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.
The biggest challenge now is how to engage with the people of Somalia to chart a path for an all-inclusive social, economic and political development agenda.
The country also faces a significant threat from a recent locust invasion and COVID-19. The Ministry of Agriculture declared a national emergency on February 2 following a locust invasion, which threatens food security. The United Nation’s Food and Agriculture Organization (FAO) projects that the number of locusts could grow 400 times by June if not treated. FAO put out a $76 million appeal to fund the spraying of the affected areas with biopesticides. Spraying commenced in February, but might be disrupted due to COVID-19 related restrictions.
The first case of COVID-19 was reported on March 16. The Ministry of Health has suspended all international flights and restricted entry for all travelers from worst-hit countries through to March 30. All learning institutions are closed, and public meetings banned in a bid to curb the spread of the novel corona virus. The government has dedicated $5 million to cushion against further transmission. Somalia’s health indicators are among the worst in the world and COVID-19 cases threaten to stretch a fragile healthcare system. Somalia will benefit from the World Bank Group’s increased $14 billion package of fast-track financing to assist companies and countries in their efforts to prevent, detect and respond to the rapid spread of COVID-19.
Years of conflict and fragility have left Somalia’s economy with a range of challenges, including population growth outstripping economic growth, acute poverty and vulnerability, recurrent external trade and climate shocks. Weak fiscal space and institutions, active insurgency and an incomplete political settlement have also affected the country’s economic strength.
Somalia also has several opportunities, as the economy is transitioning from traditional, rural pastoralism to urban, trade and services. Somalia’s economy has remained resilient despite recurrent shocks, including drought and sporadic terror attacks. Driven by increased confidence in the economy, implemented reforms and political stability, the economy is forecasted to grow at 3.2% in 2020, up from 2.9% in 2019.
Somalia’s business community is resilient, globally connected and entrepreneurial, technology offers high rates of mobile money penetration, and new opportunities for the Horn of Africa economic cooperation and integration plays to the country’s advantage.
The government is also committed to institutional reforms and reengagement with the region, including opportunities to rebuild human capital and chart a pathway toward economic resilience and growth.
Heavily-Indebted Poor Countries (HIPC) Decision Point
Somalia is focused on reaching HIPC Decision Point, to unlock financing for development and poverty reduction. In FY19, the World Bank supported $140 million in pre-arrears clearance grants to accelerate progress to the HIPC Decision Point, and secure gains in resilience. Somalia recently cleared its arrears to the International Development Association, paving the way for the country to receive debt relief under the Heavily Indebted Poor Country and Multilateral Debt Relief Initiative.
Last Updated: Mar 23, 2020