Somalia’s Finance Minister, Bihi Imaan Egeh, has cautioned that the country is facing mounting economic challenges as inflows of foreign funds decline, stressing that expanding the private sector will be essential to maintaining economic growth and reducing reliance on outside assistance.
Addressing an audience in Mogadishu on Tuesday, Egeh said Somalia is no longer receiving between $450 million and $600 million that had previously entered the economy each year, describing the loss as a significant setback that demands stronger domestic economic activity.
“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.”
The finance minister said Somalia has nonetheless recorded notable economic gains in recent years. He highlighted the expansion of the national economy, saying its size has increased from roughly $150 million a decade ago to around $2.3 billion today.
He also pointed to steady growth in the country’s banking industry, noting that commercial banks have significantly increased their lending capacity.
According to Egeh, loans issued by commercial banks to businesses and private enterprises have almost doubled over the last five years, reaching approximately $500 million.
However, he said a major concern is that too little financing is reaching productive industries such as agriculture, livestock, manufacturing, and other sectors capable of creating employment and driving sustainable growth.
He urged financial institutions to channel more resources into local production and business investment, arguing that strengthening these sectors is critical to building a more resilient and self-sustaining economy.
The minister’s comments come as Somalia faces growing fiscal uncertainty amid expectations of declining international financial support. The government is under increasing pressure to boost domestic revenue while preparing for a gradual reduction in donor assistance.
A policy brief published by Somali Public Agenda in July 2026 estimated that Somalia’s 2026 federal budget includes $1.36 billion in expected revenue and grants against projected spending of $1.39 billion, leaving a budget shortfall of about $29 million.
The report forecasts domestic revenue of $479 million, driven mainly by stronger tax collection, including income taxes, taxes on goods and services, and government service fees.
Even so, it warns that customs revenue and other import-related income remain exposed to global market disruptions and changes in external aid flows.
External grants are expected to total $878.8 million, representing nearly 65 percent of the government’s total financial resources. Of that amount, $174.4 million is allocated as direct budget support, while $704.4 million is earmarked for donor-funded development projects.
The figures underscore Somalia’s continued dependence on foreign assistance and highlight the dominant role donor-funded projects continue to play in financing government operations and development programs.