Fostering Financial Inclusion for Somalia: Serving the Under-served

Fostering Financial Inclusion for Somalia: Serving the Under-served

By Luqman Yasin Gelle; PBKM Award Winner, CP Banker & Writer (Luqmaanyare2000@gmail.com)

There is ongoing public sector reform in Somalia more particularly promoting good governance, accelerating economic recovery and creating jobs with increasing annual GDP growth rate over the last four years in a row. Despite this growth, the institutional reforms showed that sustainable economic growth in the country had not translated into shared prosperity and better livelihoods for the majority. Growth has to be inclusive to be socially and politically sustainable. One key component of inclusive development is financial inclusion, an area in which Somalia has been behind than other countries. Less than one adult out of Ten in Somalia has access to an account at a formal financial institution. Broadening access to financial services will mobilize greater household savings, marshal capital for investment, expand the class of entrepreneurs, and enable more people to invest in themselves and their families.

Since 1991 after the collapse of Somalia’s central government, the country has experienced cycles of conflict and fragility that fragmented the country, undermined legitimate institutions, and created widespread vulnerability. However, financial sector development in such a conflict-affected country is something that seems to be a miracle.

Being able to have access to a transaction account is the first step towards broader financial inclusion since a transaction account allows people to store money, and send and receive payments. A transaction account serves as a gateway to other financial services, which is why ensuring that people worldwide can have access to a transaction account is the focus of the World Bank Group’s Universal Financial Access 2020 initiative, a global policy framework to ensure that everyone has access to finance.

Financial access facilitates day-to-day living and helps families and businesses plan for everything from long-term goals to unexpected emergencies. As account holders, people are more likely to use other financial services, such as credit and insurance, to start and expand businesses, invest in education or health, manage risk, and weather financial shocks, which can improve the overall quality of their lives.

About half of financial excluded people are children, Youth and women live in both urban and rural areas, and those out of the workforce. The gender gap in account ownership remains stuck in the country, hindering women from being able to effectively control their financial lives which is why financial inclusion gets to be the solution as it has been identified as an enabler for 7 of the 17 Sustainable Development Goals.

Therefore, we must be committed to advance financial inclusion  and reaffirm our commitment to develop and implement high-level principals for digital financial inclusion by taking financial services nearer to people through the application of agent banking, favorable bank products and the use of mobile money services. This will consider financial inclusion as a key enabler to reduce extreme poverty, boost shared prosperity, and will put forward an ambitious global goal to reach Universal Financial Access (UFA) by 2020.

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