Debt: a noose around Somalia’s future

Dustin Barter Aid, Conflict, Debt, Food security, In the news, Livelihoods

Full debt cancellation is the only way forward for Somalia, write Dustin Barter, Oxfam’s Senior Campaigns and Policy Manager in Somalia, and Mohamed A. Ahmed, Independent Debt Specialist.

As the African Union Summit kicks off in Addis Adaba this week, Somalia remains swamped in debt, struggling to kick-start a more positive trajectory. Debt relief, a once hot topic (thanks Bono!), is now out of vogue: Somalia’s debt forgotten, but not forgiven. Instead, Somalia racks up sporadic attention for armed conflict and teetering on the edge of famine.

These are the harsh realities, but they obscure the change that is underway in Somalia, where the Federal Government has undertaken key reforms that are the pathway to debt cancellation. Reforms that contributed to recent World Bank grants totalling US$80 million and the EU’s first-ever budget support to Somalia for $116 million. Yet with a debt of US$4.6 billion, these grants are just drops in an ocean of debt.

The arguments for swift and full cancellation of Somalia’s debt are overwhelming.
Aside from successful reforms gathering pace, the arguments for swift and full cancellation of Somalia’s debt are overwhelming. Millions of Somalis rely on humanitarian assistance, and debt prevents Somalia from accessing much-needed cash to stimulate development. This is a debt accrued before the collapse of the Government in 1991— before the vast majority of Somalis were even born.

The realities of debt numbers

In Somalia, 2.6 million people remain internally displaced, 4.6 million people in need of humanitarian assistance and 3 million children out of school. These aren’t just numbers. As Halimo (pictured) explains:

“We lost all of our livestock due to the drought – goats, sheep, camels and donkeys. Some were for transport and others for income, such as milk and meat. It was a tragedy… We have no plan to return because there is nothing to go back to. There has been lots of rain, but who wants to eat grass?”

While this crisis is undeniably immense, Somalia’s $4.6 billion debt is small change by global standards. US$700 billion was spent bailing out US banks in 2008, around US$280 billion bailing out Greece over the past decade; both in the name of ‘global stability.’ Yet when it comes to Somalia’s debt, the international community looks the other way – failing to see that cancelling it will also contribute to stability.

Oxfam is an active member of the Somalia NGO Consortium which recently released Debt Cancellation for Somalia: The Road to Peace, Poverty Alleviation and Development. This outlines the simple, clear steps for debt cancellation – many of which Somalia has taken already. The barrier is a lack of political will.

Time to step up

The African Development Bank, IMF and World Bank are key to getting debt cancellation moving, but other debtors must also jump on board; the US, Italy and France are key; holding the biggest portions of Somalia’s debt.

To date, only China has provided full debt cancellation. There is a growing consensus that Somalia needs debt cancellation champions. Liberia and Sierre Leone benefited from the US taking such role, but in the current global climate, who is willing to step up?

Many, including The African Union and Organisation of Islamic Countries have expressed compassion and solidarity with Somalia. However, the time has come to turn words into actions, and escalate suggestions to demands.

Sceptics can continue to point towards armed conflict and governance disputes; all of which are major challenges for Somalia. Yet these challenges are further justification to reject the heavily indebted status quo and take a new approach. An approach where instead of drowning in debt, Somalia has the resources to deliver the services that enable people like Halimo to thrive.


Dustin Barter


Mohamed Ahmed