By Abdullahi A. Nor
After decades of state collapse, conflict, and economic calamity, Somalia was left with an unsustainable debt burden largely accumulated before 1991, cutting it off from international finance and development support. Arrears to creditors constrained recovery, basic service delivery, and responses to recurring humanitarian crises. Through sustained economic and governance reforms, Somalia regained international confidence and qualified for debt relief under the HIPC Initiative—an essential step to restore fiscal space, re-enter the global financial system, and support long-term stability and development.
Thus, Somalia’s re-entry into international finance following debt relief was meant to mark a decisive break from the country’s troubled past: opaque borrowing, weak oversight and debts later disowned by successor governments. That progress is now at risk.
A proposed public borrowing transaction being advanced by Somalia’s Ministry of Finance has raised serious fiduciary, governance and legal concerns within the Federal Parliament. These concerns have been formally communicated to the European Development Bank and shared with the World Bank, IMF and African Development Bank by members of the Parliament—not to obstruct development finance, but to protect its integrity.
At issue is not whether Somalia needs financing. It does. The question is whether new debt is being contracted in a manner consistent with the country’s constitution, public finance laws and parliamentary procedures—standards that also underpin multilateral development banks’ own fiduciary frameworks.
Under Somalia’s provisional constitution, parliament is mandated to exercise oversight over public finances, including borrowing. The Public Finance Management Act further requires full disclosure of loan terms, fiscal implications and contingent liabilities, alongside proper debt registration and audit. According to parliamentary records, these requirements were not met before the proposed loan was advanced.
Parliament has not received comprehensive documentation detailing the purpose, terms or risk profile of the loan. The process by which approval was purportedly obtained reportedly fell short of quorum requirements and proceeded despite a formally lodged motion on Dec 22 calling for deferral. These procedural shortcomings raise legitimate questions about the robustness and durability of legislative consent.
For international lenders, such gaps matter. Multilateral development banks routinely assess not only macroeconomic sustainability, but also legal authority, institutional capacity and governance risk. Where these foundations are weak, the risk is not merely technical—it is political and reputational.
There are additional concerns. The loan is reportedly intended for the Somalia Development Bank, whose senior leadership has close familial ties to the presidency. In the absence of clear and demonstrable conflict-of-interest safeguards, this creates an elevated risk of governance failure and public mistrust—precisely the kind of risk MDB policies are designed to mitigate.
Timing compounds the problem. Somalia’s current federal government reaches the end of its mandate in May 2026. Entering into long-term debt commitments in the final phase of an administration, without broad parliamentary consensus, introduces successor-government risk. History across fragile states shows how easily such commitments become contested, suspended or repudiated after political transitions.
Parliament’s position has therefore been straightforward: suspend new borrowing and guarantees until constitutional, statutory and procedural requirements are fully satisfied. This is not an act of defiance, but an exercise of constitutional responsibility. Fiscal sustainability and intergenerational equity demand no less.
For Somalia, the stakes are high. After decades of isolation and debt distress, credibility with international partners is among the country’s most valuable assets. That credibility rests not only on economic reforms, but on institutions that function as intended—where parliament scrutinises, the executive complies and lenders engage on the basis of law.
For development partners, the lesson is equally clear. Speed and goodwill cannot substitute for legal authority and institutional legitimacy. Financing that bypasses domestic oversight may deliver short-term disbursement, but it risks long-term instability, disputes and reputational damage.
Somalia does not need fewer partners or less finance. It needs finance that reinforces its institutions rather than undermines them. Respecting parliamentary oversight is not an obstacle to development—it is the foundation of sustainable development.
If Somalia’s post-debt relief era is to succeed, both its leaders and its lenders must insist on one principle above all: public borrowing must be rooted in law, transparency and accountable governance. Anything less risks repeating the mistakes the country has worked so hard to leave behind.
Abdullahi A. Nor
Email: abdulahinor231@gmail.com