Wednesday July 29, 2026
Mogadishu (AX) — Somalia is under mounting economic strain as key income flows decline, Finance Minister Bihi Imaan Egeh has warned, urging the private sector to take a larger role in driving sustainable growth.
Addressing an audience in Mogadishu on Tuesday, Egeh said the country is no longer receiving between $450 million and $600 million that previously flowed into its economy. He described the loss as a major challenge requiring stronger domestic revenue collection and private sector expansion.
“The $450 million to $600 million that used to enter the country is disappearing,” Egeh said. “So the situation is really not easy, and it is important that we strengthen the private sector, which is the backbone of economic development.”
Despite those pressures, the minister said Somalia has recorded notable gains, pointing to broader economic growth and advances in the banking industry.
Over the past decade, Somalia’s economy has expanded substantially, he said, growing from about $150 million to approximately $2.3 billion.
Egeh also highlighted the development of commercial banks, whose capacity has grown alongside a sharp increase in lending to businesses and private companies.
Commercial bank financing for the private sector has almost doubled during the past five years, reaching roughly $500 million, according to the minister.
Yet much of that investment has not reached productive areas of the economy, Egeh said, citing agriculture, livestock, industry and businesses capable of generating employment.
He urged banks and other financial institutions to direct more funding toward domestic production, calling such investment vital to creating a resilient and sustainable economy.
His comments come amid political and economic uncertainty in Somalia, where declining international assistance has raised concerns about the potential consequences for public finances.
A Somali Public Agenda policy paper published in July 2026 said the federal budget for 2026 forecasts about $1.36 billion in total revenue and grants, compared with $1.39 billion in spending, producing an estimated fiscal deficit of $29 million.
Domestic revenue is expected to reach $479 million, with the increase driven mainly by stronger collections from income taxes, taxes on goods and services, and administrative fees.
Customs duties and other revenue tied to imports, however, remain exposed to external shocks, the paper said, including disruptions to global trade and changes in foreign aid.
External grants provide $878.8 million, representing 64.7% of all resources. That includes $174.4 million in direct budget assistance and $704.4 million allocated to donor-funded projects.
Those figures highlight Somalia’s enduring dependence on external financing, with project-based donor assistance continuing to dominate the national budget.
