Somali is finally picking its pieces financially after a long isolation from the global economy. The country first broke the chains of informal banking in 2012 after passing a law that formally established a central bank. Before then, its people relied heavily on remittances from diaspora communities in Europe, North America and the United Arab Emirates, as there are no ATMs or loan facilities.
The same year, the state passed the commercial banking Act which together with the banking law allowed companies to operate as formal banks, offering services taken for granted throughout much of the world. The laws passed two years ago are paying off today as investors now open up to opportunities in the country. Financial institutions have also began establishing themselves in the growing economy.
Technology Company in the global payments industry announced its partnership with Premier Bank becoming the first international payments network to enter Somalia. As a result of the partnership, Premier Bank will now issue and accept the first MasterCard-branded payment cards in Somalia, a country that hasn’t had any form of formal banking service since the collapse of the government and financial services system in 1991.
The significant milestone by the country marks a historic stride towards an independent financial sector and even a more recognizable participation in the global economy.
Premier Bank ATMs can accept cards for cash withdrawal, while the bank will also issue 5,000 MasterCard debit cards this year, followed by prepaid cards, and point of sale (POS) machines.
The introduction of the MasterCard payments network means that government agencies now have an efficient platform through which to transfer salary disbursements. Foreigners, expatriates and international aid organisations sending funds to Somalia can do so via a formal, traceable network that complies with international security standards, eliminating the risks of transferring and transporting cash.
Remittances contribute well over US$1 billion to Somalia’s economy annually, or over 35 percent of GDP, funds that are an essential source of income for individuals and necessary for the development of the country.
“Reassuring foreign investors, Somalis in the diaspora and those distributing aid that our financial systems are secure and properly regulated is critical to Somalia’s economic well-being,” says Abdirahman Yusuf Ali Aynte, the Minister of Planning and International Cooperation of Somalia.
Premier Bank’s MasterCard-branded debit cards enable Somalis to withdraw funds from any MasterCard-licensed ATM globally, shop online, and pay for goods and services at millions of merchants that accept MasterCard payment cards around the world.
Customers will henceforth be provided with a safe, cost effective, convenient means of transacting both at home and abroad. Premier bank also hopes to encourage merchants and citizens to demand more electronic payments services as they engage with and contribute to the formal economy.
Demonstrating the value of close collaboration in the banking and payments technology industries, this landmark partnership is a significant step towards reducing Somalia’s dependence on cash, increasing financial inclusion and ultimately contributing to the country’s financial stability.
The partnership comes at a time when MasterCard is working closely with governments and financial institutions across Africa to introduce safe and simple financial solutions throughout Africa.