Photo: Hassan Hirsi and Warsame Gure, World Bank The Recurrent Costs and Reform Financing project has supported day-to-day functioning and financial management systems of key ministries of the federal and subnational governments in Somalia. Specifically, through its three phases, the project has supported the federal dialogue and funded basic services critical for peace building and reconstruction of the fragile state. Challenge After more than twenty years of conflict, Somalia is currently on a path of political stabilization and reconstruction. Important milestones include the adoption of the Provisional Constitution in 2012, peaceful presidential elections in 2012 and 2017, and an agreement on a federal political system, including the establishment of Federal Member States (FMS). However, numerous challenges prevail, such as weak government capacity, asymmetric federal structures, security concerns, human capital deficits, and low levels of state legitimacy. According to a World Bank 2019 report, nearly 70 percent of the population lived below the poverty line. In 2020, the COVID-19 pandemic, locusts, and floods have further caused significant economic damage.