The business community in the Horn of Africa has welcomed the move by the World Bank and the International Monetary Fund to offer debt relief to Somalia.
Coming days after the Horn of Africa nation was admitted into the East African Community (EAC), the business community says the US Dollars 4.5 billion debt (about Sh600 billion) relief from the World Bank and International Monetary Fund (IMF) will not only strengthen the country’s fledging economy but also promote job creation and attract investment into a region that has long suffered from political, economic and climatic instability.
Leading Africa money transfer company Dahabshiil in a statement welcomed the move by the two international financial institutions saying it will spur business development.
“The US dollars 4.5 million debt relief from the World Bank and IMF will strengthen the economy, promote job creation and attract investment,” said Dahabshiil in a statement.
Dahabshiil added: “We as a company have always stood with financial progress and business development in the region.”
And Dahabshiil Group Chief Executive Officer Abdirashid Duale said, “The region is opening up and the debt relief will not only spur growth locally but also in the East Africa region where there has also been good news regarding the expansion of the EAC. For the business community, the debt relief will open more opportunities for investors and that will in turn create jobs for the thousands of youth in the region and in turn help build the economy,” said Duale.
He added, ‘’The region has a demographic dividend in terms of its young population. Entrepreneurs see this as an important opportunity for business. As Dahabshiil, we have invested sustainably in many countries on the continent and we welcome this move by the IMF and World Bank. Thanks to this, we will now play a big role in the economic growth of the region and the continent”
The International Monetary Fund (IMF) and the World Bank’s International Development Association (IDA) approved the debt relief on Wednesday. The two institutions said this will facilitate access to critical additional financial resources.
“It has made significant strides in rebuilding its economy and institutions,” said the IMF’s Director for the Middle East and Central Asia, Jihad Azour.
World Bank Vice President for Eastern and Southern Africa, Victoria Kwakwa said. “It has implemented critical reforms in support of pro-poor growth, poverty reduction, better public financial management and debt management.”
The economy has been hugely dependent on remittances from the diaspora community. With the debt relief, it is hoped that the environment will be more conducive to investment and growth, of course fuelled by diaspora remittances.
A study by the International Organisation for Migration (IOM) in 2021 revealed that 67 per cent of Somalis receiving money from relatives abroad are unemployed.
Members of the diaspora community send approximately $1.3 billion annually to their friends and relatives in the Somali regions, exceeding all humanitarian and development assistance to the country.