Fiscal Federalism in Somalia: Issues, Challenges and Agenda for Reform

Following a series of reconciliation conferences, Somalia embraced federalism as a system of governancein 2004 when the Transitional Federal Charter was adopted in Mpagathi, Kenya. It was fully adopted in 2012 when the provisional constitution was approved by over 800-member constitutional assembly in Mogadishu, Somalia, and that created the Federal Republic of Somalia. Since then, the relevance of federalism in the Somali context has been questioned if it is suitable to settle the basis of a three-decade national debate on how to redesign a government that is for the people. At the heart of a bitter and draining schism and bone of contention between the levels of government is fiscal federalism. It is a daunting taskthat is hindering every elected government from meeting societal demands by equally sharing what the world puts on our table. As this problem grows, this paper is a contribution to an ongoing dialogue to an existing challenge that stands in the way of a workable agreement, it also suggests some critical areas that need to be considered if this phenomenon is to survive within the Somali context. This study identifies constitutional ambiguity (legal gap), fragile political commitment, and the lack of a deeper understanding of federalism as the biggest obstacles to successful federalism in Somalia. Finally, the study concludes by recommending that the Finance Ministers’ Fiscal Forum (FMFF) together with the Technical Intergovernmental Fiscal Federalism Committee (IGFFC) update and review the obsolete, socialist-like tax regimes that do not have any significance in the federal system, taking any possible measures to end the tenure of the provisional constitution, building a strong institutional capacity to withstand any political turmoil between FGS and FMSs and lastly mitigating the insecurity in many parts of the nation.