Somalia raised domestic revenue equal to an estimated 6.3% of gross domestic product in 2025, up from 6.2% a year earlier, and will need to collect more as foreign assistance falls, the World Bank said in a review of the country’s public finances released Oct. 26.
Countries comparable to Somalia collect an average of 15% to 17% of GDP, according to the lender’s Somalia Public Finance Review. The report describes domestic revenue mobilization as the country’s most pressing fiscal challenge, saying collections remain too low to pay for core state functions and development needs. Somalia’s domestic revenue and its spending on health and education are among the lowest in the world, the World Bank said.
What to know:
- Domestic revenue rose to an estimated 6.3% of GDP in 2025 from 6.2% in 2024, according to the World Bank.
- The federal government collects about 71% of domestic revenue, while member states and local administrations deliver most frontline services.
- Reforms modelled in the report could lift domestic revenue by 6 percentage points of GDP and cut poverty to 47% by 2033, the lender estimates.
Hideki Matsunaga, the World Bank’s country manager for Somalia, said the country had rebuilt its fiscal institutions and economic governance under exceptionally difficult conditions. “The next stage is to translate these gains into stronger domestic revenues, better value from public spending, and improved services for citizens, while preserving fiscal stability in a lower-aid environment,” he said.
Over the past decade Somalia has rebuilt core fiscal institutions, restored macroeconomic stability, strengthened public financial management and reached the completion point of the Heavily Indebted Poor Countries Initiative, according to the report. The country still faces high poverty, large infrastructure deficits, rising security spending and declining external assistance, the World Bank said.
To raise more revenue, the review points to stronger customs administration, an updated legal framework, better compliance, a broader tax base and wider use of digital revenue administration systems.
The report also says closer fiscal cooperation between the federal government, federal member states and local administrations is central to Somalia’s development. Stronger intergovernmental fiscal arrangements would improve equity, expand service delivery and build state capacity across the country, according to the World Bank.
The lender sets out five priorities: raising domestic revenue, improving the efficiency of public spending, managing fiscal and debt risks, strengthening public financial management and accountability, and advancing fiscal federalism to deliver services more fairly and effectively.
Simulations in the report show the full package could raise GDP by 9.3 percentage points above the baseline and increase domestic revenue by 6 percentage points of GDP. The reforms could also create more than 54,500 teaching jobs and open up about 250,000 higher-productivity jobs, while reducing the poverty rate to 47% by 2033, the World Bank said.
What to watch:
- Domestic revenue as a share of GDP in 2026, measured against the 15% to 17% average the World Bank cites for peer countries.
- Progress on fiscal arrangements between the federal government and member states, which the report identifies as central to expanding services.
- Customs and digital tax administration reforms, which the World Bank names among the main routes to higher collections.