Development lenders pledge $8 bln to Horn of Africa

By Aaron Maasho

ADDIS ABABA, Oct 27 (Reuters) - Global development lenders, including the World Bank, African Development Bank and European Union, pledged more than $8 billion on Monday to boost economic growth and reduce poverty in eight countries in the Horn of Africa.

The region, which includes Kenya, Somalia, Ethiopia, Eritrea, Djibouti, Uganda, Sudan and South Sudan, includes some of the world's fastest-growing economies - with vast, untapped natural resources - but it has also been beset by extreme poverty and conflict.

The funds will help to support infrastructure development, including regional oil and gas pipelines, programmes to improve health and access to energy and the expansion of university education and job training in the coming years.

"The countries of the Horn of Africa are making important yet unheralded progress in economic growth and political stability," United Nations Secretary General Ban Ki-moon said in a statement announcing the commitments.

"Now is a crucial moment to support those efforts, end the cycles of conflict and poverty, and move from fragility to sustainability," said Ban, who is leading a trip to the region that also includes World Bank Group president Jim Yong Kim.

The World Bank's pledge of $1.8 billion includes $600 million from its private-sector arm that will go toward regional pipeline and road projects linking Uganda, Kenya and South Sudan, among other projects.

"There is greater opportunity now for the Horn of Africa to break free from its cycles of drought, food insecurity, water insecurity and conflict by building up regional security, generating a peace dividend, especially among young women and men, and spurring more cross-border cooperation," Kim said.

The Islamic Development Bank, meanwhile, pledged $1 billion for infrastructure development, food security and other areas in Djibouti, Somalia, Sudan and Uganda.

Sudan and South Sudan are currently the region's only oil producers, though nearly every state in east Africa has made large oil and gas discoveries. Oil production is due to begin soon in Kenya's Lake Turkana region and in Uganda.

But while the region's natural resource potential could be a game-changer, there are also enormous challenges.

The Horn has among the highest concentrations of displaced people in the world, with war and famine making 2.7 million people refugees and 6 million people displaced within their own countries, according to a World Bank summary of the region.

In addition, there are four main conflicts in the region, including the separation of Sudan and South Sudan, the internal conflict in South Sudan, conflict in Somalia and the dispute between Ethiopia and Eritrea, the report said.

(Writing by Edith Honan; editing by David Stamp)

• Politics & Government
• South Sudan
• Horn of Africa