By Hassan Wekesa - Editor
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26 October 2026 - Somalia stands to collect more taxes if it can streamline the extractive industries such as mining and petroleum drilling, a World Bank economist has stated.
Chadi Bou-Habib, who works as the Lead Economist in the Fiscal Policy and Sustainable Growth Global Unit of the World Bank Group, said during the launch of the Somalia Public Finance Review report that Somalia can benefit from mineral mining and extractives.
He was speaking after the report revealed that the Federal Republic of Somalia’s artisanal gold sector illustrates both the scale of untapped revenue potential and the governance weaknesses that constrain its capture.
According to official records, in 2023 alone, about 5,048 kilograms of Somali gold landed in the United Arab Emirates (UAE), worth about $315 million.
Back home, the treasury saw almost nothing, the report noted, quoting Bahadur 2026.
“Fiscal returns to Somali authorities remain negligible,” it noted.
Puntland’s export levy captured less than 0.2% of the value and reported no revenue in 2024.
It is based on that that Bou-Habib said that Somalia can copy from what other jurisdictions in Africa and elsewhere have done, where they reap lucrative revenues and returns from gold mining and mineral value addition.
“For instance on gold, Somalia can copy what Tanzania has done,” he said, adding that the United Republic of Tanzania in many ways can be seen as a federalist country.
He said so because Tanzania consists of mainland Tanganyika and the semi-autonomous Zanzibar archipelago.
Bou-Habib also said that Somalia can also learn from Zambia, which has and continues to make progress with sliding royalty.
He also cited the progressive corporate income tax as Botswana, which has also achieved a lot and grown its mining and natural resources sector.
“It works this way… the higher the prices, the more tax you pay,” he said.
He added that in other words, big corporates involved in mining, when they make a lot of profits or revenue, also pay higher taxes to the governments in the countries where they operate.
Bou-Habib said that countries with untapped natural resources and extractives need first to look at other legislation, both actual and past legislation, and study best practices before they can even approach the World Bank and experts to help them benefit more as far as Taxation of Priority Sectors is concerned.
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“AMLA, which is the Africa Mining Legislation Atlas, is a very resourceful material,” he added.
For Somalia, the gap between what leaves the ground and what reaches the public purse is the country’s biggest missed opportunity.
The World Bank’s Public Finance Review describes a sector that is largely artisanal, with unmonitored production, weakly controlled cross-border trade and limited transparency.
Yet the country sits on far more than gold.
Iron ore, gypsum and uranium lie in its soil, and offshore and onshore petroleum are being explored and mapped, with significant resources under study off the Galmudug coast.
The path forward, the report suggests, begins with law. Enacting the new Mining Bill would replace an outdated framework, working alongside the 2023 Extractive Industries Fiscal Regime Law.
A federal-state revenue-sharing mechanism would then ensure mineral rents stop accruing largely outside the public sector.
Under the current agreement, the Federal Government takes all corporate income tax, while producing states and districts share royalties and surface rents.
Fairness matters too. Non-producing states would receive none of the revenue from minerals production, a gap that could deepen disparities between regions unless handled carefully.
Capacity is the other half of the story. Tax officials must learn to administer a modern mining fiscal regime, from auditing operators to verifying cost claims, while clear fiscal rules guard against the volatility that has undone other resource-rich nations.
The rewards could be real. The report’s modelling suggests petroleum and mining revenue management could add to GDP and create thousands of jobs, with petroleum potentially explaining at least half of long-term gains.
Somalia captures even a fair share of its gold and minerals, those revenues could fund schools, roads and clinics, turning buried wealth into lasting national progress.