In a historic move, the Central Bank of Somalia (CBS) has licenced the first two foreign lenders since 1970.
Central Bank Governor Abdirahman Mohamed Abdullahi noted that Egypt’s Banque Misr and Turkey’s Ziraat Katli can now operate in the nation after the board gave a nod to their applications.
“CBS Board concluded that the two banks have fulfilled all bank licencing requirements of the CBS, and their applications have been approved,” he said.
“After an extensive process, we are happy that the Board has approved the licencing applications of Ziraat Katlim Bank and Banque Misr.”
“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,” he added.
Back in the 1960s, foreign commercial banks that operated in Somalia included Italy’s Banco di Napoli and Banco di Roma, Egypt’s Banque de Porte Saide and UK’s National Grindley’s Bank.
However, immediately the Supreme Revolutionary Council (SRC) overthrew the civilian government in October 1969, all foreign banks in Somalia were nationalised under an order of the SRC on May 7, 1970.
Following this, the junta formed the Somali Commercial and Savings Bank, using assets of the nationalised lenders, in 1972 that operated until its collapse in 1988.
Since then, the Central Bank of Somalia has licensed 13 locally owned commercial banks, among them Salaam Somali Bank and Dahabshil Bank.
CREDIT FOR ENTERPRISES
Business people have welcomed the move, saying the new banks would make it easy to access capital for big projects.
“Somalia is rich in resources, and tapping them, innovative people need capital and financial injections that large banks can afford,” said Abdullahi Nur Guled, a Somali Tanzanian businessman, talking to a local outlet on phone.
He further noted that people who take their deposits to lenders outside the country can now bank locally.
“No society can develop, create jobs and fight poverty without banks that can invest in businesses, government services and projects.”