Puntland and Economic Challenges: Is It Time for Economic Policy Reform?

Puntland is currently facing a difficult economic phase, compounded by both internal and external factors. Global inflation, a decline in aid and foreign investment, prolonged droughts, increasing unemployment, and sluggish economic growth have directly impacted the lives of the people and the business capacity.

The community in Puntland is facing a continuous rise in the prices of basic goods, fuel, transportation, and essential services, while their real income is decreasing. At the same time, vulnerable communities, especially rural households, pastoralists, internally displaced persons, and unemployed youth, are bearing the brunt of this situation.

Since 2025, the decline in international aid and the halt of many development projects have reduced job opportunities, cash flow, and community investment. The remittances that expatriates used to send to their families and the investments they made in Puntland have also decreased, further weakening the domestic economy.

On the other hand, recurring droughts have severely impacted the livestock economy, which is the backbone of rural life. Many families have gone into debt to cover the costs of water, food, and the survival of their livestock, while their income from the sale of livestock and dairy products has significantly declined.

This difficult situation requires careful economic policy. When the economy is sluggish, any additional burden placed on businesses and the public can have a broader impact than the expected revenue. Taxes are an important tool for governance, but they must align with the growth of production, investment, job creation, and the improvement of public services. Otherwise, the tax burden could increase the cost of living, reduce business competitiveness, decrease investment, and undermine the purchasing power of the public.

It is also important that economic policies are based on a comprehensive assessment of their impact on businesses, the Port of Bosaso, the markets in the central regions, and trade relations with Ethiopia. Financial decisions not based on in-depth economic analysis risk reducing trade volume and the tax base, which could ultimately harm government revenue itself.

Governments are not built solely by increasing taxes; they gain strength when the economy grows. That growth requires an environment that encourages investment, political stability, market competition, the development of economic infrastructure, and transparent financial management with accountability.

The Puntland Government must continuously assess the economic impact of new policies, especially during times when the community faces compounded pressures. Economic leadership requires a clear plan that balances the need for government revenue with the protection of business capacity and the livelihoods of the people.

A community struggling with economic pressure does not only need new taxes; it needs economic policies that restore confidence, encourage production, boost investment, create new jobs, and protect the purchasing power of citizens. A strong government is based on a strong economy, and a strong economy is built on rational policy, transparency, and accountability.

By: Shukri Farah Ahmed