Saving Somalia Through Debt Relief
by Kevin Watkins-LONDON – Julius Nyerere, the first president of Tanzania, once asked his country’s creditors a blunt question: “Must we starve our children to pay our debts?” That was in 1986, before the public campaigns and initiatives that removed much of Africa’s crushing and unpayable debt burden. But Nyerere’s question still hangs like a dark cloud over Somalia.
Over the last year, an unprecedented humanitarian effort has pulled Somalia back from the brink of famine. As the worst drought in living memory destroyed harvests and decimated livestock, almost $1 billion was mobilized in emergency aid for nutrition, health, and clean water provision. That aid saved many lives and prevented a slow-motion replay of the 2011 drought, when delayed international action resulted in nearly 260,000 deaths.
Yet, even after these recent efforts, Somalia’s fate hangs in the balance. Early warning systems are pointing to a prospective famine in 2018. Poor and erratic rains have left 2.5 million people facing an ongoing food crisis; some 400,000 children live with acute malnutrition; food prices are rising; and dry wells have left communities dependent on expensive trucked water.
Humanitarian aid remains essential. Almost half of Somalia’s 14 million people need support, according to UN agencies. But humanitarian aid, which is often volatile and overwhelmingly short-term, will not break the deadly cycles of drought, hunger, and poverty. If Somalia is to develop its health and education systems, economic infrastructure, and the social protection programs needed to build a more resilient future, it needs predictable, long-term development finance.
Debt represents a barrier to that finance. Somalia’s external debt is running at $5 billion. Creditors range from rich countries like the United States, France, and Italy, to regional governments and financial institutions, including the Arab Monetary Fund.
But Somalia’s debt also includes $325 million in arrears owed to the International Monetary Fund. And there’s the rub: countries in arrears to the IMF are ineligible to receive long-term financing from other sources, including the World Bank’s $75 billion concessional International Development Association (IDA) facility.
Much of the country’s current debt dates to the Cold War, when the world’s superpower rivalry played out in the Horn of Africa. Over 90% of Somalia’s debt burden is accounted for by arrears on credit advanced in the early 1980s, well before two-thirds of today’s Somali population was born.