Somalia urged to clear outstanding loans to qualify for lending

Somalia will wait longer to qualify for development lending from the African Development Bank (AfDB) until the country clears all the outstanding loans, limiting its ability rebuild its economy at the time of relative calm because of expanded peacekeeping efforts.The regional director for AfDB’s East Africa Regional Resource Center Gabriel Negatu said in an interview in Nairobi on Tuesday that despite the bank’s interest to re-engage with Somalia, loans are not possible. “We have started to engage with sections of the Somalia republic that are peaceful. We are discussing to see what kind of projects we can work on and how much assistance we can commit but it will be purely on development assistance basis,” Negatu told Xinhua in an interview on Tuesday.Records from the AfDB indicate that un-serviced debts attributed to Somalia totalled 81 million U.S. dollars as of December 2010. The bank’s operations in Somalia were discontinued early 1991 following the outbreak of the civil war. Prior to the civil war, AfDB said it had on a cumulative basis, approved 23 loans and two grants for a total amount of 238.4 million dollars, of which 54 percent was disbursed. Twelve projects were completed and eleven projects were at various stages of implementation. The underutilized loan balances totaling 107.5 million dollars were canceled in 1996.The debts are attributed to all sections of original Somalia republic including the autonomous regions of Puntland and Somaliland. This means that even the two regions that are relatively peaceful and are seeking sovereignty cannot qualify for the bank’s debt funding. Hopes that the bank may resume lending engagement with Somalia were first rekindled when a delegation visited Somaliland last year “to discuss cooperation on water, agriculture and capacity building,” the bank said.Then this year, AfDB President Donald Kaberuka said the bank is keen to reengage with Somalia citing the growing international interest to re-establish the country’s economy and diplomatic relations. The British government reopened its embassy in Mogadishu in February while Turkish Airlines started direct twice-weekly service between Mogadishu and Istanbul in April. But it has emerged what the country is only likely to benefit from the 300 million dollars committed by the bank to the Intergovernmental Authority on Development (IGAD) region between 2011-2013, in support of long-term programs to build resilience through water and agriculture interventions and promotion of economic opportunities.