LEGAL Frameworks governing SOMALIA’S current financial systems

July 1, 2013
Author(s): Jim Burman Category: African Banking, Somalia Economy
Publication Type: Market Sector Report
  • The government framework for banking in Somalia was largely destroyed during the conflict of the last 20 years. The civil war also forced hundreds of thousands of Somalis to leave and start new lives abroad. As they became settled, many sought to send money home, and a growing group of Somali entrepreneurs worked to facilitate these transactions. With no banks in Somalia to receive outside wire transfers, these business people established their own systems for getting money into the country.

    In general, the process begins when a person in Europe, North America, or elsewhere, gives a deposit to a Somali money transfer company. The company then contacts an agent in Somalia who is close to the intended recipient and instructs that the money be distributed. At a later point, the money transfer company bundles together its deposits and wires them, usually through a major bank, to a clearinghouse generally located in a Gulf country. The money is then converted to Somali shillings and sent into Somalia. Overall the system is faster, cheaper and capable of reaching more people than traditional wire transfer companies.

Related Publications

wind energy in somalia

Wind Energy

October 1, 2012

Somalia’s and Somaliland’s difficult histories have hampered the development of infrastructure...

Somaliland Fishing Sector

The Fishing Sector in Somalia/Somaliland

January 1, 2013

Fishing is a highly profitable venture throughout the world; the tuna industry alone is worth $6...

somali banking system

Somalia Banking: Transfers, Challenges And Opportunities

January 1, 2013

This paper is a primer that discusses the challenges and opportunities of Somali banking. A...

Beekeeping in Somalia

Regional Lessons Learned for Somalia in the Apiculture (Beekeeping) Sector

March 1, 2013

The Somali apiculture industry is still very much in its infancy, yet the potential to reap real...

Livestock Somalia and Ethiopia Border

Livestock Trade in the Djibouti, Somali and Ethiopian Borderlands

September 1, 2010

In the Somali-populated territories of the Horn, pastoralism and agro-pastoralism are the...

land tenure somalia

Land Tenure in Somalia A Potential Foundation for Security and Prosperity

February 3, 2014

Land has been a source of both prosperity and conflict for Somalia. For generations, the region’...