Addis Abeba — For more than three decades, international aid has been an indispensable lifeline for Somalia. It has helped prevent humanitarian collapse, funded essential health and education services, and sustained civil-society organizations through cycles of conflict, drought, and displacement. Those contributions are real and should never be minimized. Yet prolonged reliance on external assistance raises a challenging political-economy question: can a humanitarian and development apparatus designed for immediate rescue inadvertently entrench the political arrangements and structural fragilities that perpetuate dependency?

This is not an argument that external assistance has failed uniformly, that donors harbor designs to sustain instability, or that Somali institutions are passive actors. Nor does it suggest that all aid is diverted or that humanitarian organizations ignore accountability. Such sweeping claims would exceed the available evidence. The more useful inquiry concerns incentives: who sets funding priorities, who controls resources and acquires lasting capacity, who benefits commercially and politically, how much say citizens have over resources meant for them, and what happens when funding priorities change faster than public institutions can adapt.

These questions are now time-sensitive because international funding is shrinking while domestic needs remain acute. The International Monetary Fund's 2025 review of Somalia estimated, from available donor information, that foreign aid may have amounted to roughly 20-30% of GDP over the preceding decade. It cautioned that comprehensive official records of total aid flows were unavailable and that most assistance was delivered outside the government budget. It also modeled possible 2025 reductions of $400-600 million, about 3-4.6% of GDP. Those were scenarios based on anticipated cuts and disbursement delays, not a measurement of every dollar ultimately lost.

The World Bank's Toward Building Somalia's Social Contract adds the fiscal picture. For 2022, the federal government collected about $262 million in domestic revenue, 2.2% of GDP, while external grants financed 62% of federal spending, and 82% of official development assistance was off-budget. These are 2022 figures, not a description of Somalia's fiscal position today, but they show how thin the domestic revenue base was relative to public responsibilities.

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The Overseas Development Institute's April 2026 study, Somali Systems: From Aid-Centred to State-Led Crisis Response, brings the concern into current policy. The authors of the study, Surer Mohamed and Dustin Barter, argue that the outsized role of aid and the incentives around its delivery can impede a move to state-led crisis response. They acknowledge the risks of weak transparency, accountability, and inclusion in state-led arrangements but conclude that keeping the aid-centred status quo carries greater long-term risk.

As Somalia confronts shrinking funding alongside acute need, dissecting the anatomy of its aid economy is no longer only an academic exercise; it is a practical policy priority. The question is not aid versus no aid. It is whether assistance can save lives today while building the accountable institutions, domestic revenue, and public capabilities that make tomorrow's recovery less dependent on external decisions.

Anatomy of aid economy

Foreign assistance is rarely neutral. It is a system of decisions about authority, policy direction, and resource distribution. When external actors set funding priorities, approve project designs and manage disbursement channels, they exercise considerable influence over domestic public administration. That influence is not automatically improper. Donors answer to taxpayers and legislatures, international organizations must meet fiduciary and safeguarding standards, and humanitarian agencies need flexibility to reach people in territories where state authority is limited.

Aid should not be judged solely by what it delivers today, but by the institutions and capabilities it leaves behind."

In Somalia, however, the cumulative result is a crowded institutional landscape of fragmented project delivery. A donor may channel funds through an international agency, which contracts a national NGO, which then negotiates local access through customary or community intermediaries. Meanwhile, the line ministry retains only partial visibility into actual expenditure, geographic coverage, or long-term operating costs. Each link in the chain can fulfill its contractual obligations while the system as a whole remains difficult for citizens to understand or hold to account.

Across health, education, water, nutrition, livelihoods, and local governance, three recurring features characterize the aid economy. The first is fragmented standards, wherein parallel project frameworks operate on different procurement rules, reporting formats, and salary scales, and because staff are trained for a project but are rarely absorbed into a lasting institutional structure, administrative capacity does not accumulate where it is most needed. The second is data isolation, where monitoring information is often routed into donor reports rather than integrated into national information systems, preventing governments from easily planning, coordinating, or evaluating. The third is vulnerable continuity, which means that services expand while a grant is active and become fragile when it closes, leaving ministries with commitments they did not choose and cannot finance.

This pattern is consistent with the wider scholarship. Ken Menkhaus's work on aid and institution-building highlights the difficulty of building durable institutions through fragmented, project-based interventions, while Tobias Hagmann's Stabilization, Extraversion and Political Settlements in Somalia examines how external intervention interacts with domestic political authority.

Aid also operates inside a delicate political settlement that involves the federal government, federal member states, local administrations, customary authorities, clan networks, and commercial interests. Money entering that environment interacts with existing power relationships. Its effects depend not only on the objectives written in project documents but also on who controls access, receives contracts, influences beneficiary selection, gains employment, and acquires political visibility.

Aid should therefore be judged by two separate questions. First, what goods, services, and humanitarian outcomes does it deliver? Second, what political, commercial, and institutional relationships does the way it is delivered create or reinforce? A program can meet its targets and still leave little institutional legacy. An emergency response can rightly put speed above institution-building. The task is to distinguish legitimate emergency arrangements from avoidable, permanent dependency.

The Bypassing Dilemma: State-building without the state

Donors face a recurring choice: channel funds through public institutions burdened by capacity gaps and security risks, or deliver through international agencies with insulated risk-management systems. In acute crises, bypassing the state is often defensible. Public money should not be exposed to unacceptable risk merely to demonstrate national ownership, and life-saving relief cannot always wait for better audit or procurement systems.

The damage arises when a temporary workaround hardens into permanent architecture. Repeated bypassing deprives ministries of the experience they need in procurement, program management, monitoring, and service delivery. They lack reliable expenditure data, struggle to coordinate interventions funded elsewhere, and cannot estimate the recurrent costs that follow a project's end.

A self-reinforcing cycle results in three main stages. The first stage is perceived weakness, where limited administrative reach encourages donors to bypass state mechanisms. The second stage is deprived experience, in which bypassing denies ministries the opportunities to manage resources and deliver services. The third stage is perpetual fragility, where this persistent weakness is subsequently cited to justify continued circumvention.

Breaking the cycle requires reciprocal commitments. Somali institutions must demonstrate fiscal integrity, keep reliable financial records, enforce procurement standards, and accept independent oversight; where they do not, external caution is legitimate. International partners, for their part, cannot expect national institutions to mature while indefinitely reserving the most consequential management functions for themselves. They should build capacity and expenditure transparency into off-budget programs from the start.

The World Bank's Somalia Financial Governance Report 2025, disclosed on 30 September 2026, examines revenue administration, public procurement, financial-sector oversight, petroleum governance, and emerging fiscal pressures, including security-sector costs. These are precisely the functions that determine whether Somalia can responsibly manage more of its own public resources over time.

The strategic question is not whether all assistance should flow through government tomorrow. It is whether each off-budget program has a clear justification, a defined link to national priorities, adequate expenditure visibility, and a realistic plan to strengthen Somali capacity where appropriate. A health donor, for instance, could disclose implementing institutions, districts covered, spending categories, duration, and expected recurrent costs, while the ministry helps set service standards and reviews performance even if the donor retains financial control. A civil-service reform program should be judged not by workshops delivered but by whether recruitment becomes more competitive, payroll and personnel records improve, and essential functions continue after the project closes.

Ownership vs Control: Moving beyond declarations

International frameworks routinely champion national ownership; Somalia's New Deal Compact was one expression of that ambition. Yet the term can mean very different things: a government endorsing a strategy, ministries joining program design, Somali institutions controlling expenditure, or citizens and legislators shaping and scrutinizing priorities. These are not equivalent, and the first is far easier to achieve than the last.

A government can endorse a national development plan while lacking influence over the resources needed to implement it. A ministry can attend coordination meetings without controlling a single funding decision. A national strategy can become the reference document for dozens of projects while nobody holds reliable information on their combined spending or future operating costs. Ownership then remains a political declaration rather than an operational capability.

The gap widens when donors operate across different geographic zones, apply separate funding cycles and reporting rules, and work around federal ministries. Each project may be individually defensible, yet the collective pattern is uneven: one district receives overlapping interventions while another is underserved, and a ministry with a national mandate lacks the staff to coordinate externally financed work. Federalism adds a further layer, because member states may receive assistance through several international channels, complicating coordination between national and subnational levels. None of this requires bad faith. Organizations rationally pursue their own mandates, yet the combined outcome is less effective than a coordinated one.

A more substantive definition of ownership is needed, anchored in demonstrable influence over planning, transparent expenditure tracking, and public accountability. At the same time, ownership cannot be a euphemism for unaccountable political control over donor resources. A credible national system requires transparent procurement, legislative scrutiny, independent oversight, and genuine avenues for citizens to participate and to challenge decisions. The aim is not to swap donor control for unaccountable domestic control but to allocate responsibilities clearly and hold both domestic and international actors to their commitments.

Fiscal Foundations: Reconnecting revenue to social contract

Taxation is more than a way of raising money; it is part of the fiscal cement that binds citizens to the state. Taxpayers have a stronger claim to explanations about spending and service quality, and governments that depend on domestic revenue have stronger reasons to engage constructively with taxpayers and the businesses that sustain the economy. Taxation does not automatically produce democracy, and domestic revenue can itself be captured by political or commercial interests. Even so, the link between revenue and accountability matters for Somalia's state-building debate.

The question is not aid versus no aid, but whether assistance can save lives today while building institutions that make tomorrow's recovery less dependent on external decisions."

The 2022 World Bank figures cited above illustrate the historical imbalance: federal domestic revenue of about 2.2% of GDP, combined federal and member-state revenue of about 3.6%, and external grants financing 62% of federal expenditure. When public services are financed by actors who are not answerable to domestic political processes, the feedback loop between taxation, representation, and accountability remains underdeveloped. Citizens may not know which institution is responsible for a service, and government may be blamed for failures it has no means to prevent.

The problem is not simply that Somalia collects too little tax. It is whether the collection is equitable, predictable, transparent, and tied to visible improvements in services. Where households and businesses face multiple charges, informal payments, or unpredictable levies while public services remain weak, taxation deepens distrust rather than building the social contract. Somalia, therefore, needs a dual reform: expanding lawful domestic revenue while making its use more transparent and responsive to public needs.

Somaliland offers a useful but qualified comparison. In Taxation, Political Accountability and Foreign Aid: Lessons from Somaliland, Nicholas Eubank argued that Somaliland's limited access to foreign assistance increased the importance of local tax revenue and gave actors outside government leverage to demand more inclusive and accountable institutions. Sarah Phillips's When Less Was More likewise stresses the role of local ownership in the formative settlement, while noting the exclusionary limits of elite bargaining. Later scholarship, such as Somaliland's Authoritarian Turn, documents the risks of oligarchic influence and concentrated economic power.

The lesson is not that less aid automatically produces better governance. Somaliland's path reflected a distinctive history of conflict, customary negotiation, and local institution-building, and limited aid was one factor among several. A sudden reduction in Somalia could devastate essential services without producing more representative institutions. The comparison is best treated as a hypothesis about revenue bargaining, namely that stronger domestic mobilization, combined with transparent spending and meaningful participation, can create a more durable basis for accountability.

Managing Vulnerability: Gatekeeping, diversion risks

Humanitarian operations function in environments where access often depends on negotiation with regional authorities, landowners, customary leaders, and commercial intermediaries. These relationships can be vital for safe passage, staff protection, and community acceptance, and local knowledge is often indispensable. But they also create risks of exclusion, manipulation, and diversion. The question is how systems of access and influence affect who actually receives what has been allocated.

The independentInter-Agency Humanitarian Evaluation of the Response to the Humanitarian Crisis in Somalia, published in 2025 (see also the UNFPA overview), assessed the collective famine-prevention response of 2021-2024. It found that the scaled-up response played a critical role in preventing famine and saving lives. It also identified weaknesses in accountability, inclusion, coordination, and the management of diversion risk, noting that the rapid expansion of assistance in 2022 initially gave insufficient attention to the growing risk of diversion. Later reforms improved cooperation and transparency but took longer than envisaged. The evaluation further noted that the full 2023 post-distribution diversion investigation remained confidential, with access limited to selected stakeholders. Confidentiality can be justified to protect investigations, personal safety, or due process, but it is a transparency issue worth recognizing.

These findings must be read carefully, as they show that diversion risks were serious enough to warrant investigation and system-wide reform, but they do not show that every program was compromised or that diversion occurred at the same scale everywhere. Three structural vulnerabilities stand out. The first is initial blind spots, where rapid scale-ups during acute crises can underestimate and under-manage escalating diversion risk. The second is registration challenges, in which digital beneficiary registries can improve auditing and prevent duplication, but if selection itself reflects unequal access to local power, technology can make an exclusionary allocation more efficient because better data cannot show whether the criteria are fair. The third is oversight gaps, meaning that third-party monitoring must go beyond confirming that goods reached a location and should instead verify that recipients received their full entitlements, that no unauthorized deductions occurred, that people were not excluded because of identity or status, and that complaints can be made safely.

The World Food Programme's 2024 targeting pilots in Baidoa and Dolow, discussed in a December 2025 ODI report, explored ways to improve targeting and protect the integrity of unconditional cash and voucher assistance. Their lesson is that integrity depends on attention to power, not merely on better forms, software, and audit procedures.

Commercial rents, political competition

A large injection of foreign aid also creates demand for logistics, transport, security, construction, communications, consultancy, and financial services. These markets create jobs and stimulate local economic activity. They can also concentrate benefits among narrow networks with privileged access to information and decision-makers.

Somalia's wider political economy sharpens the point. Movement corridors, ports, checkpoints, and aid procurement can generate substantial income entangled with political and security arrangements. PeaceRep's September 2026 analysis, "A Decade on, Somalia's Federal Pact Benefits Elites and Al-Shabaab," draws on several hundred interviews across Somalia and the diaspora. It identifies two connected themes: control of movement through checkpoints and control, mismanagement, or manipulation of international aid. Its authors argue that political elites and business allies can profit from aid-related rents and economic chokepoints. These are the researchers' interpretations of their evidence, not proof that every official, business, or aid organization is implicated. Further material is available on PeaceRep's Somalia page.

A company that wins a donor-funded contract has not necessarily benefited improperly; commerce is essential to development. The investigative question is whether procurement is competitive, transparent, fairly administered, and effectively scrutinized. A school may be built and supplies delivered while competition was weak, beneficial ownership was undisclosed, and value for money went unassessed. Reliance on a narrow group of suppliers may be justified by security and performance needs, but it can also create barriers to entry and dependence on a handful of intermediaries.

Transparent, competitive, and closely scrutinized donor procurement is therefore vital to prevent public resources from inadvertently reinforcing factional power. Where lawful and practical, reporting should identify the contracting entity, value, duration, selection method, and verification arrangements and explain any exception to competitive tendering. Donors should ask which regions receive contracts, which firms repeatedly win, whether qualified Somali firms can compete, and whether contracts build lasting employment and skills. These are questions for systematic investigation, not assumptions of guilt.

Shock of Retrenchment: Exposing aid-centred model

The vulnerabilities of an aid-dependent service model become starkly visible when financing contracts. The IMF's 2025 analysis warned that potential reductions of $400-600 million could affect household consumption, humanitarian programs, local NGOs, and businesses supplying aid-funded operations, with the precise impact depending on which programs were cut and how quickly alternatives could be mobilized. The World Bank's June 2025 outlook similarly noted that aid cuts were downsizing otherwise positive growth prospects.

The human consequences have since been reported. On 11 June 2026, CARE reported that nearly 50 CARE-supported health and nutrition centres had closed since January and that around 500 primary healthcare facilities nationwide had been forced to close because of funding shortfalls. On 21 August 2026, UNICEF reported that 205 health and nutrition facilities had closed, warning that as many as 618 could close under severe funding scenarios, and that admissions of children to stabilization centers rose 32% in the first half of 2026 compared with the same period in 2025, partly because preventive and community-based nutrition services had been lost. These are agency-reported estimates drawn from different dates, facility categories, and projections. They are not an audited total and should not be added together, but they show that funding reductions were associated with serious service disruption.

The institutional lesson is stark. If a critical service vanishes the moment a grant expires, who is responsible for its continuity? If government lacks the means to sustain it, can citizens realistically hold public institutions accountable for its closure? If a program is essential, why were its long-term financing and transition plan not settled at the outset?

These questions do not justify abrupt withdrawal; protecting life-saving services must remain the immediate priority. They show why the move toward resilient national systems must be engineered before a funding shock forces it through multi-year contingency planning, a transparent division of responsibilities between government and partners, diversified domestic revenue, and phased sustainability frameworks. Not every service can or should be financed immediately from domestic revenue. The goal is progressive resilience, not premature withdrawal.

Strategic reform agenda

Breaking free from the aid paradox requires coordinated action by Somali authorities at the federal and member-state level, donors, agencies, NGOs, the private sector, and civil society. No single actor can do it alone. Five reforms form the core of the agenda.

Unified information architecture. Establish a national aid and expenditure tracking system that records external assistance, as far as practicable, by donor, implementer, sector, geography, financing channel, and duration, distinguishing humanitarian relief, development aid, security support, loans, and investment. The purpose is not to force agencies to disclose sensitive operational details or to route all funds through government but to let the government see the resource landscape, identify gaps and overlaps, plan for service continuity, and inform the public.

Transparent off-budgeting. Off-budget financing is not improper in itself; it can be necessary for speed, independence, or risk management. But every major off-budget program should publicly state its rationale, its alignment with national priorities, its oversight arrangements, and its projected recurrent costs. A phased approach could tighten reporting first and expand use of national systems, as independent assessments show that safeguards are adequate.

Equitable domestic revenue. Strengthen lawful customs administration, tax compliance, and fiscal coordination between federal and member-state authorities, and link collection transparently to visible service delivery. Citizens and businesses should know what is owed, who collects it, how it is used, and what they receive in return. The aim is a predictable, fair fiscal system, not simply higher collections.

Rigorous procurement oversight. Disclose contract awards, justify non-competitive exceptions, and check beneficial ownership so that commercial competition is fair. These measures should not presume wrongdoing by Somali firms; they make legitimate participation fairer and reduce opportunities for favoritism.

Enhanced civic space. Protect and fund independent civil-society organizations, investigative journalism, and community feedback mechanisms. The ODI's 2026 analysis argues that strengthening civic space beyond humanitarian response is important for state accountability, transparency, and inclusion. Local organizations should not be reduced to implementers whose funding depends on avoiding criticism of the powerful, and they should be free to question both domestic authorities and international partners.

The goal is progressive resilience, not premature withdrawal."

Two supporting measures complete the picture. Humanitarian agencies should strengthen beneficiary verification, post-distribution monitoring, and independent complaints mechanisms, and where full investigative reports cannot safely be published, release detailed summaries of findings and corrective action. Federal and member-state authorities should likewise improve information sharing and clarify responsibilities, without turning coordination into political exclusion or needless centralization.

Progress should be measured by institutional outcomes, not spending alone. Useful indicators include the share of external assistance recorded in a common information system, the share of eligible aid aligned with national budget and planning systems, domestic revenue as a share of GDP, the share of contracts competitively awarded and disclosed, whether essential services are maintained after project closure, complaints resolved and entitlements verified, and the time needed to restore essential services after a funding shock. These should be disaggregated by sector, geography, and financing modality and independently verified. A higher share of aid recorded in the budget is not evidence of better governance unless controls, transparency, and service outcomes also improve, and agencies working in inaccessible conflict areas should not be ranked as if they faced the same constraints as long-term infrastructure financiers.

Conclusion: Toward accountable partnership

Somalia's aid paradox is that international assistance remains necessary for survival and stabilization, while the arrangements through which it is delivered can stifle durable public capacity. The achievements of aid are real, and the closures reported in 2025 and 2026 show the danger of withdrawing support before viable alternatives exist. But humanitarian necessity cannot become a permanent substitute for institutional development, and national strategies, coordination meetings, and capacity-building projects should not be mistaken for effective ownership.

Moving forward requires realigning incentives rather than merely adjusting projects. Somali authorities must show that they can mobilize revenue, manage resources transparently, coordinate federal and subnational responsibilities, and respond to citizens. Donors and implementers must progressively strengthen national systems, disclose more about the resources they control, and measure success by lasting outcomes as well as immediate delivery. Civil society must be able to scrutinize both sides, the private sector must compete on fair terms, and citizens must be able to identify who is responsible for services and to seek redress when commitments fail.

By anchoring external assistance in transparent national systems, strengthening domestic revenue mobilization, and building genuine public accountability, Somalia can move from perpetual aid dependency toward a resilient, self-sustaining social contract. A successful partnership should leave Somalia better able to govern, finance, and serve its people, not simply better able to administer the next externally funded project. AS

Editor's Note: Abdinasir Ali Osman (Prof.) is a veteran Somali senior researcher and consultant with more than 35 years of experience in education, humanitarian affairs, governance, and institutional development and reform. He can be reached at ipi2014@hotmail.com