Somalia's banking sector is undergoing a quiet transformation, potentially marking one of the Horn of Africa's most ambitious financial overhauls. Over the past decade, the country has made strides in rebuilding its banking institutions, embracing digital innovation, and introducing long-awaited reforms. But alongside this progress lies a stark reality - liquidity constraints, dollarisation and governance challenges threaten to undermine fragile gains.
As the Central Bank of Somalia CBS strengthens its regulatory framework and new legislation reshapes the financial landscape, the country stands at a crossroads. Can Somalia's banking sector deliver meaningful, inclusive growth? Or will systemic weaknesses erode confidence in a sector that desperately needs public trust?
Somalia's financial sector has grown rapidly over the years - there are 13 licensed banks active in the country, the largest of which include the International Bank of Somalia IBS, Premier Bank, Salaam Somali Bank, Dahabshiil International Bank, and Amal Bank.
According to the US International Trade Administration ITA, there are seven money transfer businesses, popularly known as hawalas , licensed to transfer and receive money through informal networks and channels. Three licensed mobile payments service providers are linked to the biggest of seven mobile network operators.
Financial services are dominated by informal conglomerate groups, each containing a bank, money transfer business, mobile payments service provider, and mobile network operator. Most banks use 'Islamic models' to offer commercial retail banking, trade finance, and investment services. Despite this banking sector growth, access to financial services is low and largely confined to urban areas. The ITA notes that Somali incomes are generally low, with 55 of households supported by remittances, mainly through hawalas and mobile payment service providers.