World Bank Urges Somalia Revenue Reform
SOMALIA · ECONOMY
Published Tuesday, 27 October, 10:11 a.m. ET · Source: World Bank Somalia Public Finance Review 2026
Key Facts
- —What happened The World Bank released its Somalia Public Finance Review 2026 on Monday, October 26, 2026, in Nairobi, Kenya.
- —Revenue level Somalia's consolidated domestic revenue was about 6.2% of GDP in 2024 and an estimated 6.3% in 2025, far below the 15-17% peer average.
- —Growth Economic growth was about 3% in 2025, down from about 4% earlier, according to the World Bank.
- —Reform impact World Bank simulations show a package of revenue and spending reforms could lift GDP by about 9.3 percentage points above the baseline.
Revenue Gap Remains Wide
The World Bank released its Somalia Public Finance Review 2026 on Monday, October 26, 2026, in Nairobi, Kenya. The report said Somalia's consolidated domestic revenue rose from 6.2% of GDP in 2024 to an estimated 6.3% in 2025.
That remains far below the 15-17% of GDP average among peer countries. The Bank called domestic revenue mobilization Somalia's most pressing fiscal challenge because current collections are too low to finance essential state functions and development needs.
Economic growth moderated to about 3% in 2025, down from about 4% earlier.
Reform Package Could Lift Growth
The Bank says Somalia’s budget still depends heavily on external aid, and that external assistance is declining.The Bank's simulations show a package of revenue and spending reforms could lift GDP by about 9.3 percentage points above the baseline.The reforms should include stronger customs administration, modernization of the legal framework, better taxpayer compliance, a broader tax base, and wider use of digital revenue-administration systems.
Fragmented System Creates Disparities
The Federal Government collects approximately 71% of domestic revenue, but Federal Member States and local administrations deliver frontline services.
What Is Not Known
The available reports do not provide a direct quotation from any Somali official responding specifically to the World Bank's October 26 review. No official Somali government rebuttal, acceptance statement or detailed implementation timetable appears in the supplied material.
The reports do not establish which specific taxes the government will choose or when a nationally agreed revenue-sharing formula will be adopted.
Frequently Asked Questions
Why is Somalia’s domestic revenue so low?
Somalia’s consolidated domestic revenue was about 6.3% of GDP in 2025, compared with 15-17% for peer countries.
What reforms does the World Bank recommend?
The Bank recommends stronger customs administration, a modernized legal framework, better taxpayer compliance, a broader tax base and wider use of digital revenue systems.
What impact could the reforms have?
World Bank simulations show a package of revenue and spending reforms could lift GDP by about 9.3 percentage points above the baseline. The Bank says faster domestic revenue growth is essential as external assistance declines.
Sources: World Bank Somalia Public Finance Review 2026.
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