Somalia’s internal revenue mobilization galvanised by UA 5.5 million grant from African Development Bank

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Rebuild of the Tax Training Institute building, Mogadishu, Somalia

The Federal Republic of Somalia (FGS) revenue mobilization strategy received a boost with a UA 5.5 million grant from the African Development Bank. The strategy aims to ramp up revenue collection through enhanced tax revenue and a more efficient collection system. 

The grant, through the Bank’s Economic and Financial Governance Institutional Support Project (EFGISP) phase 2, offers support for Somalia’s state-building efforts. 

Somalia’s suite of implementing policies and reforms to underpin the next generation of public financial management, include the National Development Plan (2017-2019), the New Partnership for Somalia (NPS) of 2017 and measures to address public financial management and the public procurement.

These planned reforms will enable the country to finance an increased share of its budget and expand the delivery of social services. Somalia is also now focused on increasing revenue collection levels from the current 1.9 % of GDP, to 2.5%. In addition, training in debt management, budget preparation, and financial governance will be conducted as part of ongoing efforts to enable Somalia’s re-engagement with the international community.

The project has already led to the refurbishment of dilapidated buildings in seven locations.  These include five revenue collection centers in the districts of Hoddan, Howlwadag, Wadajir, Yaqshid, and Hamar Weyne, a taxation-training institute, and a fiscal police station.

 “The Bank’s contribution to strengthening our revenue mobilization and institution building is evident through these investments, which will enhance our capacity to collect domestic revenue,” Minister of Finance Abdirahman Dualeh Beileh said.

EFGISP Phase 2 aims to build on previous Bank supported financial governance reform interventions in Somalia and complement the interventions of other development partners in the sector. Under the previous phase, the Bank supported implementation of two projects targeted at enhancing fiscal policy and ensuring public financial management become transparent and more effective.

The EFGISP phase 2 aligns with the Somali government’s efforts to build effective and efficient institutions, will cover support for reforms in public financial management, and strengthen policy planning and implementation capacities.  Implementation and rollout of these new policies and laws will require significant technical and financial assistance to strengthen institutional capacity at the level of the Ministry of Finance and other Ministries.

Somalia has had a turbulent past characterized by unrest, insecurity and famine. Since the 2016 elections, Somalia has strived to fulfil core state functions, including management of the economy and delivery of public services.

Nnenna Nwabufo, Ag. Director-General of the African Development Bank Regional Office for Eastern Africa said the new intervention would lead to more fiscal space to finance public service provisions.

“Enhanced debt management will accelerate the country’s re-engagement with international creditors; strengthened public financial management will ensure those funds are spent efficiently and effectively,” she said. “The ultimate result is increased resources available to finance the provision of public goods and services, investments in development programs, enabling recovery and reducing poverty.”