Full debt relief for Somalia: a new era for economic growth
By Ahmed Yuusef, CEO of Hormuud Telecom
The International Monetary Fund (IMF) has announced that Somalia will qualify for full debt relief by the end of this year, presenting a pivotal milestone for Somalia’s development.
Adding to this economic momentum is the World Bank’s forecast of Somalia’s GDP reaching 3.7% in 2024. Both will bring an abundance of opportunities for its burgeoning private sector.
Under the World Bank and IMF’s Heavily Indebted Poor Countries (HIPC) Initiative, full debt relief will reduce Somalia’s debt to $557 million. In the short-term, this will make more funding available for priority areas like infrastructure development. And in the long-term, it will be a steppingstone to Somalia’s economic growth and stability.
Other East African countries offer a blueprint for what a post-debt relief Somalia could look like. Uganda reached its HIPC completion in 2000 and has since experienced a marked increase in Foreign Direct Investment (FDI), particularly in the telecommunications and finance sectors.
Similarly, Somalia holds significant untapped potential for investors and is now better positioned than ever to showcase this on the global stage. The recent Somalia Economic Conference in May 2023 spotlighted the private sector’s openness to new international and public-private partnerships.
Somalia has the longest coastline in mainland Africa, which has allowed for the installation of subsea cable stations and contributed to a strong digital economy. But Somalia is in a good position to tap into the blue economy too. For example, through the development of the fishing sector and by becoming a maritime and shipping hub. The opportunities for growth are endless.
Debt relief will also allow for domestic entrepreneurship to thrive. Three-quarters of jobs in Somalia already come from entrepreneurial activity. Increased foreign investment and improved national security will create a more stable business environment for all Somalis.
As the CEO of Hormuud Telecom — Somalia’s largest private sector employer — I have seen first-hand the importance of the private sector in Somalia. Following decades of political instability and conflict, it has built up Somalia’s infrastructure and transformed the socio-economic landscape.
The telecommunications sector has been integral to Somalia’s infrastructural development. The increase in internet connectivity and mobile phone penetration have been essential for reaching our most rural communities and for driving digital inclusion.
As Somalia heads towards full debt relief, we are standing at the cusp of a new era of economic growth. It is clear to me that the private sector will continue to play a crucial role in navigating this.
