Fiscal Decentralisation and Governance in Hargaisa Local Government, Somaliland

Background: Fiscal decentralisation is pivotal for governance in fragile states like Somaliland. Hargeisa Local Government emphasises community participation but faces funding shortages, weak institutions, and the exclusion of marginalised groups, hindering effective service delivery. Objective: To critically analyse the relationship between fiscal decentralisation and governance in Hargaisa Local Government, Somaliland. Method: A mixed-methods correlational survey was employed, collecting data from 269 officials across nine districts. Quantitative data were collected using Likert-scale questionnaires, which were analysed via SPSS (descriptive/inferential statistics), supplemented by structured qualitative interviews that were subjected to thematic analysis. Result: Fiscal decentralisation strongly correlated with improved governance (β = 0.623, *p* < 0.001), enhancing accountability, transparency, and e-governance. However, constraints included limited taxation authority (mean = 2.53), dependence on external grants (mean = 2.71), and weak community participation (mean = 2.49). Demographic barriers were evident, including gender disparities (60.2% male workforce) and mid-level bureaucratic dominance (40.1%). Conclusion: Fiscal decentralisation significantly boosts governance quality but requires complementary reforms to address institutional weaknesses and structural inequities. Unique Contribution: This study validates the Soufflé Theory in a fragile state context, demonstrating that balanced political, administrative, and fiscal decentralisation can strengthen local governance without fragmenting national cohesion. It identifies structural barriers (e.g., gender gaps, revenue dependency) specific to post-conflict settings. Key Recommendation: Strengthen local revenue systems via expanded taxation authority; institutionalise participatory budgeting and gender-inclusive policies; and scale e-governance tools to enhance transparency. Central governments should provide oversight while empowering local fiscal autonomy.