IFAD grants Somalia 1.5mln USD to tap Diaspora investment
Tuesday, February 5, 2013
The International Fund for Agricultural Development (IFAD) has said it will provide a grant worth 1.5 million U.S. dollars to finance innovative Diaspora projects in Somalia in a new initiative to tap investment.
IFAD said amounts ranging from 20,000 dollars to 100,000 dollars will be provided to implement projects such as cross- border investment in agriculture, improve food security and increase rural employment. "We must harness this often-times invisible investment in agriculture, particularly in post-conflict countries and fragile states. Helping the Diaspora invest in agriculture represents an opportunity to mobilize new resources to achieve our common goal," said Kanayo F. Nwanze, President of IFAD in a statement issued in Nairobi on Monday.
The initiative, Rebuilding Somalia through the Diaspora Investment in Agriculture (DIA) and working with the Somali government and the U.S. Department of State's International Diaspora Engagement Alliance (IDEA), IFAD will provide a grant worth 1.5 million dollars to finance innovative Diaspora projects. Late 2012, Nwanze assured the East African Community (EAC) of full support in its efforts to fight hunger and become food self- sufficient. He said that EAC would be their top priority in 2013 adding that his senior officials would be dispatched to discuss areas of co-operation in revamping food production in the region."EAC is exemplary in its integration programmes and I fully endorse opportunities to work with the region," Nwanze said.
According to UN, two interconnected problems must be tackled - the immediate issue of some high food prices, which can impact heavily on food import-dependent countries and on the poorest people; and the long-term issue of how people produce, trade and consume food in an age of increasing population, demand and climate change. IFAD's DIA initiative is expected to raise an additional one million dollars in Diaspora investment in agriculture in the first four years in Somalia. IFAD said the development follows the recent call by Somali president Hassan Sheikh Mohamud to its diaspora abroad to invest in the reconstruction of the country.
The new programme will leverage more than one billion dollars sent home by Somalis annually. Remittances from Somalis living abroad are estimated to equal up to 50 percent of the gross domestic product, which is vital for the country's economy. 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. Internationally, recorded remittances are approximately three times the amount of official aid and almost as large as foreign direct investment flows to developing countries. About 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 percent of remittances are sent to recipients in rural areas.