As the fragile Horn of Africa nation opens up the sector to foreign lenders, the Central Bank of Somalia has announced that it has granted licenses to two foreign banks.
The first foreign banks to conduct business in the nation will be Egypt’s Banque Misr, a state-owned institution, and Turkey’s Ziraat Katilim.
“The application of both banks underwent months of an extensive process,” the Central Bank said in a statement., adding that they had the green light to establish and operate branches.
Ziraat Katlm and Egypt’s Banque Misr received clearance following a regular meeting of the central bank’s directors on July 2 to discuss licence applications.
“We are happy that the board has approved the licensing application of Ziraat Katilim bank and Banque Misr,” said Abdirahman Mohamed Abdullahi, the governor of Somalia’s central bank.
He claimed that Ziraat Katlm is a reliable bank that will benefit the growth of Somalia’s financial industry and the nation’s economy.
According to Somalia, the two banks that will operate there are evidence of the financial sector’s reformation’s success and will increase investment opportunities.
More than 70% of Somalia’s population lives on less than US$1.90 a day, making it one of the world’s poorest countries. Somalia is still recovering from years of civil strife.
The 15 million-person country has at least six commercial banks, some of which offer services through the hawala system, an informal network for money transfers done through personal guarantees.
Hawalas are easy to use and inexpensive, allowing money to be deposited in an overseas bank and instantly credited to recipients who need only provide basic identity information that matches that provided by the donor.
The declaration was made on Sunday, just six weeks after President Hassan Sheikh Mohamud assumed office in the wake of a long overdue election and a political catastrophe that lasted for more than a year.
