The Federal Republic of Somalia is faced with the challenge of rebuilding state institutions in the midst of recurrent and protracted conflict. Since the collapse of the Siad Barre government in 1991, Somalia has experienced cycles of conflict that fragmented the country, destroyed legitimate institutions and created widespread vulnerability. Gross domestic product (GDP) per capita and human development outcomes are now among the lowest in the world.

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.

Social Development

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.

Economic Development

Somalia’s economy has been shaped and sustained by conflict. The 2012 Human Development Report estimates per capita GDP at $284 - against a sub-Saharan Africa average of $1,300 per capita. Poverty incidence is 73% (61% in urban centers and 80% in rural areas).

Livestock is the mainstay of the economy: 60% of the population derives a livelihood from pastoralism-based livestock production. The export of livestock and meat generates 80% of foreign currency. Most Somalis live in rural areas where traditional coping mechanisms, clan affiliations and pastoral mobility have been undermined by conflict. Only 7% of the rural population enjoys access to improved water sources, compared to 66% of people living in urban areas.

Somalia is heavily dependent on aid and remittances. In the absence of a formal commercial banking sector, remittance companies have enabled the diaspora to remit around $1.3 billion annually to families in Somalia. In recent years, Somalia has received approximately $1 billion in official development assistance (ODA) annually (including both humanitarian and development assistance); in 2012. ODA per capita was $98. While a majority of aid has been directed toward humanitarian assistance in the past, an increasing proportion of ODA is being directed toward longer-term development in Somalia under the New Deal.

Domestic revenue sources lack diversity, which makes the government highly vulnerable to shocks; 76% of domestic revenue in 2014 was derived from taxes on international trade. Domestic revenue only accounts for half of the government budget. In October 2014, budget support from development partners totaled $87 million, compared with $82 million in domestic revenue.

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 $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.


After decades of stagnation, the public education sector was revived in 2014 with the enrolment of nearly 90,000 children in formal primary education. This is a first step toward addressing the nation’s extremely low national enrolment rate of around 42%, of whom only a third are girls. 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 10 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.

Political Development

The last 20 years have seen numerous failed attempts to establish peace and national reconciliation in SomaliaThe 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 Somali 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 — albeit fragile — military gains in southern Somalia. The new federal government has growing support from donors who are increasing assistance for further peacebuilding and statebuilding activities under the compact in the coming year.  In 2014, the government developed Vision 2016, establishing a roadmap for achieving a national political settlement. It is comprised of three interwoven strands for reviewing and adopting a revised Federal Constitution, federalism and preparing for national elections in 2016. Despite some progress, Somalia is likely to face continued instability as new stresses emerge in the coming years.


Last Updated: Mar 09, 2015

World Bank Portfolio and Partnerships

The objective of the Somalia Interim Strategy Note FY14-16 (ISN) is to lay the foundations for poverty reduction and shared prosperity by delivering on selected priorities in the Somali Compact's Peacebuilding and Statebuilding Goals. As discussed in the 2011 World Development Report, basic security and political stability are important binding constraints to sustainable poverty reduction in fragile and conflict-affected contexts. The critical measures by which Somalia will address those binding constraints are articulated in the compact and address three key drivers of the country's fragility:

  • The absence of a political consensus on a federal system based on inclusive representation and wealth-sharing among Somalia's communities and regions;
  • The absence of functioning institutions that can deliver basic services to citizens, including security, and manage the economy effectively and transparently;
  • Elite capture and economic exclusion resulting in widespread vulnerability.

The ISN proposes to initiate and scale up a few activities to address these critical issues and thereby to enable poverty reduction and shared prosperity. In aligning with the compact and working in areas of comparative advantage, the World Bank Group (WBG) will contribute to a well-coordinated international effort in Somalia, based on partnership between agencies that engage across the interlinked areas of politics, security and development. The ISN's activities will be clustered around two priorities:

  • Priority One: Strengthening Core Economic Institutions
  • Priority Two: Expanding Economic Opportunity

While highly selective, the ISN program will remain flexible, noting both the limitations on effective World Bank Group work in Somalia, as well as the need to remain responsive in a highly fluid context. The selectivity criteria that the Bank has applied in developing the ISN are: (a) alignment with the Compact and the country's binding constraints, (b) alignment with World Bank Group comparative advantage in the Somali context, (c) operational feasibility given security and access, and (d) conflict sensitivity, in particular the need for regional balance. This approach ensures that the Bank focuses scarce resources and capacity in areas of its comparative advantage while also leveraging partnerships for peace- and state-building in other important areas.

The WBG will stress a differentiated regional approach, within an emerging national framework. For years, Somalia's donors have dealt with its regions independently of one another. While this approach has been supported by the regions themselves given differentiated needs, it has not fostered a national framework. The WBG's approach under this ISN, in line with the objectives of the compact, will balance a respect for regional differences while supporting the emergence of national foundations through policy and knowledge work and through activities that connect the country. The development of sector programs under the ISN will be based on dialogue with the federal authorities in Mogadishu, as well as with regional authorities responsible for the delivery of services within the regions. Over time, and in line with the emerging constitutional framework, the Bank will support the government to develop a procedure and norms-based system for resource allocation.

Security, improved governance and the political transition will remain overriding influences on ISN delivery. The program will need to remain flexible in terms of sector and geography, as well as engagement modality, depending on security, governance and political conditions. Assuming conditions continue to improve in southern Somalia, the WBG will gradually increase its engagement there in line with other international actors. Given historical sensitivities, any increase in Bank programming in southern Somalia should not be at the cost of regional balance. If the situation deteriorates, the Bank will maintain an engagement in areas that are safe and accessible while continuing to invest in knowledge generation, reverting to the approach that the Bank has pursued since 2003.


Last Updated: Mar 09, 2015

Work carried out under the World Interim Strategy achieved some important results:

  • The Bank established a trust-funded analytic program that continues to be the main platform for knowledge generation today. The US$2 million Somalia Knowledge and Political Economy project (SKOPE) funded by the State- and Peace-Building Fund (SPF) focuses on core economic data and political economy analysis. In Somaliland, the Bank has maintained an intensive policy dialogue with the authorities through the SKOPE-financed household survey, a public expenditure review, and the process of building a set of national accounts. In 2011, SKOPE commissioned a Financial Diagnostic Assessment (FDA) of a Somali whistleblower’s account of financial mismanagement inside the former TFG government. A public summary of the FDA was picked up in the news media and in the UN’s Monitoring Group report for 2012, and strengthened both Somali and international resolve to tackle public finance management under the new government. More recently, SKOPE has facilitated the Bank’s support to the Economic Recovery Plan and debt data reconstruction. 
  • The Bank’s engagement with the private sector – developed and delivered in partnership with the IFC – is the largest in the portfolio. The Somalia Private Sector Re-engagement project (SOM-PREP), a private sector development platform financed by the SPF, Danida and DFID, is in its second phase. Active only in Somaliland to date, the project has a programmatic approach allowing for flexible and adaptive work, based on requests from government and covers investment climate and regulatory reforms, PPPs in the ports and waste management sectors, and banking supervision. The project also engages at firm level through value chain work and has established the Somaliland Business Fund, a matching grant window to support enterprise development. The SBF has now awarded US$4.6 million in grants to 80 small and large investment projects, crowding in total private investments exceeding US$10 million and generating an expected 1,500 additional jobs.
  • The Bank’s Community Driven Recovery and Development project (CDRD) was developed in partnership between the Bank and donors. Although the Bank stopped its funding in 2010, the project remains active across Somalia as a platform for bottom-up delivery of community-based support delivered by NGOs.
  • With funding from the LICUS (Low-Income Under Stress) Trust Fund, the Bank stayed engaged in Public Finance Management, focused mainly on the legal framework in Somaliland. Since the transition, this earlier engagement has allowed the Bank to step up rapidly and support the FGS to establish PFM credibility through a self-assessment process and the auditing of the 2012 financial statements, both key signals of commitment.


Last Updated: Mar 09, 2015

To deliver the Interim Strategy Note FY14-FY16 (ISN), the World Bank Group (WBG) is mobilizing internal and external trust fund resources, in a coordinated approach with key partners. The two key financing sources for the ISN are the SPF, which has committed $19.5 million to support the Somali transition, and a new WBG-administered Multi-Partner Fund (MPF), which will be anchored within the wider aid architecture as set out in the compact.

The MPF will be established from the start of the ISN period, but will scale up incrementally based on the speed of delivery and absorption capacity. The current estimate of MPF pledges are between $70 - 140 million in the first two years, with potential for iterative annual contributions thereafter of between $20 - 70 million. Given resource uncertainty, the ISN proposes core focus areas that can provide a platform for potential scale up.

Last Updated: Mar 09, 2015


Somalia: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments