Somalia Says Declining International Aid Has Slowed the Country’s Economic Growth

MOGADISHU, Somalia — Somalia has made notable economic progress in recent years, but declining development assistance from major international donors is now slowing the country’s growth, Finance Minister Biixi Iimaan Cige said in an interview with CNBC Arabia.

Cige said Somalia posted 4% economic growth in 2024, but projections for 2025 have dropped to nearly 1%. He attributed the sharp slowdown to reduced external support, noting that donor-funded programs have historically played a critical role in sustaining the country’s development agenda.

Despite the setbacks, the minister said the federal government has pushed ahead with reforms aimed at strengthening public financial management, overhauling tax systems, and improving institutional capacity. These measures, he said, are designed to boost domestic revenue, which he called the backbone of long-term national investment.

Somalia has also made significant progress in digitizing and automating tax collection, Cige said. As a result, domestic revenue has increased by more than 80% over the past three years, though he acknowledged the country began from a very low base.

The national budget grew by 24% between 2024 and 2025, but Somalia still faces a considerable financing gap as its domestic revenue rises only gradually. Cige said the government is prioritizing social spending—particularly in education, health, and social protection programs.

He noted that the share of domestic revenue allocated to education jumped from 3% to 10% within three years, a sign of what he described as Somalia’s growing ability to fund core development priorities.

Cige added that the government has shifted toward more targeted support mechanisms, moving away from broad, general aid packages that are less effective in reaching communities most in need.

GAROWE ONLINE