Somalia Welcomes First Foreign Bank Branch in Over Half-Century
A ribbon-cutting ceremony was held Sunday in Mogadishu, where officials hailed the inauguration as a “historic moment.”
“This marks more than 50 years [since] the first international bank that comes to the country,” the governor of Somalia's central bank, Abdirahman Mohamed Abdullahi, told VOA Somali in an interview.
All foreign banks closed down in 1970 when the Somali government nationalized the banking system.
“We welcome the investment and the establishment of Ziraat Bank,” Abdullahi said. “It will boost our financial sector, it will create jobs, it will attract or facilitate investment.”
Abdullahi said the presence of Ziraat Bank will also make it easier for Somalis to conduct transactions outside the country.
The bank’s operations will focus on corporate financing and trade financing, officials said on X, formerly known as Twitter.
“They will focus on businesses, medium and large; trade financing will be a big part of their activities since they are the only bank that can provide a letter of guarantees,” Abdullahi said.
Ziraat Bank was one of two banks to obtain license from the Somali government last year; the other was Banq Misr of Egypt. Abdullahi said Ziraat Bank met all the requirements to operate in the country.
In a post on X, the bank confirmed opening of the branch in Mogadishu, its second in Africa.
Despite the decades-long civil strife in Somalia, the business sector has thrived in certain areas such as telecommunications, and the country has domestic, private banks. But the conflict discouraged significant foreign investment in Somalia.
Turkey’s prominent role in Somalia’s humanitarian and development activities started in August 2011 when then prime minister Recep Tayyip Erdogan visited Mogadishu amid the fighting against al-Shabab, to draw international attention to Somalia's deadly famine, which killed tens of thousands of people.
Since then, Turkey has spent hundreds of millions of dollars in humanitarian assistance and development. Turkish companies also invested Mogadishu’s air and seaport.
Turkey built its biggest embassy in Africa, and its largest overseas military facility in Mogadishu.
After the United Arab Emirates, China and India, Turkey is now the fourth Somalia’s largest trading partner, with imports from Turkey amounting to an estimated $409 million in 2022, according to Abdullahi.
Somali still faces security challenges, with al-Shabab carrying out deadly attacks, mainly in the country’s south-central regions. But last year Somali government soldiers supported by local fighters launched a military campaign which drove al-Shabab from vast areas in the countryside.
“The security situation in the country has improved significantly, and the government has done remarkable job in fighting al-Shabab and terrorism,” Abdullahi said.
“That will give, not only Ziraat Bank, but also other international investors the confidence to invest in the country.”
Ziraat Bank is the first foreign bank to re-establish itself in Somalia, but it will not be the last, Abdullahi predicted.