Somalia’s consolidated domestic revenue remains stuck at roughly 6.3% of GDP, far below the 15–17% average among peer countries, according to the World Bank’s Somalia Public Finance Review 2026, released Monday, October 26, 2026, in Nairobi, Kenya.
The report said domestic revenue rose only marginally from 6.2% of GDP in 2024 to an estimated 6.3% in 2025 — a pace the Bank described as insufficient to finance essential state functions and development needs. It called domestic revenue mobilization Somalia’s most pressing fiscal challenge.
Economic growth moderated to about 3% in 2025, down from about 4% earlier, according to the World Bank. The slowdown compounds pressure on a budget that still depends heavily on external aid — assistance the Bank says is declining.
World Bank simulations show that a package of revenue and spending reforms could lift GDP by about 9.3 percentage points above the baseline. The Bank recommends stronger customs administration, modernization of the legal framework, better taxpayer compliance, a broader tax base, and wider use of digital revenue-administration systems.
According to the Bank, faster domestic revenue growth is essential as external assistance declines.
The review also highlighted structural imbalances in revenue collection. The Federal Government collects approximately 71% of domestic revenue, but Federal Member States and local administrations deliver frontline services — a mismatch that creates disparities in how resources are raised versus where they are spent.
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 also do not establish which specific taxes the government will choose or when a nationally agreed revenue-sharing formula will be adopted — key questions given the federal-state revenue divide.
Somalia’s low revenue base leaves the government vulnerable to any reduction in external support and limits its ability to fund security, services, and development. The gap between Somalia’s 6.3% of GDP and the 15–17% peer average represents both a fiscal risk and, according to the Bank’s simulations, a substantial growth opportunity if reforms are implemented.
