Mogadishu, Somalia – Somalia’s economy continues to face substantial challenges despite receiving substantial financial support from international donors and multilateral institutions. This has resulted in widespread unemployment, delayed salary payments, and inconsistent service delivery.
While financial resources flow into Somalia from various sources, the benefits are undermined by a lack of transparency and ineffective implementation, sparking criticism from both local citizens and international observers.
In recent months, several donors have suspended funding for critical economic sectors citing concerns over accountability and transparency. The federal government has consistently rejected these assertions, despite contrary findings from national auditing bodies.
Central Bank of Somalia Governor, Abdirahman M. Abdullahi, however, presents a different perspective in a recent paper titled ‘De-risking Somalia is a false economy.’ He suggests that the international community’s lack of confidence in Somali institutions may be the primary cause of the current economic difficulties.
The Governor highlights that Somalia annually receives approximately $4.2 billion through combined aid and remittances $1 billion in international assistance and $3.2 billion in money transfers from abroad. Despite this substantial injection of funds into the economy, there has been minimal positive impact.
He estimates that roughly $210 million is lost annually as these funds pass through numerous intermediaries in East African financial centers before reaching Somalia, with each transaction adding unnecessary expenses, delays, and reducing transparency.
This situation persists even as Somalia has been reconstructing its financial infrastructure incrementally to align with global standards and enhance international financial integration, according to the Central Bank Governor.
While Mogadishu attempts to present an image of economic recovery, President Hassan Sheikh Mohamud faces criticism for not adequately addressing these economic challenges. The administration currently confronts significant political opposition as the country approaches elections.
