WHY SOMALIA IS STILL HAVING LOW DOMESTIC REVENUE: A QUESTION AND ANSWER COMPILATION
Mohamed Osman Mahamed - East Africa University, Somalia
ABSTRACT
Somalia is a post-conflict state and now getting rid of a sustained civil war. It has a steady growing economy and a lot of economic and policy reforms are in place. Fiscal sector reform is the biggest responsibility of the Federal Ministry of Finance with the special focus on the revenue generation since it’s the most important goal of the current government. This paper presents a very brief study on the revenue status of the Federal Government of Somalia. The study describes the revenue status, recent successful reforms and challenges pressing the domestic revenue mobilization of Somalia. Dealing with “hard to tax” sectors, poor administration capacity, insecurity and political instability, incomplete transition to federalism, legislative and enforcement obstacles and other customs-related problems are the biggest aggressive challenges of domestic revenue mobilization in Somalia. The study recommends the Federal Government of Somalia to; (1) lessen the base informal business activities, (2) build its capacity of administration, (3) create a stable political and secure environment, (4) develop a robust fiscal federalism framework and (5) reform the customs operations with effective policy of trade facilitation and (6) update the tax legislations.
