MOGADISHU—Somalia said on Sunday it had awarded licences to two foreign banks as the troubled Horn of Africa nation opens up the industry to international lenders.
State-owned Banque Misr of Egypt and Turkey’s Ziraat Katilim will become the first international banks to operate in the country, Somalia’s Central Bank said in a statement.
“The application of both banks underwent months of an extensive process,” it said, adding that they had the green light to establish and operate branches.
“They are both solid banks that will add value to the development of Somalia’s financial sector and contribute to the growth of our economy,” the statement quoted Central Bank of Somalia governor Abdirahman Mohamed Abdullahi as saying.
One of the poorest countries in the world, with more than 70 percent 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 a half a dozen commercial banks, with some offering services via the hawala system, an informal network of money transfers conducted through face-to-face guarantees.
Somalia approves licensing of two foreign banks, from Egypt and Turkey. This is positive indication that the country is financially stable. As neighbors, it's good news. pic.twitter.com/z4Rgz2zzJW
— Billow Kerrow (@BillowKerrow) July 3, 2022
Hawalas are cheap and efficient to use, allowing money to be deposited in a foreign bank and instantly credited to recipients who have to provide only basic identity details matching those provided by the sender.
The announcement on Sunday comes barely six weeks after President Hassan Sheikh Mohamud took office following a long-overdue election and a political crisis that lasted well over a year.
Somalia’s new administration faces a raft of challenges including a looming famine and a grinding insurgency by the Al-Shabaab jihadist group.
Mohamud has vowed to tackle Somalia’s myriad problems including improving the economy and delivering basic services to the people.
A crippling drought across the Horn of Africa has left about 7.1 million Somalis — nearly half the population — battling hunger, with more than 200,000 on the brink of starvation, according to UN figures.
Al-Shabaab also continues to flex its muscles, waging an attack last month that killed three soldiers in central Somalia, underscoring the difficult task ahead for the country’s new leaders.