By Abdifatah Ahmed Hersi - Economist
“The cost of this deadlock is neither abstract nor theoretical. It is measurable, cumulative, and already being borne by citizens who had no role in creating the crisis. Resolve it—not only because economics demands it, although it does, but because the people of Somalia have already paid more than enough.”- Abdifatah Ahmed Hersi
On 13 May 2026, the World Bank released its latest economic update on Somalia. The findings were sobering: growth had slowed, poverty reduction had stalled, and risks were mounting. Two days later, the Halane talks between the federal government and the political opposition collapsed without an agreement. The timing was not coincidental. These were not separate developments, but two chapters of the same story.
I am an economist. I work with data, measurable outcomes, and the structural logic of cause and effect. What the evidence increasingly shows is this: Somalia’s political crisis is not a distraction from the country’s economic challenges. It is the economic challenge—at least the one most within our power to resolve.
Somalia’s economy grew by an estimated 3 percent in 2025, down from 4.1 percent in 2024. The IMF projects growth of just 2.6 percent in 2026. These figures may appear modest, but their implications are profound when measured against the country’s needs. Somalia’s population is expanding at roughly 3 percent annually.
An economy growing at 2.6 percent is not reducing poverty; it is falling behind. Every tenth of a percentage point in lost growth represents thousands of families whose living standards do not improve, whose children’s nutrition does not recover, and whose economic vulnerability remains unchanged. Yet the political class continues to negotiate—or fail to negotiate—while the economy quietly loses growth it can ill afford to sacrifice.
The Architecture of Uncertainty#
Investment, whether private or public, domestic or foreign, is fundamentally a bet on the future. It requires reasonable confidence that contracts will be honoured, regulations will remain predictable, and institutions will function with a degree of stability.
Political deadlock erodes that confidence—not through a single dramatic event, but through the gradual destruction of predictability. When the opposition formally declared that it no longer recognised the government’s legitimacy following the expiry of the presidential mandate, the message sent to investors, trading partners, and international institutions was unmistakable: the rules of the game in Somalia were once again being contested.
The private sector, which lacks the capacity to absorb prolonged uncertainty, tends to pause investment precisely when the public sector needs it most.
The IMF Programme and What Is at Stake#
There is an even more immediate concern. Somalia’s IMF Extended Credit Facility (ECF) programme remains one of the country’s most important economic anchors. Following the completion of the HIPC process in December 2023, Somalia’s external debt fell from $5.3 billion to roughly $600 million—an achievement made possible by years of difficult institutional reform.
The ECF provides not only financing but also a seal of credibility that unlocks broader international support. Its success depends on a functioning government capable of maintaining fiscal discipline and engaging constructively with international partners. Political deadlock does not merely slow these processes; it threatens to bring them to a standstill.
Reports from the Halane talks suggest that international partners have already raised concerns about the sustainability of financial assistance if the impasse deepens. This is not diplomatic rhetoric. It is a rational response from stakeholders who have invested years of effort in Somalia’s stabilisation.
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What Economics Demands
Somalia lacks the institutional depth and fiscal reserves needed to withstand a prolonged constitutional crisis. There is no central bank with the tools to cushion economic shocks through monetary policy. External reserves remain limited, and domestic capital markets are virtually nonexistent. The economy relies heavily on remittances, informal trade, foreign assistance, and the cautious optimism of a diaspora that invests when it believes in the future—and retreats when it does not.
Political uncertainty is one of the most reliable triggers of that retreat. The 2021–2022 political crisis, marked by delayed elections and armed confrontations in Mogadishu, left measurable economic scars. Somalia entered 2026 with those memories still fresh and with many of the underlying political tensions unresolved.
Those negotiating over electoral models and constitutional arrangements are not merely debating political power. They are deciding whether Somalia’s economy can grow fast enough to create opportunities for a generation of young people who are watching closely and drawing their own conclusions about whether this country is worth investing in—or remaining in. Formal employment opportunities are already scarce. An economy slowing from 4.1 percent growth to 2.6 percent creates fewer opportunities, not more.
A Warning, Not a Verdict#
This is a warning, not a verdict. Somalia has demonstrated before that it can step back from the brink. The successful completion of the HIPC process showed that when political leadership aligns around a long-term national objective, meaningful institutional progress is possible.
Yet every recovery from crisis carries costs in time, capital, and human potential that can never be fully recovered. The opportunity to build on post-HIPC credibility, attract investment, and transform a youthful population into a demographic dividend is time-sensitive in ways political calendars are not. Investors have alternatives. Donors face competing priorities. The diaspora has choices. International credibility, once lost, cannot be restored within a single electoral cycle.
The cost of this deadlock is neither abstract nor theoretical. It is measurable, cumulative, and already being borne by citizens who had no role in creating the crisis. Resolve it—not only because economics demands it, although it does, but because the people of Somalia have already paid more than enough.
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Abdifatah Ahmed Hersi is the Dean of the Faculty of Economics and Management Sciences at Hormuud University, Mogadishu, Somalia. He writes on Somali political economy, monetary policy, environmental and climate economics, and development finance.
The views expressed in this article are those of the author and do not necessarily reflect the views of the Dawan Africa platform.