The World Bank in Somalia

Somalia is continuing to make progress towards reaching the Heavily Indebted Poor Countries (HIPC) Initiative Completion Point in late 2023, following re-engagement with the International Development Association (IDA) and the clearance of arrears to International Financial Institutions. Currently, Somalia is in the HIPC interim period and all HIPC Completion Point legislative reforms have passed through both houses of Parliament and negotiations with creditors are in the process of being concluded. The International Monetary Fund (IMF) also concluded their 5^th review of the Extended Credit Facility (ECF) program. On reaching the Completion Point, Somalia will qualify for full and irrevocable debt relief, which could reduce the debt-to-GDP ratio from 41% in 2022 to 6%, meaning that debt is sustainable in a forward-looking sense, contingent on the full delivery of HIPC, Multilateral Debt Relief Initiative, and beyond-HIPC assistance. Somalia must continue maintaining macroeconomic stability, come to an agreement with all creditors, and must implement its ninth National Development Plan (NDP9).

Political relations in the region are experiencing dynamic change, with new opportunities for Somalia to benefit from trade and regional integration. As Somalia moves out of fragility, it needs to gradually transition from relying on humanitarian aid to development approaches.

After five consecutive seasons of poor rains, the country continues to experience severe drought conditions. The number of people suffering from food insecurity could grow from the current 7.1 million to 8.3 million, with pockets of the population at risk of famine conditions by mid-2023 if humanitarian food assistance is not sustained. Grants including social safety net programs (mainly targeted to rural poor/vulnerable households) and remittances are helping to mitigate the humanitarian crisis. In 2022, partners mobilized more than $1.5 billion in relief. 

Economic Development 

As Somalia continues to rebuild economic governance institutions, it has several opportunities—rapid urbanization, the growing use of digital technologies, planned investments in energy, ports, education, and health—so building resilience to shocks is a priority to support economic growth and job creation. However, severe drought, rising food prices, falling exports, and slowing growth in remittances are preventing the economy from sustaining a modest rebound.

Amid repeated shocks, growth in GDP averaged only 2% from 2013 to 2020. Owing to the multiple crises, GDP contracted by 0.2% in 2020. GDP growth recovered to 2.9% in 2021 but is projected to have fallen to 1.7% in 2022 under the regional drought and worsening global economic conditions. GDP growth is forecast to rebound to 2.8% in 2023 and 3.7% in 2024.

Implementing reforms that can support Somalia in reaching the HIPC Completion Point will be critical for rebuilding human capital, strengthening institutions, and fostering an environment for inclusive, private-sector-led growth.  

The publication of the Collection of Policy Notes for the New Somali Government in June 2022, signaled an increase in the World Bank Group’s (WBG) engagement. Drawing on WBG expertise, the policy notes provide sector-specific advice for the government, as well as an opportunity for it to reinvigorate its agenda for reform.

Last Updated: Mar 30, 2023

The World Bank Group (WBG) continues to contribute to a well-coordinated international effort to support Somalia, allowing access to increased International Development Association (IDA) financing to deepen state and institution-building, and to support relief and resilient recovery from recent crises. Important economic reform documents have been finalized with WBG support, including the Somalia Inclusive Growth Development Financing Series which supports improved fiscal management, resilience, and private sector growth.

The World Bank Group Country Partnership Framework (CPF) for FY19-22 was extended by a year and adjusted to accommodate scaled-up IDA assistance and enhanced support for the institution-building and service delivery critical to strengthening the social contract. Other support for green, resilient, and inclusive recoveries from all the recent crises includes a closer focus on human capital and foundational infrastructure. A new CPF for FY24 - 29 is under preparation (expected delivery in early FY24). CPF priorities will be based on the analysis of Somalia’s overall development challenges, as outlined in the FY23 Systematic Country Diagnostic (SCD) Update, the Somalia Risk and Resilience Assessment (RRA), and Somalia’s Ninth National Development Plan (NDP9) 2020-24.  It will also draw on consultations with the government, public and private sectors, civil society, and development partners, taking into account the areas in which the WBG has a comparative advantage. 

WBG activities are clustered around three focus areas:

1.     Strengthening Institutions and Financing for Social Service Delivery 

2.     Enabling Inclusive Private Sector Growth 

3.     Strengthening Resilience 

Support has focused on helping scale up government financing in the short- and medium- term, and accompanying this with supplemental, budgetary support. Recently approved projects include:

Somalia Enhancing Public Resource Management Project ($60 million) - The objective of this project is to strengthen accountability, transparency, and institutional capacity in public resource management.

Barwaaqo - Somalia Water for Rural Resilience Project ($70 million) - The objective is to develop water, agriculture, and environmental services for rural communities in Somalia’s drylands.

Last Updated: Apr 07, 2023

The World Bank’s International Development Association (IDA) program in Somalia, co-financed by the Multi-Partner Fund (MPF) to the amount of $573.2 million, has a total active Bank portfolio of $1.91 billion comprising 18 national projects and 3 regional projects including:

The Recurrent Cost and Reform Financing (RCRF) Project: The project has enhanced focus on intergovernmental fiscal federalism, citizen engagement, and service delivery, and also introduced reform benchmarks for improved governance and service delivery at the Federal Member State (FMS) level. The project has also contributed to COVID-19 response and recovery through scaled-up support to FMSs through fiscal transfers for education and health service delivery, scale-up of the “Marwo Caafimaad” Female Health Worker Program, and retraining for COVID-19 response. The RCRF III continues to work with FMSs and the Banadir Region to strengthen governance and service delivery.

The Somalia Urban Resilience Project (SURP) I and SURP II:  Phase II builds on the completed SURP I and Somali Urban Investment Planning Project by strengthening public service delivery capacity and increasing access to climate-resilient urban infrastructure in all FMS except Somaliland. The project is the first Bank project to channel the funds down to the municipal level to strengthen the country’s systems for fiscal decentralization. The project includes technical assistance on urban governance and services, upgrading of informal settlements, infrastructure operation and maintenance, and citywide flood risk assessment. To assist in drought mitigation, the project triggered a $20 million Contingency Emergency Response Component activation to support key cities experiencing large inflows of internally displaced persons.

The Somali Capacity and Advancement, Livelihoods and Entrepreneurship Through Digital Uplift (SCALED-UP) Project established the Medium, Small, and Micro Enterprise Financing Facility “Gargaara”. This increased access to basic digital financial and government services targeting entrepreneurship and employment, particularly for women. Financing under the Gargaara MSME Financing Facility reached $5.6 million by the end of September 2022. The project also launched the Somalia Online Business Licensing and Registration System (BLRS), publishing the first National Risk Assessment (NRA) on Money Laundering/Terrorism Funding, and supported strong reform momentum of the Central Bank of Somalia. The Federal Government of Somalia  has adopted a Digital ID Policy and made progress toward issuing licenses to telecom operators.

The Somalia Water for Agro-pastoral Productivity and Resilience or “Biyoole” Project set the foundation for the provision of water to agro-pastoral communities in Somalia creating new water access points and constructing and/or rehabilitating others, improving access to water for 322,515 people, exceeding the set target of 250,000. When the first signs of drought started emerging, the project fast-tracked rehabilitation of boreholes to support drought efforts. Biyoole is also the first IDA project in Somaliland. The project supported several trainings, and exposure- and experience-sharing visits. The project has also delivered veterinary clinics,  providing extensive services to the pastoral community.

The Somalia Shock Responsive Safety Net for Human Capital Project (SNHCP) supported the operationalization of the National Social Protection Policy through the government-led national shock responsive social protection system in Somalia, known as “Baxnaano” with a focus on enhancing cash transfer (CT) linkages with the health and education sectors for enhanced human development outcomes. The SNHCP provides predictable and reliable cash assistance to poor and vulnerable households and has scaled up emergency cash transfer top-ups to impacted households in response to the ongoing drought. The project also supports the development of a national Unified Social Registry and the CTs delivery systems. The Baxnaano program is implemented by the Ministry of Labor & Social Affairs (MoLSA) in partnership with the World Food Program (WFP). In parallel, the project makes investments in developing policies, procedures, and delivery systems for shock-responsiveness, in partnership with the United Nations Children’s Fund (UNICEF).

Last Updated: Mar 30, 2023

The World Bank in Somalia operates in partnership with UN agencies and donors, including Denmark, the European Union, Finland, Germany, Italy, Norway, Sweden, Switzerland, United Kingdom, United States, and the World Bank State and Peacebuilding Fund, which supports the Somalia Multi-Partner Fund. 

Last Updated: Mar 30, 2023