Sunday May 21, 2023
Photo: CBS SomaliaMogadishu (HOL) - After a 32-year hiatus, the Central Bank of Somalia (CBS) has made a triumphant return to the Global Payments Week (GPW) in Marrakesh, Morocco, marking a significant milestone in the revival of Somalia's financial system. This remarkable comeback highlights Somalia's progress in the global financial system, promising a brighter, more connected future.
"Global Payments Week" is an influential biennial event co-hosted by the World Bank and the Committee on Payments and Market Infrastructures (CPMI) of the Bank for International Settlements (BIS). The event is an exclusive networking platform for central bank professionals worldwide, fostering a knowledge-sharing culture across countries and regions. This year's main topics include Future-Proofing the National Payment Systems, Central Bank Digital Currency (CBDC), Expanded Usage of Digital Payments, Crypto-Assets, Open Banking, and The Changing Landscape of National Payments System Oversight.
Somalia's financial system suffered a near-total collapse in 1991 due to civil war, leaving the country without an operational banking sector for over two decades. However, the CBS has established a solid interbank payment system and hopes to curb inflation and counterfeit currency with plans to issue new shilling banknotes. Expected to be completed by 2024, this move is part of a broader strategy to preserve the value of Somalia's currency and maintain economic stability.
The adoption of the IBAN in Somalia is anticipated to streamline payment processing, mitigate operational risks, and reduce delays in international transfers. This is expected to smoothen the process of remittances, especially from the Somali diaspora, whose contributions have been essential to the country's economic resurgence.
Furthermore, CBS has announced plans to establish new branches in the capitals of federal member states by June to collect taxes and store money. These developments indicate a robust commitment towards economic revival, reinforced by the impending debt relief that Somalia is set to receive from the International Monetary Fund and other multilateral lenders by the end of 2023.
The CBS's efforts were recognized at the 2023 Central Banking Awards, where they won the Payments and Market Infrastructure Development award. Moreover,
international banks such as Turkey's Ziraat Katılım and Egypt's Banque Misr are planning to open branches in Somalia, indicating a significant increase in investment and a boost for trade financing in the country.
Photo: CBS Somalia