As part of plans to develop the financial industry in one of the world’s most fragile states, following decades of political and economic instability, Somalia has set up a national payments system.
The 13 lenders in the Horn of Africa nation can now “become inter-operable, connected to the clearing and settlement system of the central bank and able to transact with each other,” Central Bank of Somalia Governor Abdirahman M. Abdullahi said in an interview. The system will “facilitate transactions between vendors and their customers more efficiently.”
The payments system “will enable more financial inclusion in a secure and safe manner,” said Abdullahi. “The impact on the economy will be unprecedented. It will boost trade and business.”
“Somalia’s economy will likely expand 2.9% this year, in line with the IMF’s forecast, according to Abdullahi. Livestock sales, telecommunication and remittances from Somalis working outside the country will spur economic growth,” he added.
In a bid to rebuild Somalia 20 years after its civil war and struggles with insurgency by al Shabaab, an al-Qaeda affiliate, the government last year secured a debt-relief deal with the World Bank and the International Monetary Fund as it sought to return to the global financial system.
The authorities are now in talks with lenders who aren’t part of the Paris Club to potentially further reduce the nation’s liabilities that stood at $4.5 billion in June.
The International Bank of Somalia in July launched a visa card in the East African country amongst other recent developments, including issuing the first mobile-phone based financial-services license to Hormuud Telecom. The country is looking to print new Somali shilling notes.