In June, MasterCard teamed up with Mogadishu-based Premier Bank to begin issuing credit cards in Somalia. The product launch is the culmination of a three-year process that introduces the first formal banking services in the country since the government’s collapse in 1991. Some investors believe that this could spark a return of foreign businesses back into the market. Most Western banks have suspended their services in Somalia due to perceived risks of a connection to money laundering or terrorist financing operations. Premier Bank has one of Somalia’s four registered SWIFT codes, but they are of little use without access to the US correspondent banks that enable cross-border transactions.
One would think that, in a country that just re-established a central bank in 2011 after a 20-year hiatus, and inflation remains persistently high, its currency would be worthless. Prepare to be surprised. For the past two years, the Somali shilling has been one of the world’s strongest currencies, appreciating nearly 60% against the US dollar in 2013-14, and nearly 25% in the past 12 months. Improving security and living conditions have encouraged more of the vast Somali diaspora to remit funds back home – a trend that is further improving conditions, given that remittances comprise as much as 35% of the country’s GDP.