Beyond the state: structure, function, and governance of Somalia’s informal economy

Since the collapse of the Somali state in 1991, informal institutions have carried out functions ordinarily performed by government: settling contracts, moving money across borders, taxing trade, and financing basic services. This article undertakes a structured thematic synthesis of recent research on four domains of Somalia’s informal economy: financial intermediation (hawala and mobile money), cross-border trade (livestock and khat), informal governance (xeer customary law and shadow taxation), and gendered patterns of informal enterprise. Thirty sources spanning economics, political science, anthropology, conflict and security studies, and development practice, published primarily between 2018 and 2026 and identified through web search and a peer-reviewed academic database, met inclusion criteria requiring substantive engagement with at least one domain; the count reflects an emphasis on source quality over volume rather than an exhaustive census. The review finds that informality functions simultaneously as a livelihoods and resilience mechanism and as a channel for conflict financing, and that these two literatures rarely engage each other directly. It further finds that the size and composition of the informal economy remain unmeasured with precision, that mobile money’s inclusion effects have not been linked to formalization trajectories, and that documented gender gaps in credit access have not been matched by evaluated interventions. The article argues that Somalia’s informal economy is best understood not as a residual or transitional sector but as a durable, functionally differentiated institutional order, and proposes a research agenda centered on longitudinal measurement and cross-domain institutional mapping