world.
Now, following a fragile, but positive, transition mid-2012, Somalia has a full federal government in Mogadishu committed to inclusiveness, reconciliation and peace, based on a provisional constitution. Many observers hail the transition as a genuine break with the past, and the best opportunity for stability the fragmented country has had in the last two decades. The New Deal for Somalia Conference held in Brussels in September 2013, is a key milestone for the country and for a more sustainable and committed international re-engagement with Somalia.
The state’s collapse undermined basic service delivery, with a severe impact on human development outcomes. Out of 170 countries, Somalia is among the five least developed as measured by the 2012 Human Development Index. The pre-eminence of customary clan-based systems inhibit social cohesion and pervasive traditional practices such as polygamy, early and forced marriage, exclusion of women from education and employment opportunities, result in some of the worst gender equality indicators in the world.
With more than 70% of the population under the age of 30, Somalia is a young country with enormous development needs. Among the more urgent is food security which, together with displacement of a large share of the population, has led to a continuing humanitarian crisis that has spilled over into the wider region.
Somalia’s economy has been shaped and sustained by conflict. The 2012 Human Development Report estimates per capita GDP at US$284 - against a sub-Saharan Africa average of US$1,300 per capita. External aid (mostly humanitarian) and remittances are the key sources of income – but are not sustainable or translated into development efforts.
Official development assistance (ODA) per capita is US$75(including both humanitarian and development assistance) which is double the average of US$36 per capita for fragile states. The other main source of revenue is remittances estimated at US$1 billion (US$110 per capita) which makes up 35% of GDP - the highest worldwide.
The unregulated state of the economy has allowed the private sector to grow although this is marred by elite capture of revenue sources, often by cartels linked to militias. Somalia has, for instance, received between US$304-317 in illicit gains from piracy since the first known hijacking in 2005, although it is not known how much has remained in country.
Livestock is the mainstay of the economy and is estimated to create about 60 percent of Somalia’s job opportunities and 40% of its GDP. The export of livestock and meat generates 80% of foreign currency.
The self-governing regions of Somaliland and Puntland have managed to develop basic processes and structures of public administration. In Somaliland, domestic revenue was successfully doubled in 2011 though in Puntland tax administration and enforcement remains nascent.
The disappearance of formal education systems has lowered the national enrolment rate to around 31% (22% for girls as compared with 34% for boys). Secondary school participation is even lower for both boys and girls, with net attendance ratios of 12% and 8% respectively. Barriers to education include limited or unavailable primary and secondary school facilities, prohibitive school fees, and conflicting household and livelihood demands. Girls, in particular, are less likely to attend school due to domestic responsibilities. Nearly 75% of females between 15-24 years are illiterate, one of the world’s highest levels of gender disparity.
Access to health services is poor even by Sub-Saharan standards. Life expectancy at birth is 51 years and infant mortality rates are estimated to be 108 deaths per 1,000 live births i.e. one in every ten children dies in the first year (UNICEF).
In 2009, there were an estimated 625 health posts and 225 maternal and child health centers in Somalia. Assuming a population of nine million, this amounts to just one health post per 15,200 people. What existing services exist, are provided by the private sector, including pharmacies and drug stores, which may account for high service fees.
The last 20 years have seen numerous failed attempts to establish peace and national reconciliation in Somalia. Consensus on a national vision, including power and wealth-sharing, has never been reached to date.
In the coming four years, as it finalizes a permanent constitution and prepares for national elections in 2016, Somalia is likely to face continued instability as new stresses emerge.
The August 2012 election of President Hassan Sheikh and the formation of the government have revived hopes in the country’s ability to move from fragility towards sustainable stability and improved governance. The President and his government have embraced the New Deal through the development of an inclusive Compact which sets out the critical priorities for stability and sustainable economic development in the country.
Promising events in the political sphere have converged with a period of important military gains in southern Somalia - although these gains are fragile. However, the new federal government has growing support from donors who are likely to increase assistance for further peace building and state building activities under the Compact in the coming year.
Last updated September 2013
World Bank Portfolio and Partnerships
The World Bank’s engagement in Somalia remains limited by the very challenging security context. Nevertheless, since re-engagement in 2003, the Bank has played an important role in framing international engagement through co-leadership of the 2006 Joint Needs Assessment underpinning the 2007 Reconstruction and Development Program for Somalia.
Under the 2007 Interim Strategy, the Bank supported institution and capacity building, decentralization and public financial management while contributing to the collective international efforts to support the transitional process in Somalia. In October 2005, the Bank allocated US$2 million for the health and fishery sectors from the special “Tsunami Recovery” fund and in 2008 three grants amounting to US$10.19 million helped support Somalia’s urgent need to increase crop and livestock production in rural areas adversely affected by the drought.
Primarily active only in the north of the country, the Bank’s US$27 million portfolio of projects includes a first phase of public finance management and private sector development, and two phases of community-driven recovery and development. In addition, the Bank undertook livelihoods projects in the agriculture, fisheries and livestock sectors, vaccination of children and women of child bearing age, and completed a study on a decade of aid to the health sector in Somalia.
Now, with the agreement on a New Deal Compact setting out the key strategic issues as well as the development of an Economic Recovery Plan as the basis of an interim PRSP, the Bank is planning a strong re-engagement with Somalia through the new Federal Government. In line with the Compact, a new Interim Strategy Note (ISN) for FY14 and FY15 will support two strategic and long-term objectives; building domestic and international trust in Somalia’s public institutions and, supporting early recovery and economic resilience. The Bank will also establish a Multi-Partner Fund as a component of the Somalia Development and Reconstruction Facility that will comprise a number of priority windows, ensuring a consistent and coordinated approach between donors, the key agencies and the government.