The World Bank has approved $80 million in grants to Somalia to fund public finance reforms. This will be the first disbursement to the government of the conflict ridden country in 30 years.
The World Bank resumed support for the country in 2003, after cutting ties when war broke out in 1991. In 2003, the bank focused on supporting HIV/AIDS and livestock programmes with other organisations, but never approved any direct lending to the government to date.
A statement released by the World Bank revealed its board had approved financing of $60 million for its Recurrent Cost and Reform Financing Project and $20 million for the Domestic Revenue and Public Financial Management Capacity Strengthening Project. According to the World Bank, “they represent a milestone in Somolia’s development and reconstruction”.
The Country Partnership Framework Programme created by the World Bank will also help the government in Mogadishu to improve services like education and healthcare, access to clean water, energy and finance for its citizens. Somalia’s economy was forecast to grow by an average of between 3.5 and 4.5 percent annually in 2019 to 2022 when the social programmes will run.
The World Bank said “while agriculture is key to the economy, it remains vulnerable to shocks. As such, services will continue to be a main driver of growth, especially in the financial, transport and communication and trade sectors”.
Somalia, hit by decades of conflict, has been pummelled by an insurgency by al Qaeda-linked al Shabaab, famines, and maritime piracy.
Although parts of the country are still plagued by violence, some stability in the capital in recent years has attracted investment from locals and Somalis living abroad.