Years of trust fund financing have enabled Somalia to rebuild after two decades of war and reestablish itself with IDA. The Somalia Multi-Partner Fund (MPF), established in 2013, was the primary source of financing for the Bank Group’s engagement in Somalia until 2019.
The country was in nonaccrual status since 1991, but with Somalia MPF support and in partnership with the African Development Bank, the International Monetary Fund, and the UN, Somalia reached the Heavily Indebted Poor Countries (HIPC) Initiative Decision Point in March 2020 and the HIPC Initiative Completion Point in December 2023. This enabled the country to achieve debt service savings of $4.5 billion and access to additional financial resources. Somalia’s external debt fell from 64% of GDP in 2018 to less than 6% of GDP by the end of 2023.
Building on the support provided by Somalia MPF financing, the portfolio has transitioned to hybrid IDA/MPF financing with a combined total of $2.3 billion as of December 31, 2023. This includes a series of Recurrent Cost and Reform Financing Projects that have incentivized key reforms related to government legitimacy, accountability, and the social contract, including domestic revenue mobilization, intergovernmental relations, public administration reforms, and service delivery at the subnational level.
IFC trust funds supported by Denmark and the European Commission have also been instrumental in encouraging private investment in the energy, information technology and industrial infrastructure sectors, and strengthening Somalia's business regulatory environment and trade transparency. This work has generated more than $5.3 million in domestic and foreign investment and streamlined the process of obtaining business registration, licenses, and trade permits for more than 7,150 firms.
The activities in this story were implemented with the generous support of the following development partners:
Denmark, European Commission/European Union, Finland, Germany, Italy, Norway, State and Peacebuilding Fund, Sweden, Switzerland, United Kingdom, United States.
For more information on how trust funds help coordinate, innovate and catalyze development action, please see the World Bank Group’s FY24 Trust Fund Annual Report.
