Sources of Development Funds for Somalia with Reference to Blended Finance

In the past decade, Somalia has reached some important milestones in reconstructing its economy as well as normalizing relations with international financial bodies, providing renewed hope for its nation and the international community. In the semi-autonomous states of Puntland and Somaliland, peace and stability have been present for over 20 years. Furthermore, the newly formed federal government under the president Mohamed Abdullahi Farmajo has taken some strides in reestablishing the nation as an international player. Reforms are helping the Somali economy slowly gain momentum with modest growth. Establishing a National Development Plan in 2017 had helped provide the nation with a clear direction of helping reorganize the economy. However, in order for any government to be successful in executing its plans and initiatives, it must have the resources required to achieve such objectives. Finance is considered to be a significant variable in the development of countries. Access to finance is something, which can significantly help or hinder the socio-economic development of a country. This paper explores traditional and non-traditional sources of funds in relation to Somalia, highlighting the Binding Challanges Somalia currently faces. Moreover, it provides a detailed profile on conventional external sources of development finance. Additionally, it explores non-traditional sources of development finance through a blended finance approach. The author explores ways in which Islamic finance can contribute the economic social development of Somalia. It goes further to explore the role in which the diaspora community can play in the next phase of the development of Somalia and how the large amounts of funds, which are remitted, on a regular basis can be used for sustainable development purposes.