Somalia’s transition to a fiscal federalism model has been marked by challenges in revenue allocation, governance structures, and financial management. The National Consultative Council (NCC) has played a key role in negotiating revenue-sharing agreements between the Federal Government of Somalia (FGS) and Federal Member States (FMSs). However, inconsistencies in tax policies, revenue collection mandates, and functional responsibilities have created governance gaps, weakening service delivery and economic stability.
This policy brief examines the agreements reached on fiscal federalism, highlighting key challenges such as unclear tax classifications, lack of standardized revenue-sharing formulas, limited institutional capacity, and weak coordination among government entities. While decentralization efforts have progressed, fragmented revenue collection, overlapping responsibilities, and insufficient technical consultation continue to hinder effective implementation.
