Somaliland has passed a law that formally establishes a central bank, and is now poised to pass another to set up commercial banks in a bid to attract foreign lenders to start operating in the country by 2013.
Somaliland, a breakaway state in the northeast of Somalia, remains unrecognized internationally.
It has no formal banking sector and its people rely heavily on remittances from diaspora communities in Europe, North America, and the United Arab Emirates, as there are no ATMs or loan facilities.
“The President has signed the Central Banking Act into law,” Abdi Dirir, governor of Somaliland’s Central Bank, told Reuters on Monday.
“We are expecting the Commercial Banking Act to be passed in the next three to four months,” Dirir said.
Yemeni state-owned bank CAC, Djibouti-based Salaam African Bank, and Banque de Depot de Credit Djibouti, a subsidiary of Switzerland-headquartered Swiss Financial Investments, have all approached Dirir about commencing operations in Somaliland.
“Once the commercial banking laws are in place, we hope investors will be attracted by our free market,” Dirir said.
