The main purpose of this study is to analyse the political and security challenges facing Somalia. It examines the Somali Compact, which identifies certain peacebuilding and statebuilding goals to be achieved in the coming years. The report focuses on Somalia's Peacebuilding and Statebuilding Goals (PSGs) 1 and 2, "Inclusive Politics and Security", in the Somali Compact. The Federal Government of Somalia (FGS) is not present throughout the country or representative of the entire population. This complicates the state formation process. Paradoxically, PSG 1, Inclusive Politics, has not thus far been an inclusive process and there is a risk that the state formation process could lead to further violence. In addition, it is premature to conclude that federalism is the only way forward as Somalis have not yet had an opportunity to voice their opinions on state formation. As for PSG 2, Security, the African Union Mission in Somalia (AMISOM) continues to be the main provider of security. The ongoing offensive is an attempt to improve the security situation. Al-Shabaab is losing territory but has by no means been defeated. This will only happen when there are genuine options for stability, security and political representation. There are also other underlying drivers of insecurity that should not be forgotten. The Somali National Army is more reminiscent of a collection of clan militias than a unitary national armed force. There have been several attempts to enhance its capability but the training currently taking place risks reinforcing divisions because one clan is over-represented. All in all, little progress has been made with implementing the Somali Compact and it remains highly questionable whether the conditions exist to truly implement it.