The U.N. envoy for Somalia says the Cabinet has agreed on a model for elections later this year, calling the long-awaited decision "an important milestone" for the Horn of Africa nation.

Michael Keating told the U.N. Security Council on Thursday that the decision this week was the culmination of almost six months of intense consultations and "may be a watershed moment, marking the growing political maturing of a federal Somalia."

But he also stressed that Somalia's Islamic extremist insurgents, al-Shabab, remain "a potent threat."

Keating says the elections model envisions a 275-member lower house which maintains a power-sharing formula among clans and a 54-member upper house based on equal representation of existing, emerging and prospective federal states plus additional seats for Puntland and Somaliland.