Somalia’s Economic Reawakening: Post-HIPC Debt Relief and the Strategic Role of Islamic Finance in Sustainable Investment and Growth

Somalia’s achievement of the Heavily Indebted Poor Countries (HIPC) Completion Point in 2023 marked a decisive shift in its economic trajectory, reducing an unsustainable external debt burden and creating new fiscal space for development. This milestone has strengthened macroeconomic stability, enhanced investor confidence, and provided an unprecedented opportunity for long-term structural transformation. Recognising the need for financing frameworks that are both economically effective and socially aligned, this study employs a qualitative, descriptive–analytical methodology to examine the strategic role of Islamic finance as a catalyst for sustainable investment in post-HIPC Somalia. Using secondary data from internationally recognised institutions and peer-reviewed literature, the study synthesises evidence on Islamic finance instruments—such as Sukuk, Musharakah, Mudarabah, and Waqf—and their potential to support infrastructure development, private-sector growth, financial inclusion, and social welfare. Through thematic and comparative analysis, insights are drawn from Somalia’s context and compared with countries with more advanced Islamic finance ecosystems, including Malaysia, Indonesia, Pakistan, and Sudan. The findings demonstrate that Islamic finance can transform fiscal space into productive investment by promoting risk-sharing, asset-backed financing, and equitable wealth distribution. Integrating Islamic finance into Somalia’s national development agenda can reinforce fiscal resilience, diversify the financial sector, and contribute to poverty reduction. The paper concludes with policy recommendations on regulatory reform, institutional capacity-building, and strategic partnerships with the Islamic Development Bank and diaspora investors, while highlighting directions for future empirical research on Islamic finance adoption in fragile states