Overview

  • Following more than two decades of conflict, a new federal government emerged in Mogadishu in 2012 within the framework established by the Provisional Constitution. Soon after, the international community agreed to the Somali New Deal Compact–an organizing framework (2014-2016) for assistance delivery to the country—with the Federal Government of Somalia (FGS),  in line with national priorities, increasing delivery through Somali institutions.

    The compact was succeeded by the New Partnership for Somalia in 2017, following a peaceful transition of power in February 2017. The New Partnership for Somalia, followed by the Somali Partnership Forum in Brussels in July 2018, aligns with the National Development Plan, and outlines collective priority areas critical for development, including humanitarian issues, national security, inclusive politics, and economic recovery.

    Economic Development

    Somalia’s real gross domestic product (GDP) growth weakened in 2017 due to the severe drought. Although Somalia averted widespread famine in 2017, the drought led to large-scale food insecurity, affecting more than six million people. More than half of the population lives in poverty and a large proportion is sensitive to negative shocks. Real GDP growth declined to 2.3% in 2017, compared to 4.4% in 2016. Economic activity is mainly anchored in agriculture and the services sector. The agriculture sector experienced near total collapse with crop failures, a widespread shortage of water and pasture; and increased livestock mortality. Inflationary pressure increased in 2017 due to drought driven by significant increases in crop prices.

    Implementation of fiscal policy has significantly improved, but challenges remain. Domestic revenue grew by 26.5%, from $112.7 million in 2016 to $142.6 million in 2017 driven by trade taxes. Donor grants almost doubled to $103.6 million in 2017 from $55.3 million in 2016 – a remarkable performance with 85% of the commitments being realized compared to only 50% realized in 2016. Despite the improved performance, the government is still struggling with basic challenges in its fiscal operations. Recurrent expenditures account for almost all expenditure, with capital spending accounting for just 3% of total spending in 2016 and 2017. Weak expenditure controls result into ad hoc cash rationing to ensure balanced budget and zero accumulation of arrears hence, affecting overall budget execution. Current spending priorities focus on the security and administrative services which account for almost 90% of total spending hence crowding-out provision for the economic and social services.

    Last Updated: Nov 12, 2018

  • The World Bank Group (WBG) continues to contribute to a well-coordinated international effort in Somalia, based on partnership between agencies that engage across the humanitarian-development-peace nexus.

    The Country Partnership Framework (CPF FY2019-22) was endorsed in September 2018 and guides country engagement for an integrated WBG response. Joint Implementation Plans across the Bank, focusing particularly on the role of the private sector via International Finance Corporation, will deliver comprehensively to the client. The CPF helps to identify common constraints limiting development opportunities to focus attention at regional and global level. It also helps drive the data and analytical agenda for the WBG.

    WBG activities are clustered around two CPF priorities:

    (1) Strengthening Institutions to Deliver Services

     (2) Restoring Economic Resilience and Opportunities

    The CPF aim to translate political and institutional gains into tangible improvements in the lives of people. Across both areas, the CPF aims to ensure gender equality and equity, the inclusion of marginalized groups, and will seek to address fragility by building resilience across all sectors.

    These priority areas are based on discussions in the Somalia Development and Reconstruction Facility (SDRF), a consultative process where the FGS and Federal Member States, World Bank, UN and development partners affirm the strong commitment of the international community and the Government of Somalia to harmonize development support in accordance to the National Development Plan (NDP).

    The World Bank continues to leverage its comparative advantage; with a portfolio focus on recipient-executed projects (i.e. projects designed and delivered by Somali institutions), the World Bank acts as a vehicle for building and using country systems, ensuring ownership and capacity internalization for sustainability.

    The program will continue to adapt flexibly in terms of sector and geography, as well as engagement modality, depending on security, governance and political conditions. 

    Last Updated: Nov 12, 2018

  • The World Bank program in Somalia is largely funded by the Multi-Partner Fund (MPF). The current MPF portfolio focuses on core state functions, socio-economic recovery and urban development in Somalia.

    Supporting Reforms

    The MPF has made progress in engaging key government institutions to enhance their role in revenue collection and service delivery. The ‘Troika’ projects, namely the Recurrent Cost & Reform Financing (RCRF) Program, the Public Financial Management (PFM) Reform Project and the Public Sector Capacity Injection Project (CIP), focus on core government functions and support the Somali authorities to deliver services and enhance stability and growth in the country.

    Important steps have been taken in the areas of payroll reform, strengthening of the Somalia Financial Management Information System (SFMIS) as well as efforts to strengthen budget preparation and payment systems. The FGS’ increased public spending showcases enhanced capacity for government systems to transparently manage funds.

    In parallel to process and systems reform, the MPF is engaging with the government to support the development of a professional and sustainable civil service. These reforms are being rolled out federally and in Federal Member States (FMS) to ensure national coverage.

    These positive developments informed the first Article IV Consultation by the International Monetary Fund (IMF) in two decades in July 2015. IMF management approved a third 12‑month SMP covering the period May 2018–April 2019, following Somalia’s successful completion of two SMP’s.

    Supporting dialogue

    Recognizing that the Somali economy has reached the margins of growth in an unregulated context, MPF projects are helping the government in the development of a sustainable private sector-led economy. Public-Private Dialogues facilitated through sector engagements in Oil and Gas, Energy and ICT are building an understanding of the benefits to the consumer and to the private sector of improving the regulatory environment and the role of FGS in supporting economic growth. Projects on private and financial sector development, and remittances are helping to build systems for improving access to finance – a key constraint to growth.

    The World Bank is supporting the Ministry of Finance in facilitating policy dialogues to strengthen transparency and accountability in the areas of strategic public procurement, concessions, asset recovery and other selected areas of financial governance. The MPF pipeline has also served as a platform for catalyzing engagement by the International Finance Corporation (IFC) in Somalia.

    Supporting the evidence base

    In a context defined by the absence of credible data and information, the MPF portfolio is helping to fill knowledge gaps for evidence-based decision making in targeted sectors. This includes mapping wind patterns to inform investments in the energy sector and analyzing the Somali mobile money ecosystem. There are also poverty and macro-fiscal analyses through the High-Frequency Survey and the “Somalia Economic Update” series. The World Bank partnered with Somali authorities, the UN and EU to develop the Drought Impact and Needs Assessment (DINA) and subsequent Resilience and Recovery Framework (RRF) in 2018, which identify the root causes of recurrent drought, its cost and a strategy for medium-term recovery and long-term resilience.

     

    Last Updated: Nov 12, 2018

  • The World Bank Somalia portfolio is supported by two trust funds, the Somalia Multi-Partner Fund, a $320 million Multi Donor Trust Fund activated in August 2014 and the State- and Peace-Building Fund (SPF), which has contributed $36 million to Somalia since 2012. The MPF is supported by the European Union, United Kingdom, Germany, Sweden, Norway, Denmark, Switzerland, Finland, United States, Italy, and the World Bank SPF.

    The World Bank Group’s Board of Directors approved two investment programs worth $80 million in September 2018, marking the first International Development Association financing for government in more than 30 years.

     

    Last Updated: Nov 12, 2018

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LENDING

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

*Amounts include IBRD and IDA commitments


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Additional Resources

Country Office Contacts

Main Office Contact
Delta Center
Menengai Road, Upper Hill
PO Box 30577-00100
Nairobi, Kenya
+254-20-293-6061
For general information and inquiries
Hugh Riddell
Country Representative
Nairobi, Kenya
+254-20-293-6061
hriddell@worldbank.org
For project-related issues and complaints
somaliaalert@worldbank.org