by Mohamed Ibrahim
It is right and proper to first of all to acknowledge the tireless work, fiscal discipline, and economic reform the Somalia Ministry of Finance has achieved over the last two years to bring some sanity to our fiscal finances, cutting loopholes, which has spearheaded greater accountability and transparency across governmental finances. Under the competent leadership of Minister Abdirahman Beleh and his team, the Finance Ministry is on course to usher in further economic stability and growth for Somalia. This is to be welcomed and encouraged as it shows a better-coordinated government with an economic and political purposes.
While that is the case, it is also critical to point out Somalia’s international economic engagement requires urgent adjustment or total reversal. Somalia owes around $5bn, most of it interest and penalties on nearly three-decades-old loans made to the former military government of Mohamed Siad Barre, whose overthrow in 1991 plunged the country in the Horn of Africa into years of lawlessness and civil war. Those arrears make it almost impossible for Somalia to access new funds from the International Monetary Fund or the International Development Association, the soft loan arm of the World Bank that has money earmarked specifically for fragile states like Somalia. It is within this context Somalia’s leaders have called on multilateral lenders to accelerate the debt-forgiveness process so that the country can access further international loans and grant funds to spur economic growth and build much needed infrastructure development.
Ads By Google
While these aims seem noble, they are economically unwise and counter-productive to Somalia’s economic future. In Real terms, we are asking for debt relief so we can further indebt our country and future generations. This form of neo-liberal economics order has a mixed picture in Africa and the developing world for decades, impacting on their economic growth and ability to service their debts. Somalia is desperate for international help and assistance. However, we should not be repeating the same failed economic models onto our future generations and if history is any guide there is no badge of honour for repeating the same policy mistakes/short-termism that failed Somalia in the first place.
The first issue we need to understand is that the $5 Billion we owe to international entities and governments are not due for repayment at the moment. Yet, we are rushing for debt relief/cancellation to access further international financial loans and grants. This, is, in my view the wrong economic dosage for Somalia. It is also the wrong policy priority – because no infrastructure development is required or is urgent until security is established. In serious terms, we cannot be building bridges/roads for them to be bombed.
The real policy question for the Somalia and IC is why billions of dollars are being spent on security without tangible security results for over ten years? Mogadishu’s security is still under real threat as it was over ten years ago, allowing Alshabaab terrorist to collect taxation from the Somali economy and effectively forming invisible government within the country and economy.
Somalia should shop around internationally for better economic models and development that does not become economic and social liability in the long-run. Contrary to common belief, I take the view Somalia is a resourceful rich country and this should put us in a position of strength if we seek to negotiate a comprehensive trade policy with our international partners and investors.
The World Bank is rightly engaged in Somalia’s development to relief poverty and encourage economic growth. However, the critical underlying fact is also that the WB is doing other rich nation’s bidding so that Somalia’s resources and economy falls under the auspices of the neo-liberal economic order in the long-run. (There is no such thing as a free lunch, as it were). If that is the final destination, we should sit down with our international partners with mutual honesty for better economic terms while avoiding further debts altogether. This should change the trajectory of our economic negotiations with our international partners and beyond.
The tragic irony is that, we are in a position of economic strength without even knowing it, hence our country has become a theatre of dreams/focus for other nations with their business cooperations not far behind them. https://www.reuters.com/article/us-somalia-oil/shell-exxon-eye-return-to-somalia-ahead-of-oil-block-round-idUSKCN1TT0PZ
Mohamed Ibrahim is a London based activist – He can be reached via:
@Mi_shiine – ail: mohamedlsyf@gmail.com
