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publication September 14, 2021

Somalia Economic Update: Investing in Health to Anchor Growth

Latest Issue: 
  • September 2021


  • The latest Somalia Economic Update examines the current state of Somalia’s health sector and its important role in increasing economic growth.
  • Strengthening the health system is one of the biggest direct influences on improving human development and enhancing economic development in the country.
  • The report recommends opportunities in the areas of health financing, health service delivery and stewardship to improve Somalia’s health sector.

NAIROBI, September 14, 2021 – The health sector is an essential component of resilient and inclusive development. Investing in health will set Somalia on a path to reaping substantial demographic dividends from improvements in life expectancy and reductions in fertility.

The 6th edition of the Somalia Economic Update: Investing in Health to Anchor Growth notes that after 30 years of instability, Somalia’s health system is among the most fragile in the world. Somalia’s health outcomes lag in comparison to neighboring countries, and poor health outcomes are underlined by lagging health service delivery. Women and children have been most affected by gaps in maternal and child health services and high fertility rates. The COVID-19 pandemic has further highlighted that investing in Somalia’s health system is an urgent political, and economic consideration that is foundational to reducing fragility and enhancing economic development.

Currently, there is limited investment in the health sector, with Somalia’s health spending at just 1.3 percent of total government spending, which is below the 15 percent Abuja Declaration target set by African Union countries.

Investing in Somalia’s health sector is expected to have long-term benefits toward the country’s economic growth and development. Investments in health are demonstrated to increase life expectancy and productivity, resulting in growth in GDP. A recent study estimates that every dollar invested in health in a developing country yields between $2 to $4 in economic returns. Further, such investments can contribute to a stable and resilient health system to respond to health emergencies, such as the ongoing COVID-19 pandemic, which threatens to destabilize the country’s economic growth.

“The World Bank’s investments in health focus on expanding the coverage of high-impact health services by financing the delivery of select, high-impact health and nutrition services in an equitable and sustainable manner,” said Naoko Ohno, World Bank task team leader and co-author of the report. “This support should contribute to reducing poverty and enhance stability, leading to equitable, inclusive and sustainable economic growth.”

To improve health outcomes with limited available resources, targeted, cost-effective investments in health services are critical. This would include a package of high impact, cost-effective interventions that target the primary burdens of disease – family planning; maternal health and newborn health; malaria; HIV/AIDS; immunization; and child health, with nutrition.

The World Bank-financed Damal Caafimaad Project, approved in June 2021 and projected to begin in 2022, will help the government quickly expand access to high impact, essential health and nutrition services to address the leading causes of mortality in Somalia. The project will also strengthen health systems and the institutional capacities of federal and state health ministries to coordinate and use health resources. These investments are planned to contribute to improved health outcomes and strengthened government systems. 

Strengthening Systems and Stewardship

According to the report, government stewardship capacity is nascent and needs to be developed for improved health sector oversight, efficiency, and responsiveness to the population. Although the Federal Ministry of Health has developed policies to guide health service delivery, government capacity for health sector regulation, data collection and use, and oversight of health services is currently limited, impacting its ability to implement these policies. Further, most health service financing comes from donors and is off the government’s budget, contributing to considerable health sector fragmentation. As a result, systems for fund flows through the government have not been fully developed, limiting Public Financial Management (PFM) capacity. Intergovernmental coordination is also limited, reflecting political complexity and the nascent state of federalism.

Health service contracting is another way to clarify health service delivery roles between the purchaser (the government) and the provider (contractor) towards improved PFM systems. Government contracting of health services to NGOs is a means to strengthen government stewardship capacity and rapidly accelerate health service outcomes. In addition, the use of a harmonized, output-based provider payment formula would help establish the government’s role in setting health service prices, with the goal of achieving more equitable service delivery.