From aid dependence to domestic resource mobilization: a policy analysis of financing universal health coverage in Somalia
This policy analysis argues that Somalia must transition from fragile aid dependence to a sequenced, multi-channel domestic resource mobilization strategy—prioritizing immediate efficiency gains, followed by health and broad-based taxes, and long-term insurance and Islamic finance—to achieve universal health coverage amidst external funding cuts.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
In many parts of the world, the cost of keeping a person healthy is shared by everyone. When a neighbor falls ill, the community pays a small fee into a common pot, and that pot covers the doctor's bill. This system, known as universal health coverage, relies on the idea that money collected from the many can protect the few in their time of need. For a country to build this system, it needs a steady stream of income. Usually, this comes from two places: money collected from its own people through taxes and fees, or money given by other countries and international groups. For decades, Somalia has relied almost entirely on the second source. Its hospitals and clinics have been funded by outside donors, while the government collected very little money from its own citizens. This arrangement worked well enough for a long time, but it left the country vulnerable. If the donors decided to stop sending money, the entire health system would face a sudden and dangerous gap.
The situation changed sharply in 2025. Major donors, led by the United States, began to cut back their financial support. This sudden drop in funding exposed a critical weakness: Somalia's health system was built on a foundation that could not be controlled from within its own borders. In response, a team of researchers set out to find a way forward. They asked a simple but difficult question: if outside money is disappearing, how can Somalia pay for the health care its people need using only its own resources? The researchers did not just look at one solution. Instead, they examined six different ways a country could raise money, from collecting taxes on everyday goods to using religious traditions of giving. They looked at how global trade, international banking rules, and the decisions of foreign governments would help or hinder each of these options. Their goal was to create a realistic plan that could guide Somalia from a state of total dependence on aid toward a system that is strong enough to survive on its own.
The researchers found that there is no single magic bullet that can solve the problem. Somalia currently collects only about 2.5 percent of its total economic output in taxes, a figure that is far too low to pay for a complete health system. To cover the costs of public education and health care for everyone, the country would need to raise that number to at least 14 percent. Because the gap is so large, the team concluded that no single method of raising money could replace the aid that is leaving. Instead, the country must use a mix of different tools, introduced one after another over many years. The most immediate step is not to find new money, but to spend the existing money more wisely. By organizing how funds are used and ensuring that outside donations go directly into the national budget rather than separate projects, the country can get more value from every dollar it has. This approach requires no new laws and can start right away.
Once the system is organized to work better, the next step is to raise new money through taxes on specific products. The researchers identified taxes on tobacco, sugary drinks, and a plant called khat, which is widely chewed for its stimulating effects, as the most feasible options for the near future. These taxes can be collected at the ports and airports where these goods enter the country. However, the team noted that this method has limits. The amount of money raised depends on how much of these goods are brought across the border, and the political sensitivity of taxing khat is high because it involves powerful traders and consumers. Furthermore, the money raised from these taxes alone would not be enough to build a full health system, but it could provide a crucial bridge while other, slower methods are put in place.
For the long term, the researchers looked at broader solutions that would take many years to mature. One option is a social health insurance system, where people pay a small regular fee to join a national pool. This model has worked in other countries, but in Somalia, it faces a major hurdle: most people work in the informal economy, meaning they do not have regular paychecks from which to deduct fees. Collecting these payments would require a level of administrative organization that the country is still building. Another long-term avenue involves Islamic finance. In a Muslim-majority country like Somalia, religious giving and charitable endowments are deeply rooted in the culture. The researchers suggested that these funds could be organized to support specific health services, such as care for the poor or maternal health. However, they warned that these funds are often collected by different groups and are sometimes controlled by non-state actors, making it difficult for the government to direct them toward a national health plan.
The study also highlighted the vital role of the Somali diaspora, the millions of Somalis living abroad who send money home. These remittances are already a massive source of income, flowing into the country at a rate that often exceeds all official aid combined. Yet, this money is private. It goes directly to families to buy food, pay rent, or cover medical bills, and the government cannot simply take it to build hospitals. The researchers found that while the government could try to encourage the diaspora to invest in specific health projects, such as building a clinic, they cannot rely on this money to fund the entire system. Additionally, the flow of this money is vulnerable to changes in laws in the countries where Somalis live, such as new taxes on transfers or restrictions on banking, which could suddenly reduce the amount of money reaching families.
The path forward, according to the analysis, is a carefully timed sequence of actions. It begins with fixing how money is managed today, followed by the introduction of taxes on harmful products in the medium term. Only after these steps are in place should the country attempt to build a national insurance system or fully organize religious and diaspora funding. The researchers emphasized that outside help will still be needed during this transition. The role of international donors must change, however. Instead of paying for services directly and bypassing the government, they should use their money to help build the institutions and systems that allow Somalia to collect and manage its own funds. The success of this plan depends not just on decisions made in Mogadishu, but also on how global trade flows, international banking rules, and the policies of foreign governments evolve. For Somalia, and for other fragile nations facing similar challenges, the lesson is clear: building a health system that lasts requires moving from a state of waiting for aid to a state of building capacity, one step at a time.
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