IFAD grant for Somalia in response to call for diaspora investment
Remittances to be channelled to agricultural development
Rome, 4 February 2013 – Following the recent call by Hassan Sheikh Mohamud, President of the Federal Government of Somalia, to its diaspora abroad to invest in the reconstruction of the country, the International Fund for Agricultural Development (IFAD) announced a new programme that will leverage more than US$1 billion sent home by Somalis annually. Remittances from Somalis living abroad are estimated to equal up to 50 per cent of the gross domestic product, which is vital for the country's economy.
Rebuilding Somalia through the Diaspora Investment in Agriculture (DIA) initiative and working with the Federal Government of Somalia and the United States Department of State's International Diaspora Engagement Alliance, (IdEA) IFAD will provide a grant worth $1.5 million to finance innovative diaspora projects. To encourage cross-border investment in agriculture, improve food security and increase rural employment, amounts ranging from $20,000 to $100,000 will be provided to implement the projects. The DIA initiative is expected to raise an additional $1 million in diaspora investment in agriculture in the first four years in Somalia.
Internationally, recorded remittances are approximately three times the amount of official aid and almost as large as foreign direct investment flows to developing countries. Approximately four times as much is invested in agriculture – largely smallholder agriculture – through remittances, than is invested in agriculture through official development assistance. Up to 40 per cent of remittances are sent to recipients in rural areas.
David Lane, U.S. Ambassador to the United Nations Agencies in Rome, Italy, emphasized: "Investing in agriculture is investing in growth. Studies have shown that growth in agriculture is three-to-six times more effective than growth in other sectors in raising the incomes of the very poor. Through this initiative, we are encouraging investment in the basic ingredients of stability, food security and jobs."
"We must harness this often-times invisible investment in agriculture, particularly in post-conflict countries and fragile states," said Kanayo F. Nwanze, President of IFAD. "Helping the diaspora invest in agriculture represents an opportunity to mobilize new resources to achieve our common goal."
The initiative draws on successful projects implemented by Somali diaspora organizations and investors around the world. The Netherlands-based organization Himilo Relief and Development Association for example, created an online remittance platform that allows people living abroad to send money to families in areas of Somalia that are difficult to reach and where security is a concern. Working together with local merchants, remittances can be picked up at local shops in the form of food staples (or groceries) avoiding the need for recipients to carry around large amounts of cash.
Notes to Editors:
- The U.S. Secretary of State, Hillary Clinton, and the President of Somalia, Hassan Sheikh Mohamud, met in Washington D.C. recently on the occasion of the U.S. government's official recognition of the Federal Government of Somalia.
- In 2012, remittance flows to developing countries amounted to more than $400 billion, an increase of 6.5 per cent from 2011.
- Migrant workers living abroad are estimated to maintain a further $400 billion in savings in their host countries.
- Remittance flows to developing countries proved to be highly resilient — they fell only 5.5 per cent in 2009 and registered a quick recovery in 2010. By contrast, there was a decline of 40 per cent in foreign direct investment flows and a 46 per cent drop in private debt and portfolio equity flows in 2009.
Press release No.: IFAD/02/2013
The International Fund for Agricultural Development (IFAD) works with poor rural people to enable them to grow and sell more food, increase their incomes and determine the direction of their own lives. Since 1978, IFAD has invested about US$14.8 billion in grants and low-interest loans to developing countries through projects empowering over 400 million people to break out of poverty, thereby helping to create vibrant rural communities. IFAD is an international financial institution and a specialized UN agency based in Rome – the United Nations' food and agriculture hub. It is a unique partnership of 169 members from the Organization of the Petroleum Exporting Countries (OPEC), other developing countries and the Organisation for Economic Co-operation and Development (OECD).