As the Chief Government Banker Abdi Dirir Abdi says Forex Raise is economically healthy”
By: Yusuf M Hasan
HARGEISA (Somalilandsun) – The bill on Somaliland Commercial Banks currently at the House of Representatives shall once approved facilitate ease of financial transactions worldwide
This was stated by the Somaliland central bank governor Abdi Dirir Abdi in his Hargeisa offices where he also termed the high rate of foreign exchange as a healthy outcome.
“Though we expect foreign exchange rates to stabilize in a week, the central bank perceives the high rate as healthy for the economy” said Banker Dirir
Alluding the high profusion of local currency in the market as a result of the high rate of Forex the Government’s bank said that the use of local currency in day to day commercial activities has alleviated the burden of utilizing dollars occasioned upon citizens.
In the past two months the dollar usually exchanging @6,500 slshs has been changing hands between 6,800 to 7,200
On the issue of establishing commercial banks in the country Abdi Dirir urged the House of Representatives to expedite approval of the Somaliland Commercial banks bill that is long overdue.
The House of Representatives last debated the bill on 23rd August 2014 without conclusion thus the draft bill is still under the charge of the house economy committee.
According to the government banker, institutionalizing the law will allow the country to host international banking institutions thus ease commercial transactions in the yet to be recognized country.
These will laws will not only facilitate the availability of commercial banks offering loans and related services but will ease prevalent money transactions between the country and elsewhere owing to the prevailing status of Somaliland being an unrecognized state two decades after it broke away from its fateful union with Italian Somalia.
The central bank governor says that applications are pending from several international banks among them 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” since the commercial banking law is yet to be approved.
Stressing on the urgency of approval and importance of commercial banking laws said they are the cornerstone to the country attracting foreign investors thus a substantial growth driven by cheap prices and opening of employment opportunities.
While the house of representative has been dilly-dallying with the law establishing commercial banking in the country, it has in the recent past approved central bank and Islamic banking laws both of which are currently operational.
The Somaliland Central Bank – Xeerka Baanka Dhexe – Law No. 54/2012 has been signed by the President on 12 April 2012 and has come into force on this date. The Bank is essentially the Bank of Somaliland which was established in October 1994 under a constitutive Law that followed closely the 1968 Decree Law relating to the then Somali National Bank. Article 3 of the 1994 Law (which mirrored Article 3 of the 1968 Law) stated that the principal objectives of the Bank of Somaliland as being: “… fostering monetary stability, maintaining the internal and external value of the Somali shilling, and promoting credit and exchange conditions conductive to the balanced growth of the economy of the Republic, and within the limits of its powers, it shall contribute to the financial and economic policies of the State”. In contrast the bank has now all the powers and duties of a Central Bank which are set out in Articles 4 to 6 of the new Law.
The House of Representatives approved the Law on Islamic Banks on 19 September 2012 and the President signed the Law on 3 October 2012 (Decree No. 0270/102012). Here is a copy (in Somali) of the Somaliland Islamic Banks Law (Law No. 55/2012). The Law consists of 41 Articles and an addendum setting out the Application Form for Licence to set up an Islamic Bank.
Following the approval Somaliland President Ahmed Mohamed Silanyo signed the Islamic Banking Bill on October 4th 2012 thus institutionalizing The law that had been in the works since 2007.
Currently the Somaliland is being serviced by three privately owned banks namely Djibouti-based Salaam African Bank, Dahabshil Bank and Yemen-based Co-operative and Agriculture Credit Bank that deal exclusive via Islamic banking principles.
For more Somaliland laws visit http://www.somalilandlaw.com/