Title: Public Financial Management In Somaliland: A Review Of Challenges, Reforms, And Prospects
Authors: Dr. Mustafe Mahamoud Abdillahi, (PhD)
Volume: 9
Issue: 9
Pages: 61-71
Publication Date: 2025/09/28
Abstract:
This study examined the challenges, reforms, and prospects of Public Financial Management (PFM) in Somaliland, a self-declared independent state in the Horn of Africa that maintained relative stability despite lacking international recognition. The research analyzed Somaliland's PFM system through a qualitative review of literature, policy documents, and reports from institutions including the World Bank, IMF, and UNDP, complemented by comparative case studies from post-conflict states like Rwanda and Sierra Leone. The findings revealed that Somaliland made significant progress in PFM reforms since 2010, particularly through establishing a Treasury Single Account (TSA), implementing an Integrated Financial Management Information System (IFMIS), and modernizing revenue collection via the Somaliland Inland Revenue Authority (SIRA). However, the system faced persistent challenges, including weak institutional capacity, clan-based patronage networks, a large informal economy, and inadequate data for policymaking. The hybrid governance model, which combined traditional and modern institutions, created both opportunities for local legitimacy and obstacles to standardization. Key recommendations included strengthening institutional capacity through targeted training programs, broadening the tax base using digital solutions, enhancing accountability mechanisms, and improving fiscal decentralization. The study concluded that context-specific reforms, coupled with effective donor coordination and political commitment, were essential for addressing structural gaps in Somaliland's PFM system. These measures offered potential to improve fiscal sustainability, service delivery, and long-term development outcomes, while contributing valuable insights for PFM in unrecognized and post-conflict states.