Somalia to access new fund after debt clearance

After thirty years of being suspended from receiving funding due to outstanding debt, Somalia can finally receive investments from the International Fund for Agricultural Development (IFAD). Germany, Sweden, Belgium, and Italy paid off Somalia’s debt to the United Nations international financial institution. This debt clearance will help Somalia move from humanitarian to development financing, which is critical to improving food security in the country.

IFAD President Alvaro Lario announced that $11.6 million will be immediately available, while another $50 million will be used for a new agricultural development project that provides essential inputs such as seeds, irrigation technology, and climate-smart practices. The funding will also include microfinance loans. With an estimated 8.3 million Somalis at risk of high levels of food insecurity between April and June, this investment is expected to have a significant impact.

Somali President Hassan Sheikh Mohamud described the debt clearance as a “new dawn” for Somalia, and said that the country faces significant challenges that require support from the international community. The IFAD investment is the beginning of a transition that will help other international organizations to follow suit. The Governing Council meeting also marked the launch of IFAD’s 13th replenishment, which invests in almost 100 countries in projects benefiting over 90 million people. According to IFAD, only $0.04 of every $1 in official development assistance currently goes to agriculture. However, every $1 spent saves $10 in future emergency assistance, and IFAD reports more than doubling every dollar it receives into additional financing.

Furthermore, Ukraine became the 178th member of IFAD, with a heavily agricultural economy that has suffered following last year’s invasion by Russia. While most exports come from large-scale farms, 4 million small-scale growers produce 80% of fruits, vegetables, and dairy in Ukraine. Although Ukraine will not be integrated into IFAD’s funding cycle until IFAD13 begins in 2025, the institution will “explore ways to mobilize funds to support Ukraine’s rural development priorities, including the rehabilitation of rural infrastructure, activities that help increase agricultural productivity, improve competitiveness, and generate employment.”