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Somalia from Resilience Towards Recovery and Development

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Somalia from Resilience Towards Recovery and Development Report No.34356-SO Report No. 34356-SO Somalia From Resilience Towards Recovery and Development Public Disclosure Authorized Public Disclosure Authorized A Country Economic Memorandum for Somalia January 11, 2006 Poverty Reduction and Economic Management 2 Country Department for Somalia Africa Region Somalia and Development Recovery Towards Resilience From Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of the World Bank GFATM Global Fund to Fight Aids, Tuberculosis and Malaria ICAO International Civil Aviation Organization ICRC International Committee ofthe Red Cross IDA International Development Association IDP Internally Displaced People IFAD International Fund for Agriculture Development IFC International Finance Corporation IMF International Monetary Fund ITCZ Inter-Tropical Convergence Zone ITU International Telecommunication Union JNA Joint Needs Assessment KPHIS Kenya Plant Health Inspectorate Service KSA Kingdom of Saudi Arabia LDC Least Developed Country LICUS Low Income Countries under Stress MCH Maternal and Child Health MDG MillenniumDevelopment Goal MDRP Multi-Country Demobilization and Reintegration Program MDTF Multi-Donor Trust Fund MICS Multi Indicators Cluster Survey NGO NonGovernmental Organization ODA Official Development Assistance OECD Organization of Economic Cooperation and Development PHC Primary Health Care RRA Rahanweyn Residtance Army PRS Poverty Reduction Strategy SACB Somalia Aid Coordination Body SATG Somali Agricultural Technical Group SFSS Somali Fisheries Sector Strategy SLSS Somalia Livestock Sector Strategy SRC Supreme Revolutionary Council STA Somali Telecommunications Association STD Sexually Transmitted Disease SWG Statistical Working Group TBA Traditional Birth Attendant TCG Technical Coordinating Group TFG Transitional Federal Government TNG Transitional National Government UAE United Arab Emirates UN United Nations UNDOS United Nations Development Office for Somalia UNDP United Nations Development Program UNEP United Nations Environmental Program UNFPA United Nations Population Fund UNICEF United Nations Children’s Fund UNESCO United Nations Educational, Scientific and Cultural Organization UNIP United National Independence Party of Zambia UNOSOM United Nations Operation in Somalia WHO World Health Organization WTO World Trade Organization ... 111 Table of Contents .. ACKNOWLEDGMENTS. ......................................................................................................... vi1 ... PREFACE ............................................................................................................................... viii EXECUTIVE SUMMARY ......................................................................................................... ix Hard Hit But Resilient and Diverse Economy .......................................................................... ix Mixed Sectoral and Governance Performance .......................................................................... x Fostering Economic Recovery., .............................................................................................. xiv 1. A NATION STILL IN SEARCH OF A STATE........................................................................ 1 From Democracy to Dictatorship .............................................................................................. 1 Collapse ofthe State and Wrenching Conflict........................................................................... 2 Reconciliation Leads to the Transitional Federal Government ................................................ -4 2 . RECENT ECONOMIC DEVELOPMENTS ............................................................................. 7 High Economic Costs Resulting from Civil Conflict and Absence of a State ........................... 7 Mixed Social Development Performance .................................................................................. 8 Children are at Extreme Risk - Undernourished and Often Unprotected.................................. 8 High Poverty and Inequality with Large Regional Differences............................................... 10 Economy Still Largely Based on Agropastoralism .................................................................. 13 Resilient and Expanded Private Sector .................................................................................... 14 Trade Expansion ...................................................................................................................... 17 Poor Macroeconomic Performance before the Civil War. ....................................................... 22 Fiscal Management in Northern Regions Mostly for Ensuring Security................................. 23 Need for Structural Monetary and Financial Sector Reforms ................................................. 26 Somalia Needs Donors, not Creditors ...................................................................................... 31 3 . PUBLIC SECTOR INSTITUTIONS AND MANAGEMENT.................................................. 33 The Legacy of State Failure ..................................................................................................... 33 Surviving Public Sector Institutions Are Weak ....................................................................... 34 Building Accountable and Capable Somali State Institutions ................................................. 38 4 . THE PRIVATE SECTOR: VIBRANCY AMIDST RUINS ..................................................... 51 Private Sector Development with No Regulations .................................................................. 51 Historical Legacy ofInformality and State Interference ......................................................... 52 Adapting to War and Anarchy ................................................................................................. 53 Structure and Sectoral Mix ofthe Private Sector ..................................................................... 57 Priorities for Enabling the Somali Private Sector .................................................................... 66 Improving the Legal Framework for Private Sector Development ......................................... 68 5 . THE AGRICULTURAL SECTOR ........................................................................................ 73 Need for Natural Resources Management to Address the Environmental Crisis .................... 73 Livestock Still Dominates Somalia’s Agriculture and Economy ............................................ 77 Crop Production Has Suffered but Has High Potential for Expansion.................................... 82 Fishing: Market Failures in an Industry with Untapped, Vast Productive Potential ...............86 Urgent Actions ......................................................................................................................... 88 Recovery ofHistoric Information............................................................................................ 89 iv 6 . EDUCATION: POOR QUALITY AND LIMITED ACCESS JEOPARDIZE CHILDREN’S FUTURE ............................................................................................................................ 91 The Educational System Was Bankrupt before the Civil War ................................................ 91 Access to Educational Opportunities Improved. but Still among the Lowest Worldwide ......92 Schools Are Inadequately Governed. Supplied. and Equipped ............................................... 94 Teachers Lack Skills and Motivation ...................................................................................... 95 A Mix ofPublic, Community, and Private Sector Financing .................................................. 97 Strategic Priorities: Teachers’ Training, Girls’ Access, and Vocational Education ................98 7 . HEALTH ........................................................................................................................... 101 The Health Sector Was Also Bankrupt before the Civil War ................................................ 101 Somalia Is Far From Achieving the Health-Related Millennium Development Goals .........101 Weak or Absent Public Role and Poor Facilities ................................................................... 103 Fewer Qualified but More Unqualified Health Workers ....................................................... 105 Inadequate Sector Funding Limits Access to Services .......................................................... 106 Strategic Priorities and Urgent Actions: Prevention and Regulations ................................... 106 8 . PROSPECTS FOR SOMALIA’S DEVELOPMENT............................................................. 109 A Conflict-Sensitive Strategy for Reconstruction and Development .................................... 109 Long-Term Potential for Sustained Economic Growth ......................................................... 113 Institutions and Policies for Fostering Economic Recovery .................................................. 116 BIBLIOGRAPHY ................................................................................................................... 119 ANNEX: THE CLIMATE AND GEOGRAPHY OF SOMALIA................................................ 127 STATISTICAL APPENDIX ...................................................................................................
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