Somalia does not have a stock exchange and most banking is done on informal basis through money transfer firms but International Bank of Somalia Chief has said that people will be beneficiaries in long term
International Bank of Somalia (IBS), one of only a handful of commercial banks operating in the war-torn country, wants to raise $10 million in a public share offering that would be the first of its kind since civil war broke out in 1991.
Somalia does not have a stock exchange and most banking is done on informal basis through money transfer firms, but IBS Chief Executive Hassan Yusuf said those ploughing money into the bank would benefit from being early investors in the sector.
“Somalia is open for business,” Hassan told Reuters on the sidelines of a Somalia investment forum in the Kenyan capital Nairobi. “People who go now will be the beneficiaries in the long term.”
The central bank has issued six commercial banking licences so far, including to IBS, but has said it does not plan to issue more this year unless newcomers have foreign partners.
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The Somali banking community faces severe constraints. Banks in the United States, Britain and elsewhere are increasingly wary of facilitating transfers to Somalia because of tighter regulatory rules aimed at stopping cash from reaching those the West disignates as “terror groups”, such as al Shabaab.
Yusuf said that IBS is undeterred and would open six new branches in Mogadishu within two months.
By the end of 2015 it wants to have established another four outlets outside the capital, including one in the semi-autonomous Somaliland region. It also aims to introduce online banking and a mobile banking app for customers.
Yusuf said IBS is seeking to build confidence with regulators abroad.
“We have created a bank with international standards in compliance, risk-management, audit,” Yusuf said, adding that IBS would hire United States-based accountancy firm Deloitte as auditor.
IBS, which opened its sole Mogadishu branch in October, said the share offer will be open until March 31, with investors able to buy tranches of between $500 and $500,000.
The public share offer amounts to 10 percent of the share capital, Yusuf said. A further 31 percent is owned by the bank founders, who are mostly Dubai-based Somali businessmen. Yusuf said that more equity will be offered as the bank expands.
Banks from United Arab Emirates have already inquired about buying a stake, Yusuf said, without naming the potential investors.
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