The Federal Government of Somalia (FGS) has received a $6.6 million grant from the African Development Bank Group (AfDB) to enhance its capacity to develop a robust financial architecture and promote inclusive and equitable growth.
The Somalia Financial Sector Development Project aims to strengthen the capacity of financial institutions—including the Financial Reporting Center (FRC), the Central Bank of Somalia, and the Somalia Development and Reconstruction Bank—to implement effective credit delivery strategies and enforce anti-money laundering (AML) and counterterrorism financing (CFT) policies.
Through specialized training and support, it will also improve knowledge of the financial sector.Director of AfDB’s Financial Sector Development Ahmed Attout said, “This is a timely intervention that will enhance governance, accountability, skills, and technology development while fostering private sector growth through regulatory improvements and financial sector development.”
Additionally, this will build strong national financial systems with improved financial infrastructure, lower intermediation costs, and more long-term financing availability.
By improving stability, trust, and financial inclusion and drawing in private investment, the reforms aim to establish a financially competitive and globally integrated Somalia.
Security risks from armed groups that rely on money laundering have been affecting Somalia.Therefore, strengthening its financial institutions is essential to maintaining both its stability and that of the larger Horn of Africa.
Institutional hurdles and insecurity have impeded integration into the global financial system.
The lack of intermediate and correspondent banking services has further isolated the country from global financial networks and limits critical remittance transfers.
Somalia’s inclusion into the international financial system will be made possible by bolstering the country’s Anti-Money Laundering/Countering Financing of Terrorism (AML/CFT) response and bringing it into compliance with global standards.
The Financial Reporting Center, the Somalia Development and Reconstruction Bank, and the Central Bank of Somalia are just a few of the financial organizations that will directly profit from the project.
In addition, the AfDB grant will support initiatives for technical assistance and training programs for professionals in the financial sector.
