August 14, 2022
  • August 14, 2022

Egyptian and Turkish banks to operate in Somalia

By on July 4, 2022 0

Egypt’s Misr Bank and Turkey’s Ziraat Katilim will become the first international banks to operate in Somalia, according to Mogadishu’s central bank.

Somalia’s central bank said the two foreign banks ‘had undergone months of a thorough process’ [Mariano Sayno/Getty-file photo]

Somalia said on Sunday it had granted licenses to two foreign banks as the troubled Horn of Africa nation opens up the industry to international lenders.

Egypt’s Banque Misr and Turkey’s Ziraat Katilim will become the first international banks to operate in the country, the Somali central bank said in a statement.

“The application of the two banks went through a long process for months,” he 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,” Central Bank of Somalia Governor Abdirahman Mohamed Abdullahi was quoted in the statement as saying.

One of the poorest countries in the world, 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 offering services through the hawala system, an informal network of money transfers made through face-to-face collateral.

Hawalas are cheap and efficient to use, allowing money to be deposited in a foreign bank and instantly credited to recipients who only need to provide basic identity information matching that provided by the sender.

Sunday’s announcement comes just six weeks after President Hassan Sheikh Mohamud took office following long-awaited elections and a political crisis that has lasted more than a year.

Somalia’s new administration faces a series of challenges, including impending famine and a brutal insurgency by the jihadist group Al-Shabaab.

Mohamud pledged to tackle myriad problems in Somalia including improving the economy and providing basic services to the people.

A crippling drought in the Horn of Africa has left an estimated 7.1 million Somalis – almost half the population – battling hunger, with more than 200,000 on the brink of starvation, according to figures from the UN.

Al-Shabaab also continues to flex its muscles, carrying out an attack last month that killed three soldiers in central Somalia, underscoring the difficult task facing the country’s new rulers.