For the first time in decades, Somalia has approved foreign banks

It has been decades since Somalia has been open to international business, but on Sunday, the government of Somalia made the announcement that it has awarded banking licenses to two foreign firms. The Somali Central Bank said in a statement that the Egyptian bank Banque Misr and the Turkish bank Ziraat Katilim are the first foreign banks to be allowed to work in Somalia.

The institution stated that “the evaluation of the applications of these two banks has been the subject of a lengthy procedure that has been several months in length,” the institution stated, adding that they had been given the go-ahead to create and operate branches. In the release, it was reported that the governor of the Central Bank of Somalia, Abdirahman Mohamed Abdullahi, said that “These are two strong banks that will add value to the development of Somalia’s financial sector and contribute to the expansion of our economy.”

Somalia, which is one of the poorest countries in the world, is striving to recover from decades of civil strife. More than 70 per cent of the country’s population lives on less than $1.90 per day. Within this nation of 15 million people, there are at least six commercial banks, some of which provide services through “hawala,” an informal network that facilitates over-the-counter money transfers.

Hawala is a low-cost technique that enables deposits to be made at a foreign bank and then promptly credited to recipients. Recipients need only submit minimal identity information that matches that provided by the sender in order to receive their money. Just six weeks after President Hassan Sheikh Mohamoud assumed office in the wake of elections and protracted political turmoil, the government made the declaration that it would begin to license foreign banks. Somalia’s newly elected government is facing a number of problems, such as the possibility that many people will starve to death and attacks by jihadists from the Shebab group.

Mohamoud, the President, is committed to enhancing the country’s economic status and delivering essential services to the populace. As a result of the drought in the Horn of Africa, approximately 7.1 million Somalis, which is nearly half of the population, are currently suffering from hunger. But the most recent report from UN agencies says that the situation is now catastrophic and needs to be fixed quickly for the 213,000 people who are most affected.