Somalia taps World Bank support to promote economic resilience
Mogadishu, Somalia (PANA) - The World Bank’s Board of Executive Directors has approved Development Policy Financing (DPF) that introduces for the first-time drought index insurance to 180,000 of Somalia’s pastoralists of which 90,000 are women.
The $125 million IDA grant is the first of two operations in a programmatic series that aims to boost revenue, enhance debt management and accountability of public spending, and increase climate-smart private sector investments.
A World Bank statement explained that the programne will facilitate access to microfinance for lower- income groups (including pastoralists) in Somalia that operate mostly in climate-vulnerable sectors of the economy such as agriculture, fisheries and micro businesses.
The DPF also seeks to expand access to greener and more affordable electricity and support fisheries development, tapping into new sources of growth. Resources from the grant will help the government finance essential public services.
“This DPF signals the government’s commitment to continuing important structural reforms following the Heavily Indebted Poor Countries (HIPC) Completion Point, paving the way for a more stable and sustainable future,” said Kristina Svensson, World Bank Country Manager for Somalia.
The reforms supported in this operation complement the World Bank’s broader engagement in Somalia and is aligned with the objectives of the World Bank’s Country Partnership Framework for Somalia (FY24–28).
The proposed series is part of the World Bank’s support to help Somalia construct a more stable, visible, and legitimate state, foster inclusive private sector-led growth, and enhance resilience, with a long-term view to restoring the social contract and enabling Somalia’s emergence from fragility, conflict, and violence.
Achieving the results of this DPF is closely linked to World Bank’s portfolio and investments by other development partners. Furthermore, this operation aligns with corporate commitments on climate co-benefits, reducing gender gaps, and maximising finance for development.
The approval comes at a time when Somalia continues to face multiple and overlapping shocks that reduce economic growth and contribute to widespread poverty.
Somalia is the world’s second most exposed country to climate change impacts. For Somalia, the projections for temperature rise have the highest certainty. Climate change is making periodic droughts and floods more frequent and severe and is inextricably linked to Somalia’s social and political vulnerabilities.
“Sustainability of public finances, supported by the DPF, is critical for ensuring economic resilience. Actions to strengthen domestic revenue mobilisation, manage better public debt, and enhance accountability of public spending create the building blocks for adequate funding for development and contribute to macroeconomic stability,” said Stella Ilieva, Task Team Leader and Senior Economist.
-0- PANA AR/MA 31July2024
