Somalia and the European Union have signed a €30 million (US$35.5 million) agreement aimed at strengthening governance, boosting economic resilience and supporting long-term growth, the EU delegation in Somalia said on Sunday.
The agreement forms part of a broader €102 million funding package signed on Jan. 30 under the European Union’s Global Gateway initiative. The package includes four financing programs targeting education, migration management, and community development through infrastructure and livelihood support, according to the EU.
The funding comes as Somalia faces mounting economic pressures linked to declining international aid and repeated climate shocks, including droughts and floods, which continue to undermine livelihoods and food security.
“Through these programs, the European Union reaffirms its commitment to supporting Somalia’s state-building efforts, economic recovery and resilience,” the EU delegation said in a statement published on its official Facebook page.
Somalia has relied heavily on external assistance to deliver basic public services after more than three decades of conflict and political instability. While security conditions have improved in parts of the country, fiscal capacity remains weak, and development spending is largely donor-funded.
The International Monetary Fund (IMF) said Somalia’s economic outlook deteriorated in 2025 and 2026 due to sharp reductions in international assistance and adverse climate conditions. The Fund expects economic growth to slow to about 3% in 2025, down from 4.1% in 2024, reflecting lower aid inflows and weaker agricultural output.
Focus on governance and resilience
The €30 million agreement signed with the EU places particular emphasis on governance reforms, resilience-building and inclusive economic growth. Officials say improving public institutions remains critical for Somalia’s long-term stability and its ability to mobilize domestic resources.
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Somalia reached the completion point of the Heavily Indebted Poor Countries (HIPC) initiative in late 2023, securing significant debt relief and easing pressure on public finances. However, the government continues to face challenges in sustaining reforms and maintaining service delivery amid volatile aid flows.
According to the World Bank, sustained improvements in public financial management and revenue mobilization are essential to expanding Somalia’s fiscal space. The institution said stronger public finances would allow for higher investment in human capital, infrastructure and social protection, which are critical to economic growth, job creation and poverty reduction.
The EU-funded programs are designed to complement these reform efforts by strengthening institutions, supporting local communities and improving access to services, particularly in vulnerable and conflict-affected areas.
Education, migration and community development
Beyond governance, the broader €102 million package targets education and migration management, two areas of growing importance for Somalia and its international partners.
Somalia has one of the world’s youngest populations, with high unemployment and limited access to formal education and vocational training. Donors view education as key to reducing poverty, limiting irregular migration and supporting long-term economic transformation.
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Migration management is also a priority, as Somalia remains both a source and transit country for migrants and refugees in the Horn of Africa. EU officials say part of the funding will support community infrastructure and livelihoods to address the root causes of displacement and irregular migration.
Aid dependence under strain
Despite ongoing reforms, Somalia’s reliance on donor funding exposes it to external shocks. Cuts in international aid in recent years have forced difficult budget choices and raised concerns about the sustainability of public services.
Analysts say maintaining donor confidence will depend on the government’s ability to deepen reforms, improve transparency and strengthen security. At the same time, climate-related risks continue to pose a major threat, with droughts, floods and erratic rainfall regularly disrupting agriculture and food supply.
The EU said its support aims to help Somalia navigate these challenges while laying the groundwork for more resilient and inclusive growth.
As international partners reassess aid priorities amid global economic pressures, Somalia’s ability to translate external funding into durable institutional and economic gains will remain under close scrutiny.
