Financial institutions in Somalia encompass central banks, commercial banks, money transfer businesses (MTB), microfinance institutions (MFI) and mobile money operators (MNO). Financial institutions in Somalia are quite young, mostly established within the last decade and many in the last few years. They are acutely aware of Somalia’s vulnerability to a range of shocks - economic, climate, political and conflict [1].

Despite considerable growth in the banking sector since 2012, the vast majority of the population remains unbanked, depriving banks of much-needed cash. Moreover, regulation is lagging in the banking sector, making it difficult for financial institutions to inject substantial sums into private companies [2].


Many Somalis live in informal settlements in urban areas, meaning that they cannot use their land as collateral on a loan; in addition, they often lack a formal address they could use for a bank account or credit application [3].


Key policies and governance approach

Somalia has achieved remarkable progress in advancing critical economic reforms, supported by the International Monetary Fund (IMF) and other donors, that culminated in the attainment of the Highly Indebted Poor Countries (HIPC) Decision Point in March 2020. This achievement restored Somalia’s regular access to International Financial Institutions’ (IFI) concessional grants from multilateral partners, including the World Bank’s International Development Association (IDA), for the first time in three decades. Somalia is committed to continuing the reforms to reach the HIPC completion point by 2024 and maintain macroeconomic stability, including prudent debt management [4].


Legal financial frameworks and strategies need to be developed and implemented [3].