Lending Institutions, Health Care, and Human Capital

Lending Institutions, Health Care, and Human Capital

Tracy Jo Tyler

John Cronin

Sociology of Developing Countries

August 26, 2014

Somalia is recognized as one of the poorest countries in the world and is located in the horn of African and also formerly known as The Federal Republic of Somalia. Over the last 20 years Somalia has been involved in a civil war which has caused much damage to the country.  Many people of the country suffer from famine, disease, unhealthy living conditions, and they also lack the resources needed from proper health care. Foreign aid is provided from a wide range of countries and organizations to aid in providing health care, education, and providing people with basic resources need to live.

The International Monetary Fund (IMF) and the World Bank are financial agencies within the United States that tries to promote international trade, international monetary cooperation, and help assist to reduce poverty in developing countries. Somalia has been a member of the IMF since 1962, however there was a period of time when there was no interaction between the two due to the fact that Somalia did not have a government. In 2004, a parliament was created and Hassan Sheikh Mohamud was elected president. Since a new government has been established, the IMF has begun to rebuild their relationship with Somalia after 22 years. The IMF aims to provide Somalia with advice on how to regain and build their economy, although this will not occur until Somalia repays their debt of $352 million dollars to the IMF. On top of the debt they owe the IMF, Somalia also owes the World Bank $250 million dollars.

Somalia has recently received aid from other foreign donors such as the World Bank, The African Development Bank, and the European Union, as well as several other donors. As a result of receiving foreign aid, Somalia has begun to rebuild their economy with the new construction of housing, shopping malls and supermarkets. The IMF will not be loaning any money to Somalia due to the large debt owed, however the IMF will provide other aid such as advice on macroeconomic policies and technical assistance.  ("IMF, Donors Helping Somalia Rebuild Self-Sustaining Economy," 2014).

The health of a countries economy can largely depend on the health of the citizens with in the country. Poverty stricken countries, such as Somalia, tend to lack the necessary resources needed for proper medical attention. During the 20 years of conflict Somalia endured, private sectors managed the health care. With a new government and a new strategic plan set in place, there are plans for every citizen in Somalia to have access to basic health care by 2016(Nairobi, 2013) .

The health of Somalia’s population can have impacts on the economy on both a macroeconomic and microeconomic level. The largest profitable business in Somalia is the livestock sector. The Somalia livestock industry accounts for about 40% of Somalia’s GDP and is the main income earner for most Somalia People. In normal years, livestock and its products can account for 80% of total exports ("Livestock « SATG | Somali Agricultural Technical Group," n.d.). People must maintain a certain degree of health in order to work and continue to stimulate the economy.  People who are healthier tend to not miss work as much and tend to more productive while at work. Working in livestock is a very laborious job and with livestock being the largest sector of the economy, it’s vital to have healthy workers to ensure the economy will continue to bring in the large portion of the countries profit.