Of all the countries in the world that will be affected by cuts to overseas aid announced this year, the impacts felt in Somalia will be among the most profound.
The war-torn country has long been highly reliant on aid to function. Over <a rel="nofollow" target="_blank" href="https://reliefweb.int/report/67 per cent funded by foreign donors, while the country’s health system continues to be predominantly run by a mixture of international donors, agencies and NGOs.
Cuts are already taking their toll: a World Food Programme (WFP) country spokesperson told The Independent that they have reduced food aid provision from 1.2m people per month to 820,000 per month despite the country’s critical food needs, while USAID files analysed by The Independent show projects worth more than $400m have been terminated in Somalia by that agency alone.
But while Somalia’s example shows us why aid remains vitally important for some countries, it also helps illustrate why some politicians have become disillusioned by the way aid has been operating.
Tens of billions of dollars have poured into the country since the country’s civil war broke out in 1991, but the country’s life expectancy remains below 50, GDP per capita remains below $500, and corruption levels were judged the second worst in Africa by Transparency International in 2024.
“There is a lot of donor fatigue when it comes to Somalia,” says Ahmed Soliman, Horn of Africa Programme researcher at Chatham House.
“The way that the US instigated its cuts in such a brutal and painful way, it is very difficult to predict how much everyone will suffer now,” adds a Mogadishu-based UN official, who did not wish to be named.
“But at the same time, aid dependency has been a problem for a long time in Somalia. This could be an opportunity for the country to stand on its own two feet a bit more.”
There are some reasons to be hopeful that now could be a good moment for the country to begin to being weaned off aid dependency.
Nation-building efforts, carried out in earnest since a new federal constitution was adopted in 2012, are beginning to pay dividends. Recent years have seen the government introduce legislation on everything from data protection to child welfare, while management of the country’s national humanitarian “safety net” has largely been transferred from NGOs to government authorities, says Somalia WFP spokesperson Sara Cuevas Gallardo.
At a time when many African nations are crippled by unmanageable debt repayments, wide-ranging reforms instigated by Somalia’s finance ministry have enabled the country’s external debt to fall from 64 per cent of GDP in 2018 to less than 6 per cent of GDP by the end of 2023. Meanwhile, President Hassan Sheikh Mohamud has pledged to hold the country’s first nation-wide federal election since 1969 next year.
Efforts are also under way to tackle corruption in the country. The diversion of aid to local officials, clan leaders, or elders – labelled “widespread and systemic” by the UN in 2023 – has long been a concern for humanitarian operators in the country, but new initiatives around coordinating systems and boosting aid efficiency are increasingly being adopted, said the Mogadishu-based UN official.
“As time goes by, and as our country has struggled with the failures of institutional decay and turbulence in different formats, we are slowly but surely building back our institutions,” said Abdihakim Ainte, advisor to the Prime Minister of Somalia, at the recent climate resilience summit held by think tank IIED in London at the end of June.
This shift is taking place at both a national and local level. In Southwest State – the country’s most populous, and one long-impacted by cycles of drought, famine, and insecurity – a new piece of legislation, signed into law in February, aims at strengthening efforts to ensure that aid is used for its intended purposes by cutting out middle-men and criminalising unauthorised transportation or commercial usage, among other measures.
“The law is really very comprehensive, and we are training law enforcement and the court system to be able to enforce it,” says Abdinasir Abdi Arush, minister of humanitarian and disaster management in Southwest State. “We have shared what we have done with other states as well as the federal government, to encourage them to carry out their own reforms.”
In the private sector, meanwhile, the billions of dollars in remittances sent by the Somali diaspora shows there are revenue streams beyond humanitarian aid that the country can capitalise on, while certain business success stories offer hope that profits are possible even in the most challenging of economic environments.
The $2.4bn in remittances that the IMF tracked Somalia receiving in 2024 is more than double the $1bn the UN tracked the country receiving in aid. The World Bank describes the diaspora as a “vital economic force” in the country, while the strength of remittances last year led the IMF to upgrade 2025 GDP growth last year to a buoyant 4 per cent.
Abdullahi Nur Osman, CEO of Hormuud Salaam Foundation, a non-profit that makes charitable donations, argues that Somali businesses will be the key driving force from aid dependency. The Hormuud Salaam Foundation is funded via profits from Somalia’s largest bank and largest telecoms provider, Salaam Somali Bank and Hormuud Telecom.
“Our staff in the country are part of the local community, and have local knowledge and trust,” Osman says. “The private sector has not only managed to survive through civil war, but has thrived.”
Hormuud Telecom provides Somalis with some of the cheapest mobile data globally, at an average cost of $0.50 per gigabyte, while Salaam Somali Bank’s widely used mobile money platform has contributed to Somalia becoming a “largely cashless society”, says Osman, with over 70 per cent of adults now using mobile money transfers.
Such digital infrastructure developed out of necessity, allowing Somalia to continue doing business regardless of security concerns – and it is also now widely used by NGOs to send funds and early warning messages for crises like drought or flooding.
Osman acknowledges, however, that the country continues to face key obstacles to becoming less aid-dependent. He believes that while they provide crucial financial support, “remittances cannot replace the role of the state”. He also thinks that a reluctance from aid agencies to fund long-term resilience work, and a tendency to focus instead on solely addressing humanitarian crises – a dynamic set to become even more pronounced as aid belts tighten this year – is holding the country back.
Somalia also struggles to attract foreign investors, with foreign direct investment currently totalling less than half of annual aid flows, and worth less than $1bn per year. “The most important thing we need in Somalia is foreign direct investment, which the government has been working hard to attract, in areas such as energy and fisheries,” says Osman. “This continues to be a major challenge.”
There are concerns, too, that when foreign investment does come, it is not necessarily being well-regulated. A wide-ranging hydrocarbons agreement signed between Turkey and Somalia in April drew significant criticism for giving Turkey access to 90 per cent of Somalia’s oil and gas revenues, according to documents published by Turkey’s Parliament.
For his part, President Hassan Sheikh Mohamud defended the deal as one with “shared benefits”, arguing that Turkey was the only country willing to invest.
The story of Somalia’s oil and gas also speaks to a broader problem facing the country that will need to be more effectively addressed if the country is to stand on its own: the issue of weak governance.
President Mohamud, first in power between 2012 and 2017 and now again since 2022, is a man accused by some of economic mismanagement and power-grab. Even more concerningly, Somalia continues to be impacted by Civil War, with Al Qaeda terrorist group Al Shabaab controlling some 40 per cent of the country, the provinces of Jubbaland and Puntland attempting to break away, and clans regularly fighting over resources on a local level.
Ahmed Soliman, from Chatham House, believes that the federal government has had a tendency to look outwards for legitimacy from foreign donors or resources like oil and gas, when the reality is that its hold on power is actually weakening, with constitutional reforms under President Mohamud’s administration leading to fighting between Jubbaland and the federal government in recent months.
“There is a sense that the federal project is stalling a bit, and the security picture is failing to evolve in a positive way,” says Soliman. “The aid dependency continues because the core dilemma of the relationship between the centre and the regions has yet to be resolved.”
The lack of clear government control means that everyone from large companies to informal sellers is forced to pay taxes or security provision multiple times to groups including the local government, the federal government, local militia, and police forces, and Al Shabaab, says Soliman.
Recent months have seen Al Shabaab boost its territory, with far fewer resources than the federal government, to the point of threatening Mogadishu in recent months.
What is now required is careful, consensus-driven negotiation between different parties to build a more sustainable, popular governance model for the country – something “nobody thinks for one second is going to be easy, but requires politicians acting in the national interest ahead of self interest”, says Soliman.
Positive progress has been made in a lot of areas, but with climate and security concerns escalating, and aid cuts biting, Somalia continues to face a difficult situation. It remains to be seen whether the country’s political class will be able to navigate the country through.
This article is part of The Independent’s Rethinking Global Aid series
