Somalia has reintroduced a national payments system to be used for transactions between its banks and the Central Bank.
Since the collapse of its government in 1991, Somalia has lacked any formal banking or financial system.
Under the system, the central bank connects lenders to a clearing and settlements platform to enable them to process real-time money transfers. It also includes interoperability capabilities for:
- Debit and credit cards
- Mobile network operators
- Automated cash machines
SEE ALSO: Somalia Among the Most Active Mobile Money Countries Globally
An Automated Transfer System (ATS) and National Switch will complement each other, with the ATS facilitating large payments and the National Switch facilitating interoperability of retail payment systems in Somalia, and open doors to manage international payments in the country from a single platform.
In August 2021, Visa launched its first payments card in the country, in partnership with International Bank of Somalia (IBS) – as the country takes steps to institute a thriving financial and banking system.
The central bank also issued the first mobile-phone based financial-services license to Hormuud Telecom in March 2021, and is looking to print new Somali Shilling notes.
Following the new system, the Central Bank of Somalia Governor, Abdirahman M. Abdullahi, indicated that the 13 banks in the country can now ‘become interoperable, connected to the clearing and settlement system of the central bank and able to transact with each other.’
This will facilitate transactions between vendors and their customers more efficiently.
The Governor also said the presence of a modern clearing and settlement system will contribute to financial stability in Somalia and evoke domestic and foreign trust in Somali financial institutions.
RECOMMENDED READING: The Central Bank of Somalia Issues First License to the Country’s Largest Telecommunications
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