Sep 26, 2018 News
The Islamic Development Bank (IsDB) has reportedly suspended a US$5M loan to the Government of Somalia following accusations of mismanagement and corruption.
Voice of America, a US government-funded news outlet, reported that Somalia had started its Dryland Development Project in 2016 in three rural villages to help pastoralists build better mechanisms to resist drought, help them develop livestock and crops, as well as give them access to health and education services.
The project was set to cost US$5M.
As of February 2017, the Saudi-led Islamic Development Bank had transferred US$1.5M to an account at the central bank of Somalia in three installments. However, IsDB was forced to freeze the account, following an audit that raised concerns about an incoherent payment system and overpayments made to a particular supplier.
The IsDB said that the project coordinator, Abdishakur Aden Mohamud, submitted a report, which revealed “no substantial information” to suggest that progressive strides had been made on the project for which he is responsible.
Even while the audit was being conducted, the IsDB reported that the project coordinator withdrew finances both by cash and cheque, which are “not in line with the fiduciary and financial management system.”
The Islamic Development Bank’s general mandate places significant focus on the United Nations Sustainable Development Goals, especially as it relates to supporting small nations.
Since some of its member states are poor nations, which are prone to corruption, the IsDB conducts regular audits on the management of funds disbursed to them.
Recently, Guyana received approval for its first loan of US$20M from the Saudi-led bank. This loan is for the Guyana Power and Light Company (GPL) to fund its Utility Upgrade Programme. The programme is part of GPL’s Development and Expansion for 2014-2021.
The current pace at which Guyana progresses toward the renovation of the Cheddi Jagan International Airport, if repeated, could see the country experiencing a suspension of the US$900M resource envelope of grants and loans set aside for its development, as the Islamic Bank conducts regular, rigorous audits into the development projects which it funds.
Guyana joined the Islamic Development Bank in 2017. The bank had inked a three-year work programme starting in 2018.
It made a resource envelope of US$900M available to Guyana earlier this year. The funding if drawn down will be used to fund the key areas of human and rural development, economic infrastructure, and trade and competitiveness.
So far, the bank has awarded Guyana two grants amounting to more than US$500,000 in addition to the recent loan package.
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