Somalia’s Finance Minister Bihi Imaan Egeh warned on Tuesday in Mogadishu that the country is losing between $450 million and $600 million in income that previously flowed into the economy, and urged accelerated private sector growth to offset the shortfall.
The warning lands as Somalia’s federal budget already shows signs of strain, with a July 2026 policy paper projecting a $29 million fiscal deficit and continued heavy reliance on foreign grants. Egeh’s comments frame private enterprise not as a policy preference but as a necessity, given shrinking external support and volatile customs revenue.
“The $450 million to $600 million that used to enter the country is disappearing,” Egeh said. “So the situation is really not easy, and it is important that we strengthen the private sector, which is the backbone of economic development.”
Despite the pressure, Egeh pointed to gains over the past decade. He said Somalia’s economy has grown from roughly $150 million to about $2.3 billion, alongside a stronger banking sector.
Commercial bank financing to the private sector has nearly doubled in five years, reaching approximately $500 million, according to the minister. He said lending to businesses has expanded sharply as banks build capacity.
However, Egeh acknowledged a persistent gap: too little of that financing reaches productive sectors such as agriculture, livestock and industry. He called on banks to redirect lending toward domestic production and job creation, calling it essential to sustainable growth.
The remarks coincide with a Somali Public Agenda paper showing the 2026 federal budget projects $1.36 billion in total revenues and grants against $1.39 billion in expenditure. Domestic revenue is expected to rise to $479 million, driven by income tax and administrative fee reforms, though customs receipts remain exposed to global trade shocks.
External grants make up $878.8 million — nearly 65 percent of total resources — including $174.4 million in direct budget support and $704.4 million for donor-financed projects, underscoring Mogadishu’s continued dependence on foreign financing.
Egeh has led Somalia’s Finance Ministry since July 2023, a tenure marked by the country reaching the Heavily Indebted Poor Countries completion point in December 2023, unlocking roughly $4.5 billion in debt relief. His ministry has since launched initiatives such as the World Bank-backed SPRING project, aimed at strengthening private-sector-driven growth.
