Mogadishu (AX) — Somalia stands at a critical juncture. The country risks losing millions in unspent reform funds unless it accelerates a much-needed governance overhaul supported by the African Development Bank (AfDB). It’s a timely reminder of how the window for progress can close faster than we anticipate.
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Eighteen months into the $13 million Institutional Support for Economic Governance Project (ISEGP), only 15.2% of the funds have been utilized. This dismal pace has left federal finance officials scrambling to triple their monthly disbursement rate before the project’s looming deadline in December 2026. The stakes couldn’t be higher.
A report released by the AfDB in May 2025 offers a somewhat mixed narrative. While tax revenues rose to an impressive 2.8% of GDP in 2023 and Somalia’s public-sector accountability score on the Ibrahim Index improved to 20.1%, exceeding its 2026 benchmark, experts caution that these gains might be fleeting. Many derive from temporary measures, such as tariff adjustments and GDP rebasing, rather than from deep-rooted structural reforms.
As it stands, most project outputs are still in their infancy. Of the 16 deliverables, only one — a Medium-Term Revenue Strategy launched in 2024 — has been fully completed. This strategy not only plays a pivotal role in shaping Somalia’s 2025 revenue forecasts, but it was also developed in consultation with key stakeholders and the federal government, showcasing a commitment to inclusion that’s essential for long-term success.
Yet, the road is fraught with complications. A significant infrastructure project integral to the ISEGP involves modernizing inland revenue offices across Somalia’s Federal Member States (FMSs). Unfortunately, political roadblocks hinder progress, particularly in Northeastern State, which has refused to endorse the central blueprint. The AfDB’s May report describes this impasse as stemming from “political misunderstandings” between the Federal Government of Somalia (FGS) and Northeastern State.
With discussions ongoing, federal finance officials are working diligently to address the economic implications of these delays and are seeking a way forward, ideally before the December 31, 2025 deadline. However, if the political deadlock continues, it could jeopardize broader program goals related to equitable infrastructure distribution and the unification of national revenue.
This standoff is particularly critical given that Northeastern State’s port city of Bosaso is a hub for a significant portion of federal customs revenue. Without Northeastern State’s cooperation, the project’s foundational assumptions related to domestic revenue mobilization could be called into question, especially those embedded within the 2025 revenue forecasts guided by the newly launched Medium-Term Revenue Strategy.
Until the designs gain approval, progress in Northeastern State will remain stalled. While the consulting firm Ecotech Ltd. commenced its work in August 2024 and successfully held preliminary consultations with other FMSs, the situation in Northeastern State remains a glaring example of how political complexities can stifle economic progress.
Adding to the urgency of the situation are rising global construction material prices, largely affected by trade tensions between the United States and China. The AfDB’s report serves as a wake-up call, urging the federal implementation unit to expedite procurement prior to potential price increases, which could impose further strain on already limited resources.
While the project has seen the operationalization of the Commonwealth Meridian debt management platform, integrating it with Somalia’s national Financial Management Information System (FMIS) remains incomplete, further complicating the landscape. A commitment of delivering 16 promised debt statistics bulletins by the project’s end has not yet been met.
On the topic of gender inclusion, the project aimed for a target of 20% female participation across all training modules, covering sectors like debt management, procurement, and public investment. However, the latest monitoring update reveals that progress remains dishearteningly stagnant, with women’s participation hovering near zero.
Despite the AfDB still classifying ISEGP as a “non-potentially problematic project,” citing promising procurement progress and the expectation of acceleration in 2025, the clock is ticking. With approximately $11 million still undisbursed, the onus is on donors to decide: Should they extend timelines or risk a last-minute spending rush that could compromise oversight and delivery?
The ISEGP is not merely a project; it forms part of a broader mission embodied in Somalia’s National Development Plan and the Heavily Indebted Poor Countries (HIPC) initiative to rebuild fiscal institutions and secure comprehensive debt relief. As political consensus, public trust, and external financing hang in the balance, the next year could prove pivotal. Will Somalia rise to the challenge and fulfill the goals set forth in this ambitious reform project? Or will it become yet another chapter in the story of unrealized potential? Only time will tell.
Edited By Ali Musa
Axadle Times International – Monitoring.
