As at 31st December, the total net assets in the banking sector stood at USD 171 million, the largest bank in terms of net assets is Dahabshil Bank International (DBI), DBI is a fully-fledged Sharia compliant bank licensed by the Bank of Somaliland (Website: https://www.dahabshilbank.com). Dar-Salaam bank (DSB) is also fully Shari’ah compliant institution and the second largest bank in Somaliland (Website: <a href=”http://www.darasalaambank.com”>http://www.darasalaambank.com</a>). Premier Bank Ltd, which is the newest international Islamic bank to open up business in the country. It is a fully fledged Islamic bank licensed by the Bank of Somaliland.
The Central Banking Act No: 54/2012 gives the Bank of Somaliland the authority to regulate Islamic Banks by issuing licenses, registering, and monitoring and guiding the activities of Islamic Banks. The Islamic Banking Act No: 55/2012 provides the conditions that Banks need to meet to operate in Somaliland.
1.1 Remittance Service Providers
Over the years, the Somali culture of trust has created a well-functioning money transfer business (Remittance services providers or the Hawalas) which has allowed Somalis in Diaspora to send money back home in an unstable and unregulated environment.The Hawalas are the oldest financial service in the country.
Currently, there is no regulation for the operation of the remittance service providers in Somaliland as the Remittance bill has not yet been approved by the House of Representatives. As at December 31st, the Bank of Somaliland has issued licenses for the 16 listed below (chart 3).
Chart 3: List of money transfer businesses or remittance service providers
|December 31, 2018
||Remittance Service providers/Money Transfer business
|1. Amal Express
||2. Dahabshil money transfer
||3. Kaah Express
||4. Tawakal Express
|5. Taaj Express
||6. Juba Express
||7. Bakaal Express
||8. Iftin Express
|9. Amaana Express
||10. Hodan Global
||11. Horyaal Express
||12. World Remit
|13. Huda Express
||14. Saba money transfer
||15. Universal Express
||16. Global exchange
1.2 Money payment service providers
Before the introduction of Mobile Money, most transactions in Somaliland were cash based. Mobile money has become a convenient solution as it eases daily transactions. Current mobile money is denominated in dollars of transactions more than USD 100, and in Somaliland Shillings of transactions less than USD 100, after the Bank of Somaliland’s regulation during the year 2018.
There are two mobile money service providers in Somaliland: ZAAD mobile money services provided by Telesom and eDahab payment services provided by Somtel. It was 2009, when the Somaliland’s biggest mobile network operator, Telesom, launched their mobile payment service “ZAAD Service”, Telesom has become the first telecommunication firm that has pioneered the introduction of mobile money exchange in the world in 2018. This innovation has eased the way of Telesom’s CEO Abdikarim Mohamed Eid to win the ArfricaCom’s best CEO award in year 2018.
Currently, there are no mobile money services regulations and the regulator has the challenge of providing an adequate regulatory framework that is flexible enough to allow for further innovation and strict enough to protect the consumer and ensure financial stability. However, in year 2018, the Bank of Somaliland has drafted National Payment System (NPS) Act with the support of World Bank group. The NPS bill is now with the President and the Council of Ministers.
The bill is intended to set a base for the use of mobile money, which would for example include:
- Registration requirements;
- Transaction, deposit and withdrawal limits;
- Rules and Regulations regarding the AML/CFT ; and
- Rules for interconnectivity with banks and other mobile money service operators.
This bill will be in line with Article 86 of the Central Bank Act No: 54/2012 that establishes that the “Bank of Somaliland shall establish, maintain and promote sound and efficient payment systems”.
1.3 Insurance or Takaful Businesses
Islamic insurance services are known as “takaful”. Under takaful individuals, households and firms concerned about risks make regular contributions to be reimbursed or repaid to members in the event of loss. Somaliland had been without any form of insurance since the collapse of central government of Somalia in 1991, exposing businesses to insurable risks. Currently, Somaliland has three Islamic insurance companies include; Takaful Insurance of Africa (TIA) the largest and eldest takaful company, Somtakaful and Horn of Africa Insurance. The takaful and insurance companies are licensed and regulated in accordance with the provisions of the Central bank act No 54/2012