A COMMENTARY ON THE FISCAL IMPACT OF USAID WITHDRAWAL ACTIVITIES IN THE SOUTHWEST STATE OF SOMALIA JUNE 2025
The new U.S. administration under President Donald Trump, following his second inauguration on January 20th, 2025, ushered in a major shift that led to global economic uncertainty, including trade and tariff war and freezing official development assistance through USAID. In this regard, USAID operations were abruptly halted on February 23rd, 2025. This decision had a substantial impact on many countries, including Somalia, with Southwest State especially affected by the loss of a key revenue source and the disruption of numerous ongoing projects previously supported by USAID.
Southwest is one of the states in Somalia hosting the largest number of activities funded through foreign aid. Many households in the state largely rely on employment and livelihoods from aid-funded activities. Similar to other parts of Somalia, hundreds of staff were laid off in the months between February and May by many organizations based in the Southwest region, while a large number of programs were paused.
A total of 11 International Organizations moved out of the region, with 7 INGOs reported completely closed operations by the month of April.
To gain an in-depth understanding of the fiscal impact, the IRAD Institute met with the Minister of Finance, H.E. Ahmed Mohamed Hassan, on April 29th to discuss the fiscal impact on the State following the abrupt disruptions of the USAID Programs in the State.
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