Somalia is undergoing a process of institutional and economic reconstruction after decades of instability. Legal reforms, deeper regional integration and the country's strategic position, natural resources and young entrepreneurial population are creating new opportunities for investment and private-sector growth.
The national reform program gained momentum following the re-engagement of international financial institutions. With support from the IMF and the World Bank, Somalia implemented far-reaching macroeconomic and institutional reforms under the Heavily Indebted Poor Countries (HIPC) Initiative, culminating in its achievement of the HIPC Completion Point in December 2023. This milestone reduced the country's external debt from approximately $5.2bn in 2018 (around 64% of GDP) to about $638m (around 5.5% of GDP) by the end of 2023. It marked a decisive step towards macroeconomic stability and established a stronger foundation for sustained development. At the centre of that wider transformation is the Central Bank of Somalia (CBS), which has itself had to be rebuilt almost from the ground up.
When Abdirahman M. Abdullahi became governor in April 2019, the Bank faced a significant trust deficit, weak institutional capacity and a shortage of skilled professionals. Its financial statements had received qualified audit opinions, with a three-year backlog of unaudited accounts. The regulatory framework was limited, financial infrastructure underdeveloped and mobile money, the country's principal payment channel, operated outside the Bank's regulatory framework.
Originally published by African Business.