Country Brief

History
With a population of 7.7 million in 2006, and an income per capita estimated in 2002 to be $226 (compared to $515 in Sub-Saharan Africa), Somalia is one of the poorest countries in the world. The UNDP’s Human Development Index ranked Somalia 161 out of 163 countries in 2001. The civil conflict, continuing insecurity in many parts of the country, and poor access to services and infrastructure have made conditions worse than they were before the civil war.
Economic Developments
GDP per capita is estimated to have declined from US$280 in 1989 to US$226 in 2002 as a result of the consequences of the civil conflict. Absent or weak administrative structures provide minimal interference with trade or private sector activities. As a consequence, the private sector has flourished, trading with neighboring and Asian countries, processing agricultural products and manufacturing on a small scale, and providing services previously monopolized or dominated by the public sector. There has been significant (but unmeasured) private investment in commercial ventures, including in trade and marketing, money transfer services, transport, communications, airlines, telecommunications, construction and hotels, education and health, and fishery equipment, largely funded by the large remittances from the diaspora. The remittances, amounting to about $1 billion per year, have partially offset a larger drop in per capita output for Somalia. However, persistent insecurity threatens further growth of the private sector and the absence of provision of key public goods is hurting both rural and urban households and the private sector.
Social Developments
The civil conflict, absence of government, continuing insecurity in many parts of the country, and inadequate access to basic services and infrastructure worsened welfare and poverty compared to pre-civil war times. Extreme poverty (less than $1 PPP) is estimated at 43 percent. It is 10 percentage points higher for rural and nomadic populations. General poverty (less than $2 PPP) afflicts 73 percent of households, but reaches 80 percent in rural and nomadic populations. Income inequality is significant with the poorest 10 percent of the population receiving only 1.5 percent of total income.
Education
There have been modest gains in education indicators in recent years, but all are still extremely low. Gross primary school enrollment of 22 percent remains the lowest in the world. One in five Somalis is illiterate. Twice as many boys as girls attend primary and secondary school. Twice as many men as women are literate.
Health
Health indicators are also among the worst in Africa. Life expectancy is 47 years, and under-five and maternal mortality rates are a staggering 156 and 1013 per 100,000 live births, respectively. A majority of the population (71%) does not receive minimum dietary energy. Only 29% of the population has access to an improved water source and 25% to improved sanitation facilities.
Political developments
A Somali National Reconciliation Conference was opened in October 2002. The Intergovernmental Authority on Development (IGAD) sponsored the conference to show international support for a peace-building process. On January 29, 2004, all the key faction leaders signed a declaration on a framework for a five-year transition period.
As part of these efforts, a transitional parliament of 275 members was inaugurated in August 2004. The parliament elected Mr. Abdullahi Yusuf Ahmed president of the new Somalia Transitional Federal Government (TFG), and a cabinet was nominated in January 2005. The government officially relocated to Somalia on June 2005.
Since June 2005, when the TFG officially relocated to Somalia, it has been unable to exert full control over the territory and has experienced internal tensions to its authority. In June 2006, the Union of Islamic Courts (UIC) managed to take control of Mogadishu and some strategically important locations from the traditional factions.
The dramatic change in power balance, however, was only temporary. In December 2006, the Transitional Federal Government (TFG) aided by Ethiopian troops pushed back the UIC. In January 2007, the TFG President, Abdullahi Yusuf Ahmed, entered Mogadishu for the first time since he became the President in 2004. Public resentment of the continued presence of Ethiopian troops in Somalia created a volatile situation, seriously constraining humanitarian delivery and emergency operations in the centre and south of the country. Meanwhile kidnappings and piracy in the north-east region of Puntland has also led to a deteriorating security situation there.
A National Reconciliation Congress (NRC) conference in Mogadishu in August 2007 produced no breakthrough. In September 2007, some opposition (including UIC members and former TFG Parliamentarians and members of the TFG) held their own conference in Asmara, Eritrea, denouncing the TFG and the NRC and formally established the Alliance for the Re-liberation of Somalia (ARS). A national reconciliation process - proposed by the international community led by the U.N., and with the participation of both TFG and ARS - was held in Djibouti in June 2008 towards establishing peace. An 11 point agreement was signed in August between the TFG and an opposition ARS, calling for "end all acts of armed confrontation" within 30 days, and withdrawal of Ethiopian troops within 120 days after a UN peacekeeping force is deployed. The two sides continue to meet under this Djibouti Agreement with progress being reported on all matters under the Agreement.
Security
An escalation of armed hostilities and kidnappings in South Central Somalia and Puntland resulted in the UN relocating staff from Mogadishu and other locations and to raise the security level in Mogadishu to Phase V. In addition, piracy of vessels has increased dramatically in the Gulf of Aden and Indian Ocean off the coast of Puntland The EU, USA and other countries have committed to provide vessels to combat piracy in 2008 to ensure the delivery of humanitarian aid.
WBG Portfolio and Partnerships
The Bank's Program. The Bank’s activities are limited by the current circumstances of the country and are at the request of the international community. In 2007, the Bank approved an ISN for Somalia to cover the period FY08-09. Most of the activities focus on governance, institution and capacity building (public financial management), decentralized service delivery and local governance, improving the business climate and contributing to the collective international efforts to support the transitional process in Somalia. Most recently, the TA on PFM reform in all three areas of Somalia has been launched. In October 2005, the Bank allocated US$2 million for the health and fishery sectors from the special “Tsunami Recovery” window of the Japan Social Development Fund.
In 2008, the World Bank approved three grants amounting to US$10.19 million to support (i) Somalia’s urgent need to increase crop and livestock production in rural areas adversely affected by the drought and the current global food crisis through the Rapid Response Rehabilitation of Rural Livelihoods Project (US$7.0 million) funded under the Bank’s Global Food Crisis Response Program); (ii) the issuance of 60 community block and social access grants Somaliland and Puntland through the Community Driven Recovery and Development Project (US$2.49 million) funded under the LICUS Trust Fund; and (iii) private sector development through the Somalia PSD Re-Engagement Program – Phase I (US$0.7 million) funded under the LICUS Trust Fund. Three additional programs amounting to about US$3.5 million are being developed to support public financial management, phase II of the Somalia PSD Re-Engagement Program and PRSP preparation.
IFC. IFC’s strategy in Somalia will focus on advisory work. PSD activity has been curtailed by civil war and collapse of the Somali state. PEP Africa will be looking into opportunities to assist in capacity building of private sector associations. An IFC strategy for Somalia could also focus on improving the investment climate when political stability is achieved. IFC is working jointly with IDA on a private sector development initiative noted above.
WBI. Since FY03, WBI has been working closely with the Somalia Country Team to provide support to its capacity-building efforts within the framework of the CRN. Two capacity-building projects have been implemented by UNDP with WBI oversight. The first project “ Capacity Building for Somali Planners” seeks to develop the capacity of financial planners in Somalia as a means of fostering economic growth. The second project aims at providing improved connectivity and associated technical and pedagogical support to institutions in partnership with the African Virtual University. Somali officials have also continued to participate in various training programs conducted by WBI in the region. Donor Coordination. Through its engagement, the Bank has been coordinating closely with the United Nations and other donors. The Bank is an active member of the Somalia Donor Group and the Somalia Aid Coordination Body. In addition, the Bank jointly co-chairs the Joint Planning Committee, where donors strategize on development assistance for Somalia. Consistent with the implementation of the Paris Declaration on Aid Effectiveness, Bank support has also been guided by the OECD/DAC Principles for Good International Engagement in Fragile States , which seeks to foster a longer-term vision for engagement aimed at building legitimate, effective and resilient state institutions. Somalia is one of the pilot countries for this, with the Bank and DFID as the lead donors