Why Somalia’s quiet €35 million loan should worry citizens and partners
When a government decides to borrow in the open, there is at least a ritual: debate in parliament, a publicised agenda, a paper trail that future historians and auditors can follow. What happened in Mogadishu this autumn looks nothing like that ritual. According to reporting by Axadle, the European Investment Bank — nearly absent from Somalia’s financing landscape since 1980 — has agreed a first tranche of €35 million to the Somalia Reconstruction and Development Bank (SRDB), and President Hassan Sheikh Mohamoud’s cabinet quietly endorsed the loan on October 30th. Yet the official cabinet minutes make no mention of it.
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That omission is more than a bureaucratic lapse. It lands at the intersection of two realities: Somalia’s desperate need for reconstruction capital and the fragile, often personalized nature of its institutions. The result is a combination that should make Somalis and international partners sit up and ask basic questions about governance, transparency and risk.
Context: relief, reconstruction and a return to the lenders’ table
Somalia’s finances were transformed less than two years ago when the country secured roughly $4.5 billion in debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative. That milestone reopened international credit lines and created the space for development finance players such as the EIB to re-engage. In principle, that is constructive: capital can underwrite power lines, ports, roads and the modest industrial base that would give Somalis jobs at scale.
But post-conflict finance is a double-edged sword. Lending institutions have historically made cautious, conditional returns to fragile states because weak oversight raises the likelihood of waste, capture and opaque borrowing that ultimately burdens future taxpayers. The EIB’s purported due diligence visit to Mogadishu in September is therefore crucial. Still, the secrecy surrounding the cabinet’s approval — on a loan to a bank reportedly led by people close to the president — undermines confidence in how those safeguards are being applied.
Why the omission matters
There are three immediate risks when a politically sensitive financial decision is removed from the public record.
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Accountability evaporates. Cabinet minutes are not mere formalities; they are part of the glue that holds accountability together. Their absence invites speculation and stokes grievance in a country where memories of state capture and patronage remain fresh.
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Perception of conflict of interest. When leadership positions in an institution receiving international credit are linked to the president’s family, even the appearance of nepotism corrodes legitimacy. International lenders know perception matters almost as much as reality — reputation can derail projects long after contracts are signed.
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Debt sustainability and future risk. Somalia’s HIPC relief reset expectations for fiscal prudence. New lending must be prudently structured and transparently managed to avoid repeating cycles where sovereign obligations outlive the political terms that contracted them.
Voices from Mogadishu
“People here want roads and schools, not rumours about who stands to profit,” said Amina, a teacher in Hodan district who asked that her surname not be used because she still works with government-linked programmes. Her sentiment is echoed by donors in Mogadishu who say they welcome the EIB’s return in principle but want ironclad safeguards and public disclosure. “We need legal covenants, transparent procurement, independent oversight mechanisms,” one European diplomat told this paper on condition of anonymity.
On the other side, there are arguments for expediency. Somali officials, grappling with security challenges and an infrastructure deficit, see a narrow window to attract European capital. Fast-tracking a loan can be presented as pragmatic. But haste without transparency is a foreign policy bargain with domestic consequences, and it risks undermining trust at home and abroad.
Broader implications for fragile states
Somalia’s episode is not unique. Across fragile and conflict-affected countries, the return of development finance has raised a familiar debate: how to balance the urgency of rebuilding with the slow, painstaking work of institution-building. Donors have tried a range of responses — from blended finance and risk-sharing instruments to stronger conditionalities and third-party monitoring. All of these measures presuppose clear public records and domestic debate. Without them, the safeguards fray.
There is also a geopolitical dimension. As Western lenders re-engage, other external actors are active in Somalia, and the optics of opaque lending can feed narratives exploited by critics of Western involvement. That matters for the EIB’s reputation and for Somalia’s broader relationships.
What needs to happen next
At a minimum, Somali authorities and the EIB should agree to three public steps:
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Publish the cabinet minutes and any legal opinions that relate to the loan approval.
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Disclose the SRDB’s governance structure, including relationships that could create conflicts of interest, and set up an independent oversight board with international and Somali civil society representation.
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Make the EIB’s due diligence findings public or shared with parliament and key oversight bodies, with redactions only where necessary for security reasons.
Those measures would not just protect creditors and donors — they would protect Somalis. In struggling democracies, transparency is the cheapest and most effective anti-corruption policy available. It also buys political legitimacy for the very investments that citizens hope will change daily life.
Ultimately, the question is not whether Somalia should borrow to rebuild — it clearly should. The question is whether borrowing is done in the light, not the dark. If the previous year of debt relief taught Somalis anything, it is that future generations should not be asked to pay for the secrecy of today. The coming weeks should not be a test of who can get what through the system, but of whether Somalia’s institutions can demand that public decisions remain, above all, public.
By Ali Musa
Axadle Times international–Monitoring.
