Somalia is rated 185 on the Climate Vulnerability Index, with recurrent years of drought pushing it to the brink of famine in early 2023.
Somalia’s government is reaching out to main corporates in the country to channel investments into combating or adapting to climate change.
A memorandum of understanding (MoU) signed on Wednesday shows that the country’s Ministry of Environment and Climate Change will work with local telco Hormuud and other firms which will in turn redistribute funding received by the government for investments in local green sectors.
It will be similar to a Public Private Partnership (PPP) where Somalia is to tap into the $100 million pool of funding from the Green Climate Fund.
The exact areas where the money was to go was not yet made public, but officials said the funding is intended to support a range of green initiatives including reforestation, green energy generation and community adaptation.
“Sustainability is built into the bricks and mortar of what we do – our operations are driven by creating a better future for Somalis,” Ahmed Yusuf, CEO of Hormuud Telecom, said on Wednesday after the MoU was signed.
“This partnership allows us to leverage our extensive infrastructure and resources to power Somalia’s climate resilience initiatives and make real strides towards a sustainable tomorrow.”
The Ministry also listed Salaam Somali Bank, BECO and Somgas among corporates involved in the arrangement.
Salaam Somali Bank is Somalia’s oldest private financial institution while BECO, or Baidoa Electric Co, is a public-private enterprise based in Baidoa, the capital city of South West State of Somalia. Somgas, meanwhile, is a leading player in the liquid petroleum gas (LPG) market.
These firms will work under the policy guidelines of the Ministry to reinvest the money the government receives from the Fund into local projects. Officials said this idea is to speed up projects by riding on the networks of the corporates.
“The Public Private Partnership will drive forward climate resilience projects in Somalia and contribute to the National and the East African Community’s Climate Change Policy,” a dispatch said of the MoU on Wednesday. The MoU will last for five years, initially.
Somalia had earlier tapped into the Global Climate Fund, which helps countries speed up climate response action through what it calls “country-owned partnerships”.
Backed by the UN, the Fund has become the world’s largest multilateral climate-focusing financing. It allocated $100 million for climate action investment in Somalia for the next one year, according to a statement in March by the Fund.
Khadija Mohamed Al-Makhzoumi, Somali Minister for Environment and Climate Change, said the new arrangement is a “a leap forward”.
“By leveraging the strengths of the private sector and its unrivalled insights into local opportunities for sustainable development, we’re clearing the road ahead to address the pressing climate challenges our nation faces,” she said.
“Somalia and the East African region are on the frontline of climate change.”
Somalia is rated 185 on the Climate Vulnerability Index, with recurrent years of drought pushing it to the brink of famine in early 2023.
This was followed by floods, displacing over a million people. Drought, floods and insecurity have combined to render over 7 million people across the country in need of humanitarian assistance, UN data show.
But the country also lacks infrastructure to mitigate climate shocks.
Shuayb Haji Nur Mohamed, Managing Director of Salaam Somali Bank, stated, “Climate finance holds the key to unlocking resilience in a country like Somalia, on the frontlines of the climate crisis, and this MoU essentially puts that key in our hands.”
“As The Banker Magazine’s International Islamic Bank of the Year, we’re a trusted pillar of the community, with a deep understanding of the opportunities for investment into innovative, home-grown climate solutions.”