Somalia at a Crossroads: Population Pressure, Poverty, and the Promise of Reform

Issue 12 (19/10/25)

In a nutshell:

Somalia’s macro-economic story over the last decade is one of hard-won progress punctuated by repeated shocks. After averaging almost 5% real GDP growth in the early 2010s, output slowed to barely 2% just before the pandemic, as drought, conflict, and locust infestations battered agriculture and livestock. COVID-19 then pushed the economy into a 2.8% contraction in 2020. Since then, activity has recovered – growth reached 2.7% in 2023 and is projected to accelerate to 4.2% in 2024, driven by normalized rains, robust remittance-financed consumption, and donor-funded capital spending. Yet with the population expanding at 3.5–4% annually, per-capita growth remains anaemic – barely 1% in 2023 and trending close to zero thereafter. Living standards, in effect, are standing still. 

The country has added roughly one million people every 18 months, rising from 14.3 million in 2016 to nearly 19 million in 2024 and is expected to hit 20 million in 2025. At this pace, the population will double by 2044. More than 70% of Somalis are under 30, making it one of the youngest populations globally.

Each year, 350,000 to 400,000 young people enter the job market, implying roughly 1.8 million Somalis are looking for work. Yet unemployment remains stuck at 19%, and underemployment is even higher. Many are engaged in informal, low-productivity work or have dropped out of the labour force altogether. Despite GDP growth averaging 3% annually since 2016, real per capita income has barely budged, leaving living standards stagnant.

Read the complete Blog here to understand the way forward:

https://abdilahi.substack.com/p/somalia-at-a-crossroads-population

Why Somalia Hasn’t Felt Its Post-HIPC Gains: 10 Hard Truths

Issue 11 (30/09/25)

In a nutshell:

Somalia reached the HIPC Completion Point in December 2023. By all accounts, this milestone should have unlocked a wave of economic benefits: cheaper financing, renewed investor interest, and more fiscal space. But for many Somalis, the promised gains haven’t materialized. Why?

Let’s explore what typically happens after HIPC relief, what’s been different in Somalia, and how the government can still make the dividend real.

What a Post-HIPC Dividend Usually Brings

• Lower debt service frees up budget space for development priorities.

• Improved investor confidence encourages private sector growth and FDI.

• Expanded fiscal space allows governments to invest more in public services, infrastructure, and social protection.

• Enhanced reform credibility attracts concessional financing and donor support.

• Macroeconomic stability becomes more achievable, supporting long-term planning.

• Better credit ratings can open access to international capital markets.

• Stronger institutions often emerge from the reform process, improving governance.

• Increased policy autonomy enables governments to pursue national development goals more effectively

So, the question is: what's been different in Somalia?

Read the complete Blog here:

https://abdilahi.substack.com/p/why-somalia-hasnt-felt-its-post-hipc

What’s Holding Back Somalia’s Development and How Do We Fix It?

Issue 10 (13/09/25)

In a nutshell:

Since reaching the HIPC Completion Point in 2023, Somalia has entered a new chapter, one that demands disciplined action rather than aspirational promises. The early signs were encouraging: macroeconomic indicators showed progress, and donor engagement remained strong. But beneath the surface, new vulnerabilities have emerged across the economy, governance, climate, social protection, and security.

So, the question is: how do we keep the reform momentum alive and accelerate tangible progress for the Somali people?

Read the complete Blog here:

https://abdilahi.substack.com/p/whats-holding-back-somalias-development?r=60iv6n

What Have We Learned? Rethinking International Approaches to Development and State-Building in Fragile States through the Somali Case

Issue 9 (04/09/25)

In a nutshell:

Somalia’s fragility is not a temporary disruption. It is a deeply embedded, systemic condition shaped by a complex, negotiated political order. For decades, international engagement has treated fragility as a technical deficit to be solved through institution-building. But Somalia’s reality defies such linear models. Authority and legitimacy are distributed across clans, religious leaders, business networks, local administrations, and armed actors. The state is not absent. It is plural, adaptive, and constantly renegotiated.

To engage effectively, development actors must shift from template-driven state-building to a political economy-informed approach rooted in Somalia’s polycentric social contract. This means recognizing informal institutions not as obstacles, but as the operating system of governance.

Read the complete Blog here:

https://abdilahi.substack.com/p/what-have-we-learned-rethinking-international?r=60iv6n

Navigating Fiscal Reform in Somalia: 2025 Progress Under Pressure and Promise

Issue 8 (27/08/25)

In a nutshell:

Somalia is undertaking a deliberate and technically ambitious effort to rebuild its fiscal architecture. The goal is clear but formidable: to finance essential services through domestic revenues by 2027, maintain fiscal deficits below 3.5% of GDP, and gradually reduce reliance on external grants, which currently fund well over 60% of the national budget. This reform journey is unfolding in a context shaped by climate shocks, security transitions, and political fragility. Yet, despite these pressures, the progress is tangible. New revenue laws are taking shape, digital public financial management systems are operational, payroll reform is advancing, and governance in the key sectors is gaining traction. 

Read the complete Blog here:

https://open.substack.com/pub/abdilahi/p/navigating-fiscal-reform-in-somalia?r=60iv6n&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

Somalia’s Fiscal Mirage: Samaritan’s Dilemma, December Syndrome, and the Fragility of Surplus

Issue 7 (15/08/25)

In a nutshell:

Somalia’s fiscal story in 2024 is a paradox wrapped in promise. On the surface, the numbers shine: a consolidated surplus of $41.7 million; a third consecutive year of balance; federal revenues surging close to $1 billion. But beneath this veneer of stability lies a complex web of volatility, dependency, and structural fragility. Aid-driven revenue spikes, year-end spending surges, and subnational deficits paint a picture of a system that balances its books while straining its foundations. This isn’t just a tale of surplus – it’s a study in fiscal stress, where donor cycles, informal economies, and federal imbalances collide to challenge the very architecture of Somalia’s public finance. 

Read the complete Blog here:

https://open.substack.com/pub/abdilahi/p/somalias-fiscal-mirage-samaritans?r=60iv6n&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

Aid, Diaspora, and Debt: Unpacking Somalia’s External Sector Dynamics

Issue 5 (04/08/25)

In a nutshell:

Somalia’s balance of payments (BoP) over the past seven years tells a compelling story of a fragile, aid-dependent economy navigating persistent external pressures. The data reveals deep structural imbalances, a heavy reliance on remittances and grants, and limited progress in attracting investment or diversifying exports. While debt relief has improved fiscal space, the external sector remains vulnerable to shocks and institutional weaknesses.

Read the complete Blog here:

https://abdilahi.substack.com/p/aid-diaspora-and-debt-unpacking-somalias?r=60iv6n

Turning the Tide: Somalia’s Bold Path to Fiscal Resilience and Public Service Delivery

Issue 4 (24/07/25)

In a nutshell:

Somalia’s fiscal and service delivery challenges are no secret. If you’ve been following recent discussions or if you’ve been reading my Substack posts, you’ll know the situation has been tough. Really tough. But here’s the thing: the story has been improving too, and not just marginally. The real question now is how we can accelerate this progress and lock in the reform momentum. How do we build a system that’s not only fiscally resilient but also capable of delivering essential services across the country? 

Read the complete Blog here:

https://open.substack.com/pub/abdilahi/p/turning-the-tide-somalias-bold-path?r=60iv6n&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

Where Does All the Money Go? Somalia’s Recurrent Spending Dilemma

Issue 3 (17/07/25)

In a nutshell:

Last week on Substack, we unpacked Somalia’s federal fiscal journey from 2018 to 2024 – a story shaped by heavy donor reliance and a domestic revenue system that’s still finding its footing.

This week, we’re shifting gears to look at something just as critical: Somalia’s recurrent spending problem. But this isn’t just about numbers on a spreadsheet, it’s about what those numbers say about the state’s relationship with its people. When spending is unsustainable, it chips away at public trust, limits the government’s ability to deliver real change, and holds back progress on peace and development.

In this Blog, I break down the key challenges, draw lessons from other countries, and share some practical ideas for how Somalia can start turning things around.

Read the complete Blog here:

https://open.substack.com/pub/abdilahi/p/where-does-all-the-money-go-somalias?r=60iv6n&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

Strengthening Somalia’s Fiscal Foundations in the Absence of Fiscal Federalism

Issue 2 (10/07/25)

In a nutshell:

In FY2024, Somalia’s Ministry of Finance reported total revenues of $912.7 million, with 59.5% sourced from external grants and only 40.5% from domestic revenue. Tax revenues accounted for 29.2% of total revenue, while non-tax revenues contributed 11.2%.

This revenue structure reflects both progress and persistent structural challenges — particularly the absence of a formal fiscal federalism framework, which has significant implications for equity, efficiency, and sustainability.

Why this is disappointing

Somalia’s current revenue structure reveals a troubling overreliance on external aid, with grants comprising nearly 60% of total revenues in FY2024. While these funds offer short-term fiscal relief, they expose the country to volatility and undermine fiscal sovereignty — a classic symptom of aid dependency. According to the Musgrave framework, sustainable public finance requires a gradual shift toward domestic taxation. Yet Somalia’s low tax-to-GDP ratio signals untapped potential in broadening the tax base, improving compliance, and strengthening administrative capacity.

Read the complete Blog here:

https://abdilahi.substack.com/p/strengthening-somalias-fiscal-foundations

Aid volatility and budget resilience in fragile states

Issue 1 (03/07/25)

In a nutshell:

The overwhelming majority of fragile states remain heavily reliant on Official Development Assistance (ODA). But how resilient are their budgets to aid shocks, and do stronger institutions offer protection?

In this Blog, I show that stronger budget institutions do not necessarily buffer countries from aid volatility. In fact, countries with better governance may:

• Attract more diverse donors, leading to more variable flows.

• Be more transparent about volatility, making it more visible in data.

• Be more integrated into global aid systems, which are themselves volatile.

Meanwhile, low-transparency countries may appear more stable due to limited donor engagement or underreporting.

Read the complete Blog here:

https://abdilahi.substack.com/p/aid-volatility-and-budget-resilience