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Overview

A sustained period of political and institutional progress projects the sense of a country gradually transitioning out of fragility and protracted crisis. The formulation of a Provisional Constitution in 2011, establishment of the Federal Government in 2012, and subsequent formation of five Federal Member States have re-drawn Somalia’s new map, creating space for a political dialogue. 

Presidential and parliamentary elections were concluded in August 2022, followed by a peaceful transition of power, underscoring the leadership’s commitment to work towards state-building and stability, even in a challenging political environment. Somalia’s private sector remains a source of resilience and innovation as political relations in the Horn of Africa and Red Sea regions experience dynamic change, with new opportunities for Somalia to benefit from its proximity to these markets for trade and regional integration. 

Somalia qualified for the Heavily Indebted Poor Countries (HIPC) initiative in March 2020, restoring its access to regular concessional financing and launching the process toward debt relief. It cleared arrears to the African Development Bank (AfDB), International Monetary Fund (IMF), and International Development Association (IDA), reducing its external debt from $5.3 billion to $3.3 billion in 2021, equal to 45% of its gross domestic product (GDP).

Somalia reached agreements with Paris Club creditors in March 2020 on the terms of its debt relief and is servicing its outstanding debt to IDA. To receive irrevocable debt relief, it must maintain sound macroeconomic policies, implement its poverty reduction strategy—the Ninth National Development Plan—for at least a year, and complete a set of policy measures known as the HIPC Completion Point triggers, aimed at promoting inclusive growth and poverty reduction. 

Economic Development

Somalia continues to rebuild economic governance institutions despite the difficult circumstances, including its susceptibility to climate-related shocks and the higher global prices caused in part by the war in Ukraine.  

It has several opportunities—rapid urbanization, the growing use of digital technologies, planned investments in sectors such as energy, ports, education and health—that can support economic growth and job creation. However, it is experiencing a severe drought, with conditions for famine emerging in some parts of the country preventing the economy from sustaining a modest rebound in growth. Real GDP growth is projected to slow to 2.2% in 2022, from 2.9% in 2021.

Poverty in Somalia is deep and widespread. In 2019, an estimated 69% of the population lived below the poverty line, with GDP per capita estimated at $502 in 2021. The worsening drought is calculated to have led to nearly 50% of the population becoming food insecure. One million people had been displaced from their homes by the end of July 2022, as rural dwellers sought access to food and basic services in urban areas. This growing size of the internally displaced population is likely to contribute to greater vulnerability and poverty overall. Increasing remittance inflows and grants (jointly estimated at 60% of GDP), as well as the government’s social protection program, Baxnaano, are providing some relief.

Building resilience to shocks is a priority for encouraging growth and job creation. Steadily implementing reforms that can support Somalia in reaching the HIPC Completion Point will be critical for creating the foundations necessary 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’s engagement. Drawing on World Bank Group expertise, the policy notes provide sector-specific advice for government leadership, as well as an opportunity for it to reinvigorate its agenda for reform.

Last Updated: Oct 06, 2022

What's New

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
Vera Rosauer
External Communications Officer
Nairobi, Kenya
(254-20) 293-681
For project-related issues and complaints