Economic adjustment in conflict-affected and fragile states in Africa: Lessons from Somalia

Fragile states in Africa, like Somalia, are grappling with tensions and tradeoffs between development imperatives and stabilization objectives, the need for economic stimulus and debt sustainability, and global financial stewardship and transparency. At the same time such countries need to focus on strengthening local public and private sector capacity. Indeed, the two countries are confronting extraordinary development challenges, including with respect to development finance. For more than a decade, the international community has stepped up efforts to engage more effectively with fragile states whose economic performance is impaired by limited administrative capacity, persistent social tensions, ongoing conflict, and political instability.

The International Monetary Fund and World Bank are engaged in some form in almost all fragile states to improve economic management and performance, reduce poverty, and improve governance. Development assistance is inherently risky in these environments, where weak policies and institutions correlate with a lower probability of successful outcomes. Despite the risks, there is a strong rationale for engagement as the impact of well-designed and supervised aid-financed programs can potentially be very high.

On October 17, the Brookings Africa Growth Initiative and the Brookings Doha Center hosted Finance Minister Abdirahman Duale Beileh of Somalia for a conversation on these and related issues.