The World Bank said on Tuesday it had approved a total of $80 million in grants to Somalia to support the government efforts to expand service delivery in the recovering Horn of Africa nation.
This is the first time in three decades the World Bank is making a disbursement to Somalia.
The lender suspended ties with Somalia in 1991 when civil war broke out and the central government collapsed.
In a statement, the bank’s board of directors said $60 million would go into Recurrent Cost and Reform Financing Project while $20 million will be used to fund Domestic Revenue and Public Financial Management Capacity Strengthening Projects.
World Bank Country Director for Somalia Bella Bird said the lender’s role is “to help Somalia rebuild core institutions that can restore citizens’ trust and redistribute resources to address extreme poverty”.
“For this CPF [ Country Partnership Framework (CPF)], our focus is to support Somalia’s institutions to extend their reach in providing services to citizens and to scale up our interventions that will open up economic opportunities.”
Somali finance minister Abdirahman Beileh described the World Bank move as “great news”.
The country has made some progress in rebuilding state institutions and improving economic performance in addition to carrying out reforms in the economic and security sectors, according to the World Bank.
Hafez Ghanem, Vice President of the World Bank for Africa, said Somalia provided an example for how the Bank can operate in the most challenging environments.
“We applaud the government for their commitment to reform and the steps taken towards building a better future for the country,” he said.
The World Bank says it projects Somalia’s economy to grow at an annual rate of 3-4 per cent despite it being vulnerable to recurrent shocks.
Between 2013 and 2017, Somalia’s GDP growth averaged 2.5 per cent but that has not been sufficient to translate into poverty reduction in the country.
Earlier this month, the International Monetary Fund (IMF) said it expected the economy to grow by 3.1 percent this year from 2.3 percent in 2017.