Somalia established a national payment system while rebuilding the country | Al Qaeda News

Somalia is struggling to rebuild after 20 years of civil war and is still fighting the Al-Shabaab insurgency

After decades of political and economic instability, Somalia established a national payment system as part of a plan to develop the financial industry in one of the most vulnerable countries in the world.

The Governor of the Central Bank of Somalia, Abdirahman M. Abdullahi, stated in an interview that 13 lenders in the Horn of Africa countries can now “interoperate, be connected to the central bank’s clearing and settlement system, and be able to transact with each other.” Effectively promote transactions between suppliers and their customers”.

Somalia is struggling to rebuild after 20 years of civil war, and is still fighting the insurgency of Al-Qaida affiliate Al-Shabaab.

The government reached a debt relief agreement with the World Bank and the International Monetary Fund last year to seek a return to the global financial system. The authorities are now negotiating with lenders who are not part of the Paris Club, an informal group of mainly wealthy Western government creditors, to further reduce the country’s debt of $4.5 billion in June.

Under this system, the central bank connects lenders to clearing and settlement platforms, enabling them to process real-time remittances. It also includes interoperability features for debit and credit cards, mobile network operators, and ATMs.

After recent developments, including the Somalia International Bank which launched visa cards in July, the central payment system bodes well for the country’s financial sector. The central bank also issued the first mobile phone-based financial services license to Hormuud Telecom, and hopes to print new Somali shilling banknotes.

Currently, Somalia mainly uses U.S. dollars because of the widespread presence of counterfeit currency in the local currency, and there are few real banknotes in circulation, old and dirty. Since the government has not yet printed new banknotes, all transactions from large-value projects to buying a cup of tea are done in U.S. dollars through cash, bank or mobile money.

Abdullahhi said that the payment system “will achieve more financial inclusion in a safe and secure way.” “The impact on the economy will be unprecedented. This will promote trade and commerce.”

Abdullahi said that Somalia’s economy may grow by 2.9% this year, in line with the forecast of the International Monetary Fund. He said livestock sales, telecommunications and remittances of Somalis working abroad will stimulate economic growth.