The World Bank’s Board of Executive Directors has approved a $125 million Development Policy Financing (DPF) grant aimed at introducing drought index insurance to 180,000 pastoralists in Somalia, including 90,000 women. This initiative is the first of its kind in the region and is part of a broader effort to boost revenue, enhance debt management, and increase climate-smart investments in the private sector.

“We are grateful to@WorldBank Board of Executive Directors for approving the $125 million USD Development Policy Financing grant today. This financial assistance is timely and will support advance #Somalia‘s economic reform priorities including boosting domestic revenue, strengthening public financial management, enhancing debt management and supporting private sector development. The #Somali government is committed to delivering a better economic future for its resilient people”, The Minister of Finance of Somalia, Bihi Iman Egeh said on X Thursday.

Key Objectives and Benefits

The DPF grant, the first in a series of two operations, aims to:

• Provide drought index insurance to 180,000 pastoralists, mitigating the impacts of climate change.
• Facilitate access to microfinance for lower-income groups, particularly those in climate-vulnerable sectors like agriculture and fisheries.
• Expand access to greener, more affordable electricity and support fisheries development.
• Help finance essential public services and promote sustainable economic growth.

Enhancing Economic Resilience

“This DPF signals the government’s commitment to continuing important structural reforms following the Heavily Indebted Poor Countries (HIPC) Completion Point, paving the way for a more stable and sustainable future,” said Kristina Svensson, World Bank Country Manager for Somalia.

The program aims to enhance the resilience of Somalia’s economy by supporting sustainable public finances, strengthening domestic revenue mobilization, improving public debt management, and enhancing accountability in public spending.

Addressing Climate Change and Poverty

Somalia is highly vulnerable to climate change impacts, with frequent and severe droughts and floods exacerbating social and political challenges. The World Bank’s support is aligned with its Country Partnership Framework for Somalia (FY24–28), aiming to foster inclusive growth, enhance resilience, and restore the social contract.

“Sustainability of public finances, supported by the DPF, is critical for ensuring economic resilience. Actions to strengthen domestic revenue mobilization, manage better public debt, and enhance accountability of public spending create the building blocks for adequate funding for development and contribute to macroeconomic stability,” said Stella Ilieva, Task Team Leader and Senior Economist.

Long-term Vision

The World Bank’s initiative is part of its broader engagement in Somalia, focusing on constructing a stable and legitimate state, fostering private sector-led growth, and enhancing resilience to climate change. This operation aligns with the World Bank’s corporate commitments to climate co-benefits, reducing gender gaps, and maximizing finance for development.

As Somalia continues to face multiple and overlapping challenges, this grant represents a significant step towards a more sustainable and prosperous future for its people.