Reflections on the future role of the state in Somalia from the perspective of aid effectiveness

Motivation In fragile states, due to limited domestic revenue collection, the private sector is usually the main provider of services; the state being a provider through extensive aid financing. Therefore, the current situation in Somalia raises questions about what the priorities for donors’ interventions should be. Purpose A key challenge in fragile states is to find the right balance between short‐term imperatives, such as the restoration of services and state authority, and long‐term state‐building objectives in a context of limited revenue generation and with unstable political settlements. What should the path of gradual state reforms in Somalia be? Approach and Methods Based on lessons of implementing reforms in fragile states in the last decades and from a literature review on fragile states and insights arising from years of reforms in Somalia, this article offers some reflections about the most relevant public sector reforms in the country. Findings In relation to the most relevant reforms, defining a new role of the state and intergovernmental fiscal relations are critical to tackle the relatively limited affordability of public interventions. Policy implications The questions of limited resources in Somalia, a fragile state, and a resulting dependence on aid financing, are critical for aid effectiveness and are also relevant for other fragile states.