First Foreign Bank Branch Opens in Over 50 Years in Somalia

According to officials, Ziraat Katilim, a reputable Turkish bank, has established a branch in Mogadishu, making it the first foreign bank to do business in Somalia in more than 50 years.

At the Mogadishu ribbon-cutting event on Sunday, officials praised the inauguration as a “historic moment.”

In an interview with VOA Somali, Abdirahman Mohamed Abdullahi, the governor of Somalia’s central bank, stated that it has been more than 50 years since the first foreign bank entered the nation.

When the financial system in Somalia was nationalised by the government in 1970, all international banks shuttered.

Abdullahi declared, “We applaud the investment and the founding of Ziraat Bank.” “It will attract or facilitate investment, strengthen our financial sector, and create jobs.”

According to Abdullahi, having Ziraat Bank around will help facilitate Somalis’ ability to transact business abroad.

Corporate and trade financing will be the bank’s primary areas of activity, officials stated on X, formerly known as Twitter.

Since they are the only bank that can offer a letter of guarantee, trade finance will play a significant role in their operations. “They will focus on businesses, medium and large,” Abdullahi stated.

Only two banks, Ziraat Bank and Banq Misr of Egypt, received licences from the Somali government in the previous year. Ziraat Bank satisfies all conditions to operate in the nation, according to Abdullahi.

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The bank announced the establishment of its second branch in Africa, in Mogadishu, in a post on X.

Somalia has had decades of civil unrest, but despite this, the economy has prospered in some sectors, like telecommunications, and the nation has its own private banks. However, the fighting deterred big international investment in Somalia.

Tens of thousands of people died from a deadly famine in Somalia in August 2011, which prompted then-prime minister Recep Tayyip Erdogan to visit Mogadishu amidst al-Shabab fighting. This visit marked the beginning of Turkey’s significant involvement in humanitarian and development efforts in Somalia.

Turkey has since invested hundreds of millions of dollars in development and humanitarian aid. The airport and harbour in Mogadishu are also owned by Turkish businesses.

In Mogadishu, Turkey constructed the largest overseas military installation as well as the largest embassy in Africa.

Turkey is currently Somalia’s fourth-largest economic partner, after the United Arab Emirates, China, and India. According to Abdullahi, imports from Turkey will total $409 million in 2022.

Al-Shabab continues to carry out fatal operations in Somalia, mostly in the south-central portions of the country, posing security issues to the government. However, local fighters and Somali government soldiers launched a military assault last year that drove al-Shabab out of large rural areas.

“The country’s security situation has greatly improved, and the government has done an outstanding job combating terrorism and al-Shabab,” Abdullahi stated.

“That will instill confidence in other foreign investors to invest in the country, not just Ziraat Bank.”

According to Abdullahi, Ziraat Bank is the first international bank to reopen in Somalia, but it won’t be the last.