Mogadishu (Somalia Today) — Somalia has set up its first Financial Stability Committee, giving the central bank a dedicated risk panel just as banking assets, remittances, and digital payments accelerate across the economy.
The new body, which sits within the Central Bank of Somalia (CBS), held its first meeting on 24 November 2025.
Senior CBS officials and a representative of the International Monetary Fund attended, underscoring the committee’s close ties to Somalia’s reform and debt-relief drive.
According to CBS, the committee will track risks across banks, money transfer firms, and payment systems. It will also recommend measures to keep the financial system on a stable footing.
New stability mandate
CBS Governor Abdirahman Mohamed Abdullahi cast the launch as a shift in how Somalia manages financial stress.
“The inauguration of the Financial Stability Committee marks a turning point for Somalia’s financial sector,” he said.
“The committee will serve as a dedicated platform to safeguard stability, identify risks, and coordinate policy responses that will protect the financial sector and the wider economy.”
The bank called the move “a historic step in Somalia’s financial governance.” It said the committee is meant to “monitor systemic risks, coordinate macroprudential policies, and strengthen the resilience of the financial system.”
In practice, the new body brings supervisors and policymakers around one table. They will share data, run scenarios, and agree on a response before trouble in one institution spills into the wider system.
If the committee sees signs of stress, it can press for tighter supervision, higher prudential ratios, or other targeted safeguards.
Fast-growing banking sector
The committee opened its work by reviewing the Financial Stability Report 2024. CBS said the document offers “a comprehensive assessment of Somalia’s financial system.”
The report found that “the banking sector’s assets reached US$2.0 billion, capital adequacy remained strong at 19 percent, and profitability improved with net profit rising to US$9.0 million in 2024.”
Payment systems have also thickened. RTGS and ACH platforms processed “over US$1.9 billion in transactions.” That gives Somalia a formal backbone for large-value and retail transfers that once ran mostly through informal cash channels.
On the retail side, mobile money now dominates. Services reached “84 percent of the adult population,” the report said. For many Somalis, a wallet on the phone has replaced a bank branch and physical notes.
Remittances tie these channels together. The report notes that the sector “continued to play a critical role in household livelihoods and economic resilience, with inward transfers totalling US$6.23 billion in 2024.”
Those inflows support family budgets, small businesses, and the foreign-exchange liquidity that underpins a heavily dollarised economy.
Reforms and debt relief
The risk panel crowns several years of tough reform.
In late 2023, Somalia reached the completion point under the Heavily Indebted Poor Countries initiative. That milestone unlocked sweeping debt relief and pushed external public debt down to a small share of GDP.
To get there, Mogadishu signed up to strict fiscal, monetary, and financial-sector benchmarks. These included stronger legal powers for the central bank, updated banking laws, and tighter oversight of payment and remittance providers that carry much of the real economy.
Since then, international partners have argued that Somalia must move from one-off fixes to a steadier framework for financial stability. That means regular risk reviews, clearer macroprudential tools, and a more systematic way of managing shocks.
The new committee is intended to sit at the centre of that architecture.
Risks on the horizon
Even with stronger capital and liquidity buffers, officials warn the system still faces sharp pressure points.
The sector leans heavily on correspondent banking relationships to clear cross-border payments. A sudden cut in those links could disrupt trade flows, remittance channels, and access to hard currency.
Climate shocks, such as droughts and floods, can quickly weaken borrowers and increase non-performing loans. Political and security tensions can unsettle confidence, slow investment, and trigger bouts of cash hoarding.
At the same time, digital finance has exploded. Mobile operators, payment companies, and money transfer businesses are tightly interconnected. A failure, outage, or cyber breach in one part of the network can spread fast if safeguards are thin.
The committee is expected to map these linkages and run regular stress tests. It can then push for targeted responses, from higher liquidity buffers to closer scrutiny of concentrated exposures and new fintech models.
Somalia’s financial future
Looking ahead, the CBS says the committee “will play a central role in shaping Somalia’s financial future,” with a work plan that goes beyond diagnosis.
Priorities include “advancing currency reform,” as authorities prepare new Somali shilling banknotes.
The committee will also work on “integrating money transfer businesses into the national payment system,” “strengthening AML/CFT frameworks and digital finance regulations,” and “enhancing crisis preparedness through contingency planning and financial safety nets.”
Taken together, officials present these steps as a shift from firefighting to a more settled macroprudential regime. The aim is to support growth without letting risk build up out of sight.
For Somalia’s young banking industry, a standing risk committee signals that financial stability is no longer an afterthought but a core policy goal.
The hope in Mogadishu is that better data, stricter rules, and regular joint analysis will allow the system to deepen, bring more Somalis into formal finance, and avoid the bouts of instability that once cut the country off from global markets.
