Somalia's federal government was established in 2013, marking the first permanent central government in the country since the start of the civil war in 1991. The government was formed after years of peace and reconciliation talks, which took place in the context of a famine in 2011 and the rise of militant Islam in the form of al-Shabaab. Despite its establishment, the federal government still has limited reach and authority, and al-Shabaab remains entrenched in the country.
According to research by Nisar Majid, a research associate at the London School of Economics and Political Science, Somalia's political economy has been shaped by two key themes: checkpoint governance and the control, mismanagement, and manipulation of international aid. The research found that political elites and their business allies at both federal and member state levels benefit from corruption associated with international assistance. They also benefit from the rents generated at various "chokepoints" along Somalia's transport corridors.
Somalia's coastline, which stretches over 3,000km, plays a critical role in the country's economy. The major and minor seaports and landing beaches act as both avenues and chokepoints for international trade. The main export is livestock, while imports include food, electrical and electronic goods, clothes, and construction materials. Taxes are extracted at entry points, including Berbera, Bosasso, Mogadishu, and Kismayo ports, and on interior roads. These taxes make up a significant part of the revenue generated in the country.
The recipients of these revenues include the federal government, federal member states, and al-Shabaab. This enables all these players to continue operating. The research has shown that control over chokepoints has been central to political power in Somalia and shapes alliances between local elites and external actors like Ethiopia and Kenya. Somalia's business-political elites and al-Shabaab continue to profit from the current situation, while large proportions of the population see little benefit.
Somalia receives significant amounts of international aid for humanitarian, development, and security needs. Since 2010, Overseas Development Aid has averaged US$1.6 billion annually, reaching approximately US$2.5 billion in 2024. However, the aid is often channelled through project contracts that are susceptible to aid diversion and corruption. One of the worst forms of corruption is the exploitation of internally displaced people, who are some of the main recipients of assistance.
The humanitarian system is currently undergoing a global reset, driven by aid cuts. In Somalia, this reset must include acknowledgement of systemic barriers to change and address some of its perverse internal incentives, which continue to enable corruption and aid diversion. International donors must engage with inclusive Somali-led dialogue processes and support diverse voices and interests across society, including al-Shabaab. This will help create space for civic networks, women's groups, business communities, and religious scholars to have a say in the country's future.
Ultimately, the losers in this arrangement are the general population, who see little benefit from the current situation. Many Somalis see al-Shabaab as a credible alternative to the official government leadership, incumbent or opposition. To address this, international donors must take a more nuanced approach to engaging with Somalia, one that acknowledges the complexities of the country's political economy and seeks to support positive change.
Key points
- Somalia's federal government has failed to deliver stability and prosperity to its citizens.
- The country's political economy is shaped by checkpoint governance and the control, mismanagement, and manipulation of international aid.
- International donors must engage with inclusive Somali-led dialogue processes to support positive change in the country.
