Somalia: A New Dawn for Domestic Revenue Reliance

In the modern governance systems, the ability to generate sustainable domestic revenue stands as a keystone of national self-reliance and economic independence, by actively utilizing internal potential through taxation and public administration to secure government financial means to cover essential operational expenditures to fund critical infrastructure projects and to support important public services, building effient domestic revenue system reduces dependence on international financial support, foreign aid and external debt, empowering the nation to promote responding the needs of citizens and reliable development.

Since 2012, when Somalia successfully transformed from a transitional federal government (TFG) to settled federal republic, the nation took a critical path towards financial recovery and global reintegration, the key milestone in this target was re-engaging with international financial institutions like the International Monetary Fund (IMF) and the World Bank under the Heavily Indebted Poor Countries (HIPC) Initiative to qualify requirements for debt relief, Somalia had to meet strict economic benchmarks more importantly proving its capability to raise domestic revenue, the government actively began taxation and non-tax collection from limited resources, to analyse the trajectory of Somalia’s local revenue growth, this assessment examines the last fifteen years (2012 to 2026) structured systematically into three segments of five years term.

During the initial five-year from 2012 to 2016, domestic revenue collection remained modest and gradually growing starting from about $30 million, totaling just less than $130 million according to joint financial reports from the Somalia’s Ministry of Finance, the World Bank, and the IMF, referring the security challenges and limited state outreach throughout the country at that moment, the majority of these funds were generated from Mogadishu Seaport, Aden Adde International Airport and fees from government services.

Furthermore, Somalia maintained to manage a steady upward in its domestic revenue, which reached nearly $230 million between 2017 to 2021, the growth process seemed to became stuck because it took place during the COVID-19 pandemic, a crisis that extremely affected international trade and global economy, despite these intense external shocks, Somalia sustained with its financial reforms, striving to meet the benchmarks and milestones to reach the final completion point for full debt relief.

Somalia was under monitoring by international financial institutions, in which evaluated its financial performance and reforms, the main focus was the country’s ability to collect domestic revenue and strengthen public financial management, regulations and systems.

During this term between 2022 to 2026, Somalia experienced a historic chapter in fiscal as domestic revenue collection nearly doubled from roughly $260 million to a range of $404 - $450 millions, this rise reflects an administrative reforms as key driver behind this fiscal growth was the commitment of Feisal Mohamed Hashi, Director General of the Somalia Revenue Directorate appointed in May 2023, under his leadership, the directorate expanded and diversify the country’s revenue sources beyond from Mogadishu seaport and airport tariffs, by introducing new collection frameworks, digital tax systems, modernization efforts and broader compliance measures across local business sectors.

Nevertheless, this remarkable achievement marked a major turning point in the country’s economic trajectory, Somalia officially reached the completion point of the Heavily Indebted Poor Countries (HIPC) Initiative on December 2023, wiping out billions of dollars in historical debt, ensuring full debt relief and opening opportunities for international trade, investments and strategic transformation development.

The practical impact of these reforms and successes resulted improvement of public finance management, as the Minister of Finance H.E. Bihi Iman Ige highlighted this achievement in an interview with Dawan TV, noting that domestic revenue collection grew up to fully cover the salaries and wages of all government officials, civil servants and national armed forces, this demonstrates a major one step forward in national self-sufficiency, proving that Somalia can be soon capable funding its own governance system and essential public services.

Reflecting the previous remarkable milestones, including clearing billions of dollars of historical debt and achieving domestic revenue that covers all government salaries, Somalia is now establishing an independent revenue body called Somalia Revenue Authority (SRA), this vital institution rapidly passed through the highest bodies of the government in 2026, the Cabinet approved the establishment bill on 16 July, followed by the House of the People on September 9 and the Senate House on 21st September, the legislation officially became a law on October 7, 2026, when the President Dr. Hassan Sheikh Mohamud signed it into effect.

Looking forward, the successful collaboration between the Federal Government and the Federal States for the Somalia Revenue Authority (SRA) will be crucial to achieving national financial independence, by effectively expanding SRA operations nationwide such as customs enforcement, direct and indirect taxation, and agreed-upon tax-sharing mechanisms, the SRA will be beneficial for all levels of government; national, state, and local administrations, eventually, same as other countries establishing this important institution will not only ensure a stable financial future for Somalia, but it will also paves the way for the country towards new dawn for domestic revenue reliance and economic self-sufficiency for upcoming generations.

By Abubakar Yasin