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26 October 2026 – The Federal Republic of Somalia has made significant strides in debt management, according to a Public Finance Review (PFR) report by the World Bank released on Monday.
Somalia is a post-conflict federal republic with an estimated population of about 19 million.
Speaking at the report’s launch at the World Bank offices in Nairobi, Verena Maria Fritz, Lead Governance Specialist for the Kenya Country Management Unit, which covers Kenya, Rwanda, Somalia and Uganda, said Somalia had made significant progress in rebuilding core fiscal institutions, strengthening fiscal and debt transparency, and restoring macroeconomic stability.
Hideki Matsunaga, the World Bank’s Country Manager for AEMSO, said Somalia had been on a journey for the past decade and had now rebuilt, laying an important foundation for economic recovery. He noted that public finance had for years relied on external assistance, and that Somalia now needed to focus on its ability to mobilise domestic revenue.
“Progress can be seen, but revenues remain low,” Matsunaga said.
He urged the government to improve customs administration, increase revenue collection and tax administration, and improve infrastructure.
“Raising more revenue is just part of the story. Every dollar collected from taxpayers must translate into better lives for citizens,” he emphasised.
He challenged the government, at all levels, to focus on prudent and more efficient spending and to put proper procurement structures in place.
“The challenge is to spend better, not more,” he said.
He also called for cooperation across all levels of government, arguing that the federal government and the federal member states have an opportunity to collect revenue better.
“Better revenue unlocks growth, more jobs and improved opportunities for all Somalis,” he noted.
Abdiqafar Elmi Hange, a Member of the Federal Parliament of Somalia and Deputy Minister of Finance, said 2023 was a major milestone that marked an important point in his country’s economic recovery. He said the Ministry of Finance had recorded a 76% growth in federal government revenue collection over the last four years.
“Revenue has helped improve essential services, and we are working towards strengthening cooperation on public finance across the federal government and the federal member states,” Hange said.
He said the ministry had developed the 2025-2029 financial plan, which continues to guide the country’s growth. He noted that challenges still threaten this resolve, citing insecurity, climate change, the Middle East conflict and the burden inherited from the COVID-19 pandemic.
“The PFR helps us understand challenges, opportunities and progress,” he said, adding: “Our responsibility is to strengthen this progress.”
Hange has previously held several public posts, including Minister of Planning, Economic Development and International Cooperation of Somalia’s Puntland State. During his tenure as Minister of Planning, he led the oversight of government economic policy reforms aimed at transforming the country’s socio-economic conditions. He has over 14 years of experience in the development and humanitarian sectors and in non-governmental organisation (NGO) operations.
How Can Somalia Finance Its Future?
In her executive summary briefing, Stella Ilieva, Senior Economist for Macroeconomics, Trade and Investment (MTI) at the World Bank, said the PFR is an analytical report that examines how governments collect and manage resources.
Ilieva noted that Somalia has made significant progress in rebuilding the state. However, she said the fiscal model is under pressure as grants decline.
On Somalia’s ministerial setup, she said the report, titled “Somalia Public Finance Review: The Next Stage of Public Finances” and officially launched at the World Bank’s Nairobi offices on Monday, noted that there are 153 ministries across Somalia, a number experts consider far too large.
She said additional resources will have greater impact only if they are managed well. As Somalia is a federal republic with several federal member states, she said fiscal federalism is central to growth, because fragmentation leaves everyone exposed.
She said the PFR identified several short-term and long-term policy options that, if implemented, would help Somalia achieve a great deal. Short-term options can deliver results in one to two years, while long-term options can bring significant improvement within three to five years.
The short-term options proposed in the report are preserving fiscal sustainability, mobilising more domestic revenue, strengthening fiscal federalism and improving spending efficiency.
“Somalia can mobilise more domestic revenue through a serious rollout of robust revenue systems and by broadening the tax base to include excise duties, sales tax and mining, among other avenues,” Ilieva said.
On strengthening fiscal federalism, she said Somalia can improve coordination between the federal government and the federal member states and harmonise fiscal systems.
To improve spending efficiency, she said, Somalia needs to rationalise institutions, strengthen payroll controls and plan the security transition. The report also notes that the country needs to improve procurement.
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The long-term options include building a broader domestic revenue base and clarifying the roles and responsibilities of different levels of government. Other long-term interventions include strengthening state institutions and service delivery, and enhancing fiscal sustainability and resilience.
World Bank staff estimated that the proposed policy options could deliver significant and tangible results, which could become visible in the 2026-2033 period. The simulated cumulative impacts are GDP growth of 9.3% above the baseline, a 6.0% increase in total revenue collected and expenditure savings of 0.4%.
“These are simulations, not forecasts, but they show what can be achieved if Somalia moves towards greater self-reliance,” she concluded.
Panel Discussion
During the panel discussion, panellists said that declining grants mean Somalia must now move from grants to domestic resource mobilisation.
They said Somalia must strengthen its domestic revenue, improve tax collection, and ensure that large companies pay more tax and small businesses pay less so that they are not overburdened. This was emphasised by Dr Sadiyo Siad, Chancellor of Hano Technical University and Hano Academy.
She added that Somalia must stop revenue leakages and shift from excessive importation to exporting more of its raw, refined and value-added products and services.
She said both the government and the private sector have a role to play, and that digital technology will spur growth.
A beneficiary of a scholarship herself, she said the government and the private sector must invest in people. She said support is needed for Technical, Vocational and Educational Training (TVET) centres to help equip the population with the required skills. She recalled that when she said she wanted to bring Science, Technology, Engineering and Mathematics (STEM) back to Somalia, many people thought she had gone berserk, but 14 or 15 years later, people can see how impactful it has been.
She urged government actors to improve public spending while reducing wastage.
“In a nutshell, Somalia needs to utilise resources that we know already exist,” Dr Siad said.
She added that there is a need for a clear fiscal plan and for equity, in recognition of the fact that each region has its own unique needs. She also called for proper fiscal planning, training of manpower and, finally, accountability.
“Federalism should not be simply about dividing revenues, but about ensuring that all Somalis have opportunities and access to government services,” she said.
She also noted that the Somali diaspora needs to come in, as its remittances and investments would help spur economic growth.
Hussein Muhammad, another panellist, noted that Somalia faces many challenges and that its economic vibrancy remains lower than that of neighbouring countries.
“In Somalia, you find just small-scale farming, livestock and small businesses, nothing much. The World Bank and other development partners need to help us strengthen tax collection.
“We need them to assist us in building tax and revenue collection systems,” Muhammad said.
Saleiman S Omar said Somalia must start crafting policy reforms to capture small and medium enterprises (SMEs), improve collaboration among governments, and facilitate and support remittances from the Somali diaspora. He added that the government must be resilient and adopt measures that avoid reliance on foreign assistance.
Fritz also led polls in which panellists voted on priority areas.
On the question “What is most important for making fiscal federalism work better for citizens?”, two interventions tied at 34% each: clarifying which level of government is responsible for what, and strengthening revenue sharing and coordination. These were followed by strengthening accountability for how public resources are used (24%), while establishing more predictable intergovernmental transfers ranked last at 8%.
On the question “Where should Somalia focus first to raise more domestic revenue?”, 52% of participants said it should reduce fragmentation and improve revenue coordination across jurisdictions. Broadening the tax base followed at 24%, while strengthening customs administration and improving taxpayer compliance tied for last at 12% each.
On the question “As external assistance declines, what should be Somalia’s top fiscal priority?”, 60% of panellists said the country needs to mobilise more domestic revenue, while 20% said it needs to improve the efficiency of public spending. Strengthening fiscal cooperation across levels of government came third with 18%, while protecting priority spending on basic services came last.
World Bank Practice Manager Abha Prasad said Somalia needs to move from stability to progress.
She highlighted five priorities: enlarging Somalia’s own-source revenue, improving spending efficiency, managing risks, strengthening public financial management so that procurement is consistent nationwide, and aligning who is responsible for what. She also emphasised the need for careful management of reforms.