Prime Minister David Cameron has warned global leaders that the world will "pay a price" if it fails to help Somalia tackle terrorism, piracy and hunger.
Opening an international conference in London on the crisis-stricken east African state, the Mr Cameron said: "These problems in Somalia don't just affect Somalia. They affect us all.
"In a country where there is no hope, chaos, violence and terrorism thrive. Pirates are disrupting vital trade routes and kidnapping tourists.
"Young minds are being poisoned by radicalism, breeding terrorism that is threatening the security of the whole world.
"If the rest of us just sit back and look on, we will pay a price for doing so."
Representatives of more than 40 countries have gathered for the high-level international conference amid fears Somalia is becoming the new breeding ground for terrorism.
Among the senior figures attending the Lancaster House event are United Nations Secretary General Ban Ki-Moon and US Secretary of State Hillary Clinton , as well as members of Somalia's Western-backed transitional government.
Mr Cameron said he hoped the conference would mark a "turning point" for Somalia and put in place the "building blocks" of a more stable nation.
Somalia has had transitional administrations for the past seven years, but has not had a functioning central government since 1991, when warlords overthrew a long-time dictator and turned on each other, plunging the nation into two decades of chaos.
Mr Cameron said nations must help Somalis "create a representative government", ahead of the expiry of the transitional authority's mandate in August.
He said Britain, Denmark, Norway, the United Arab Emirates and the Netherlands were setting up a local stability fund to provide support from previously neglected regions - including those emerging from terrorist control.
At the same the UK was providing a further £51m over the next three years to support Somalia refugees who fled the country for neighbouring Kenya and Ethiopia, Mr Cameron added.
Hopes for progress have risen in recent months after troops from the UN-backed African Union Mission in Somalia (Amisom) succeeded in driving the Islamist al Shabaab group from the capital, Mogadishu.
They were further bolstered by reports that the al Shabaab stronghold of Baidoa in the southwest of the country has fallen to troops from neighbouring Ethiopia and Somali government forces.
The UN Security Council voted unanimously on Tuesday to increase the Amisom presence from a maximum of 12,000 troops to 17,700 while increasing funding and expanding its area of operations.
Nevertheless, al Shabaab remains in control of much of the country, and earlier this month it underscored its commitment to violent extremism by publicly declaring its affiliation to al Qaeda .
Mr Cameron said Amisom needed to be able to put al Shabaab "permanently into retreat".
A recent report by the Royal United Services Institute think tank estimated that there were currently around 200 foreign fighters in training camps in the country - with around a quarter of them coming from Britain.
The report echoed a warning made by MI5 director general Jonathan Evans in 2010 that it was "only a matter of time" before there were terrorist attacks on the streets of Britain inspired by those fighting in Somalia.
With the London Olympics just months away, Mr Cameron has acknowledged that the security threat from al Shabaab was "real" and "substantial".
Mr Cameron also called for further action against the Somali pirates, calling for the creation of an international taskforce on ransoms.
"Let's set the ultimate ambition of stopping these payments because in the end they only ensure that crime pays," he said.
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