- July 5, 2022
- Posted by: Amos Ekow Coffie
- Category: Economics
Somalia announced Sunday that it has granted banking licenses to two foreign institutions, opening the country to international investment for the first time in decades.
The Egyptian bank Banque Misr and the Turkish bank Ziraat Katilim thus become the first foreign banks to be allowed to operate in Somalia, the Somali Central Bank said in a statement.
“The review of the applications of these two banks has been the subject of a lengthy process of several months,” the institution said, adding that they had the green light to establish and operate branches.
“These are two strong banks that will add value to the development of Somalia’s financial sector and contribute to the growth of our economy,” the governor of the Central Bank of Somalia, Abdirahman Mohamed Abdullahi, was quoted in the statement as saying.
One of the world’s poorest countries, with more than 70% of its population living on less than $1.90 a day, Somalia is struggling to recover from decades of civil war.
The country of 15 million people has at least half a dozen commercial banks, some of which offer services through “hawala”, an informal network of over-the-counter money transfers.
hawala is a low-cost system that allows deposits made at a foreign bank to be instantly credited to recipients who need only provide basic identification information matching that provided by the sender.
The announcement of the licensing of foreign banks comes just six weeks after President Hassan Sheikh Mohamoud took office following elections and a long political crisis.
Somalia’s new administration faces a series of challenges, including the threat of famine and attacks by the Shebab jihadists.
President Mohamoud has pledged to improve the economic situation and provide basic services to the population.
Due to the drought in the Horn of Africa, some 7.1 million Somalis – nearly half the population – are currently suffering from hunger, but for the 213,000 most affected people, the situation is now catastrophic and urgent, according to the latest assessment by UN agencies.