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Public Financial Management Reforms in Somaliland | ICPAS
ICPAS Accounting & Finance Summit 2026Interactive research-note edition
Public financial governance

Public Financial Management Reforms in Somaliland

A concise account of reform progress, remaining system constraints and the priorities for stronger public accountability.

Abdirizak Ali Mohamed · Presented at the ICPAS Accounting and Finance Summit · Hargeisa, 2026

2008

A reform journey toward rules-based public finance

Somaliland has moved from largely manual and fragmented processes toward more structured, documented and standards-based systems.

62.6%Growth in inland revenue, 2019–2023
$88.2mInland revenue collected in 2023
~40%MDAs reportedly audited each year
IPSASCash Basis introduced for public reporting
IFMISSupports payroll, transactions and reporting

The foundations are stronger. The next test is consistent performance.

Somaliland’s PFM reforms have strengthened the legal framework, budget execution, payroll control, treasury management, procurement, financial reporting and external oversight.

A more structured system. Formal laws, a unified chart of accounts, standardized templates and IFMIS-supported processing have improved documentation, transaction control and reporting compared with the pre-reform period.

An unfinished institutional agenda. Revenue forecasting, audit coverage, internal-audit capacity, reporting across the wider public sector and subnational capability continue to limit the full value of the reforms.

PFM reform should now move from system establishment to system performance.
Law + systems

The architecture has changed

The PFM Act, Procurement Law No. 82/2018, Audit Act No. 76/2016 and IFMIS provide a clearer operating framework.

Practice

Implementation determines impact

Controls, reports and audit findings create value only when they are consistently applied, reviewed and acted upon.

Three views of Somaliland’s evolving PFM system.

Select a lens to review the principal achievements and the work still required to consolidate them.

From fragmented processes to a formal control environment

Legal reform and digital processing have created a common structure for budget execution, payroll, treasury operations and public procurement.

Legal frameworkPFM-related laws and regulations provide clearer roles and procedures.
Budget executionIFMIS, a unified chart of accounts and formal reporting support more structured execution.
Payroll integrityIFMIS-based payroll has improved records and alignment with approved allocations.
Treasury managementCash-management practices have become more disciplined.

Better information and clearer oversight

Standardised reporting, procurement rules and an expanded audit mandate have strengthened the transparency architecture.

Financial reportingStandard templates and IFMIS processing have improved timeliness and reliability.
Public procurementLaw No. 82/2018 formalised procedures and increased transparency in contracting.
External auditAudit Act No. 76/2016 strengthened the National Audit Office’s mandate.
Legislative scrutinyThe Public Accounts Committee reviews audit reports and conducts hearings.

Skills have grown, but capacity remains uneven

CIPFA-aligned programmes, domestic revenue mobilisation training and technical advisory support have expanded the pool of PFM practitioners.

Central institutionsTraining has supported MOFED, the National Audit Office and key MDAs.
Professional pathwaysCIPFA-recognised diplomas, CATT and DRM qualifications have strengthened technical skills.
Subnational capacityLocal-government accounting, audit, procurement and fiscal management require wider support.
Retention and continuityStaff turnover and shortages of specialised professionals remain significant constraints.

Execution controls improved faster than forecasting and reporting depth.

Budget processing is more rules-based, but credibility still depends on stronger revenue estimates, better data and disciplined management of deviations.

AreaCurrent positionNext requirement
Budget executionIFMIS and formal procedures support more structured control.Improve monitoring of variance between approved and executed budgets.
Revenue forecastingProjections remain largely manual.Introduce stronger statistical capability, reliable datasets and modern forecasting methods.
MDAs and local governmentsExpected to apply IPSAS Cash Basis.Improve consistency, disclosure quality and timely entity-level reporting.
Public enterprisesExpected to report under IFRS.Strengthen compliance, audit quality and timely publication.
Accrual IPSAS transitionA gradual transition has begun.Sequence asset registers, staff capability, policy choices and systems before full adoption.
IFMIS

Common processing platform

Improves the recording and tracking of government transactions.

Cash Basis

IPSAS reporting foundation

Requires cash receipts and payments, policies, notes and budget comparisons.

Forecasting

Credibility constraint

Weak estimates and fiscal shocks contribute to budget deviations.

Accrual adoption should be a managed capability transition—not only a change in the stated reporting standard.

Inland revenue rose substantially, with room to strengthen the system behind it.

Collections increased from USD 54.2 million in 2019 to USD 88.2 million in 2023—growth of approximately 62.6% over five years.

Administrative progress. Taxpayer services, registration, assessment, electronic filing and payment systems have improved the administration of inland revenue.

Structural priorities. Forecasting, compliance management, taxpayer service quality, domestic revenue diversification and the sequencing of future institutional arrangements require further work.

30.2%

Growth in 2020

The strongest annual increase in the five-year series.

12.1%

Growth in 2023

Revenue continued to rise after more moderate growth in 2021 and 2022.

A stronger mandate must be matched by wider coverage and effective follow-up.

Audit methodologies, institutional roles and legislative review have improved. Capacity constraints still limit the reach and impact of oversight.

~40%

Annual audit coverage

The National Audit Office is reportedly able to audit about four in ten MDAs, prioritising larger budgets and higher risks.

70%+

Medium-term ambition

The note identifies substantially wider coverage as an important institutional objective.

Institution or mechanismCore roleStrengthening priority
National Audit OfficeIndependent review of public funds, financial statements and legal compliance.Increase coverage, performance-audit capacity and follow-up of findings.
Public Accounts CommitteeReviews audit reports, conducts hearings and holds the executive to account.Strengthen technical support, hearing procedures, reporting and follow-up.
Internal audit unitsReview internal controls, compliance and risk within public entities.Improve independence, planning, professional capability and management response.
Accounting unitsPrepare financial information for management, reporting and audit.Improve IPSAS knowledge, reconciliation discipline and timeliness.
Audit impact is measured not only by reports issued, but by weaknesses corrected and accountability enforced.

Consolidate the gains through focused institutional action.

The note points to a practical agenda spanning budget credibility, professional capability, audit follow-up and system-wide reporting.

01Budget and revenue systems
  • Align the National Development Plan more closely with the annual budget.
  • Strengthen the budget approach and implementation of a Medium-Term Expenditure Framework.
  • Modernise revenue forecasting, taxpayer services and compliance management.
  • Improve the governance of supplementary budgets and execution variances.
02Accounting, assets and treasury
  • Improve fixed-asset registers and inventory systems before deeper accrual reporting.
  • Strengthen comprehensive financial reporting across MDAs, local governments and public enterprises.
  • Sequence implementation of a Treasury Single Account with the required legal, banking and systems preparation.
  • Continue modernisation of the Central Bank of Somaliland and the wider financial system.
03Audit and accountability
  • Increase National Audit Office resources, specialist skills and risk-based audit coverage.
  • Introduce systematic tracking of audit recommendations and management responses.
  • Strengthen PAC technical support, public reporting and follow-up processes.
  • Use comprehensive PFM assessments, including PEFA where appropriate, to benchmark progress.
04Professional and subnational capacity
  • Expand continuous professional development and certification for accountants, internal auditors and procurement staff.
  • Scale PFM capacity-building to local governments and support fiscal decentralisation.
  • Strengthen ICPAS as an anchor for national PFM professional development in partnership with universities, CSI and regional institutions.
  • Improve retention and career pathways for trained public-sector personnel.
1

Credible plans

Connect development priorities, realistic revenue estimates and annual budgets.

2

Reliable records

Improve reconciliations, asset information and entity-level reporting.

3

Effective assurance

Expand audit reach and ensure findings lead to corrective action.

4

Capable institutions

Build and retain professional skills at central and subnational levels.

Preliminary qualitative evidence from an ongoing doctoral study.

The research examines how PFM reforms have affected transparency, accountability and institutional performance in Somaliland.

Qualitative designPurposive samplingKey-informant interviewsFocus groupsDocument reviewOngoing PhD study

Participants. Current and former senior public officials, oversight leaders, PFM practitioners, consultants, civil-society representatives and business professionals with direct experience of pre- and post-reform arrangements.

Evidence base. Interviews, focus groups, archival records, PFM strategies, reform reports, policy documents, governance frameworks, financial reports and relevant literature.

Interpretive caution: the findings are preliminary and should not be read as a final evaluation of Somaliland’s PFM reforms. Numerical claims reproduced here are those reported in the source note.

How to cite this research note

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Author’s recommended citation
Mohamed, Abdirizak A. (2026). Diagnostic Note on Public Financial Management (PFM) Reforms in Somaliland. Presented at the ICPAS Accounting and Finance Summit 2026, Hargeisa, Somaliland.
APA 7
Mohamed, A. A. (2026). Diagnostic note on public financial management (PFM) reforms in Somaliland [Conference research note]. ICPAS Accounting and Finance Summit 2026.
Harvard
Mohamed, A.A. (2026) Diagnostic Note on Public Financial Management (PFM) Reforms in Somaliland. Research note presented at the ICPAS Accounting and Finance Summit 2026, Hargeisa, Somaliland.
Chicago
Mohamed, Abdirizak A. Diagnostic Note on Public Financial Management (PFM) Reforms in Somaliland. Research note presented at the ICPAS Accounting and Finance Summit 2026, Hargeisa, Somaliland, 2026.

the permanent webpage URL: https://www.icpasorg.com/pfm-diagnostic-note.

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