Somali central bank in good hands

[oba hiloowlow]

 

 

 

Abdusalam Omer is a central bank governor without much to govern.

 

The Central Bank of Somalia doesn't hold reserves in the country's currency, the shilling. There are no functioning commercial banks in the strife-torn country for it to regulate. The 75-strong staff that still turns up for work after two decades of civil war is a motley crew of money men and handymen

 

"I don't know why the central bank employs painters," says the 58-year-old who was named the country's top banker in January.

 

Not so long ago, the Somali-American bureaucrat was working in the mayor's office of Washington, D.C., trying to pull the city back from financial ruin. These days, his daunting task is helping to lead the economic reconstruction of Somalia, the war-shattered country of his birth now in a tenuous peace.

 

In that reconstruction, he is helped along by global development banks and East African neighbors, who hope to see a stable Somalia help transform the region from conflict hotbed to investment hotspot.

 

Economists haven't tracked growth in Somalia for years. But investors in the region say Somali money—which has long buoyed real estate and stocks in neighboring Kenya—is finally finding its way back home. The East African region is already set to expand more than 5% this year, and in years to come a fast-growing Somalia, on the back of renewed construction and infrastructure investments, could accelerate that pace.

 

On Wednesday, Mr. Omer returned to Washington to lead the first Somali delegation to the meetings of the World Bank and the International Monetary Fund since 1991.

 

Somalia owes the IMF $352 million, but earlier this month it recognized a Somali government for the first time in 22 years and praised its newly elected president, Hassan Sheikh Mohamud, a former university dean who took office in September.

 

"With Somalia we're really starting from square one," said Ralph Chami, the IMF's mission chief to the country. "Getting the central bank up and running is paramount."

 

That is a tall order in the country of 10 million people that snakes around the Horn of Africa. Somalia's government controls little more than the capital, Mogadishu, as African peacekeepers continue to do battle against Islamist al Shabaab militants, who killed about 30 people in an attack on the Supreme Court last week.

 

Nor can the government collect much in the way of taxes to fund its budget. Duties from the ports and airport it controls are the exceptions.

 

As for Mr. Omer, he lacks the most-basic tools to help prime growth.

 

He can't influence the value of the shilling, for example, because the bank doesn't control the bills in circulation. The currency has appreciated 25% against the U.S. dollar since the new government took office due to crowds of aid workers and investors bringing dollars and euros into the country and converting to shillings.

 

The grimy 1,000 shilling notes were last officially printed in the 1990s. Batches of counterfeit cash, produced by enterprising warlords, have undermined faith in the currency.

 

Mr. Omer hopes to reprint the shilling by the end of this year, just one of the steps Somalia urgently needs to make the most of new investor interest from Somalia's Diaspora and beyond. He says the government hasn't settled on how much to print or whether to exchange the counterfeit money in circulation along with legitimate old bills.

 

That move aims to protect people like Nurto Abokar Mohamed, who runs a market stall on the brink of going out of business. She converts much of the $100 her mother sends each month from Saudi Arabia into shillings to buy the sugar, flour and cooking oil she sells at a Mogadishu market. That $100 is getting her as much as a third fewer shillings than it did a year ago, meaning she can't cover the cost of supplies and rent on her stall.

 

"Within a few days, my business will not exist," she says.

 

In addition to stabilizing Somalia's currency, Mr. Omer aims to build the standard electronic payment systems that Somalia lacks. He also hopes to soon secure so-called Swift codes for the commercial banks looking to enter the country, so businesses can send and receive money from major banks abroad.

 

"If they do those things, at least it's a start," says Liban Egal, chief executive of First Somali Bank, who returned to Somali in 2010 after two decades in Baltimore. "You can't do business internationally right now because nobody will touch Somalia." Mr. Egal acknowledges that until the central bank regulates the industry, his company is more of an investment and payments company than a bank.

 

Mr. Omer knows the road ahead will be tough but sees parallels to his career in the U.S.

 

He studied economics at Boston College in the 1970s and earned a Ph.D. in public administration from the University of Tennessee in the 1980s. In 1992, he was hired by the District of Columbia's budget office, rising to deputy chief financial officer under Anthony Williams, who led the city back from a deficit of almost $500 million and was elected mayor in 1998.

 

"In the midst of the most chaotic situations he's able to keep his compass and his strategic goals, and he's sensitive to trying to make some concessions to short-term needs as a way to buy support for long-term priorities," says Mr. Williams.

 

Mr. Omer says he learned a great deal from Mr. Williams, who had a congressional mandate to hire, fire and tax back to fiscal health a city where trash was going uncollected and revenue checks were going uncashed.

 

"The difference is that in D.C. there's always money, in Somalia there is no money," Mr. Omer says, adjusting a pair of thick-framed black glasses. "The similarity is when institutions are dysfunctional, things get very grim."

 

 

http://online.wsj.com/article/SB10001424127887324763404578433253051605678.html

[Coofle]

Waaryaa Oba sawnigii u haystay odayga in meesha laga qaaday, inaan sidaa akhriyay baan u haystaye, Bal warkaaga date-kiisa dib ugu laabo

[Carafaat]

Interesting CV. Lets hope he can keep inflation down, foreign exchange flowing so that trade keeps going and in the future regulate the financial sector/Xawalas.

[Mintid Farayar]

What's more interesting is that certain accomplishments/positions are omitted from the CV. For example, that he was the reigning Chief-of-Staff for A. Williams when Williams became mayor of the U.S. capital city.

 

Abdisalam is a good guy, even though he's been ardently anti-SL from the beginning But overall, a gentleman...

[Aaliyyah]

Impressive CV, the central bank must be in good hands.Wish him success.

[oba hiloowlow]

Coofle;941623 wrote:

Waaryaa Oba sawnigii u haystay odayga in meesha laga qaaday, inaan sidaa akhriyay baan u haystaye, Bal warkaaga date-kiisa dib ugu laabo

dont thinks so however i will look into it sxb.

[Tallaabo]

This guy must seek professor Samatar's advice before its too late.

[Maqane]

I wish him the best of luck

[Samafal]

Impressive CV indeed. May Allah make it easy for him and Somalia.

[Daqane]

http://www.centralbank.so/

Official site

[Mario B]

Tallaabo;941748 wrote:

This guy must seek professor Samatar's advice before its too late.

And why would he do that? Prof Samatar didn't make it to the top job at the last election whilst this guy has just been given probably the second most important job in the Republic.

 

Good luck to the man.

[Classified]

Tallaabo;941748 wrote:

This guy must seek professor Samatar's advice before its too late.

You're not related to Professor Samatar nor this guy. Don't you think you should mind your Triangle business?

[Mario B]

Central bank chief turns recovery skills on Somalia

 

Friday, May 17, 2013 REUTERS

 

 

When Washington D.C. was in financial crisis in the 1990s, Somali-born Abdusalam Omer joined a team that turned its "junk" bonds into investment grade paper. Now, as governor of the Central Bank of Somalia, he wants to transform a "failed" state.

There is no escaping the scale of his new assignment. His office in Mogadishu is surrounded by the bombed out shells of former banks, symbols of Somalia's shattered economy and its broken financial system after two decades of conflict.

 

"We have to build brick by brick and person by person," Omer told Reuters by telephone from the smartly painted central bank, which stands out against nearby wrecks that once housed Banca di Roma, Commercial Bank of Somalia and other institutions.

 

"The task is so daunting," said Omer, 58, a dual Somali-U.S. national who left Somalia at 16 and returned this year.

 

But he is undeterred. Omer aims to issue licences to commercial banks by the year end, a new currency to replace the tattered Somali shilling may be on the cards and data is being gathered to build a picture of prices and other indicators to chart the informal economy that has emerged in the anarchy.

 

Omer's decision to take the central bank job is one more sign of a delicate recovery underway in the Horn of Africa nation since its new parliament elected President Hassan Sheikh Mohamud last year.

 

Success is not assured. Islamist al Shabaab militants continue to launch attacks from rural strongholds, clan divisions run deep and the government has limited control beyond Mogadishu's boundaries. But creating a new economic order is seen as vital to shoring up the shaky peace.

 

"The absence of commercial banks is a major hindrance ... to any reconstruction and development," said Omer, who as deputy chief financial officer helped balance the budget of the district government of cash-strapped Washington D.C.

 

The central bank is now offering "provisional licences" so commercial banks can prepare to comply with anti-money laundering rules and the other regulations that must be met when full licences are issued, which Omer plans for the last quarter of 2013.

 

"We want to do it methodically and right," said Omer, adding foreign banks were interested in licences but did not name them.

 

Yet years of chaos add complications to that careful approach. Dahabshiil, a Somali money transfer firm with an Islamic bank in Djibouti, already offers Islamic banking services in Somalia under a licence issued by a past regime, though its management says it will comply with any new code.

 

ROBUST INFORMAL ECONOMY

 

Dahabshiil is among several money transfer operations, telecoms firms and others that have survived and even thrived since the fall in 1991 of dictator Mohamed Siad Barre, whose Marxist-inspired rule gave way to anarchy under rival warlords and stringent codes imposed when Islamists militants took over.

 

"That informal economy is a robust economy," said Omer, who has previously said it was growing at 5 to 7 percent a year.

 

Indicating a growing confidence, Somalia's battered shilling has strengthened by about 80 percent in the past two years since Islamist militants were ejected from Mogadishu by an African peacekeeping force. It now trades at about 18,000 to the dollar.

 

But the well-thumbed and ragged notes are in short supply because they were last printed before 1991 and the biggest denomination is 1,000 shillings, worth about 5 U.S. cents.

 

A new currency could be on the way. "There is a unanimous understanding and agreement on the part of the Somali leadership that there is a need for a new currency and the central bank of Somalia will be working on that in due time," Omer said.

 

He did not give details, but the former World Bank employee who trained the Shanghai municipality on bond issues said he expected support on the issue from the International Monetary Fund, which in April formally recognised Somalia's government.

 

In the vacuum, many Somalis have relied on dollars and found innovative ways to work without a formal banking system. Mobile firm Hormuud lets clients make payments or transfers of a few U.S. cents by text message, vital when the smallest unit available in Somalia of the U.S. currency is a dollar bill.

 

"One of the problems in a dollarised economy is breaking down the one dollar," said Omer, adding this enterprising spirit needed to be harnessed as the formal economy was created.

 

As one of the first steps to that goal, the central bank is gathering data about inflation and other indicators needed for policy making. Next week, the bank issues its first economic report that will go up on its new website www.centralbank.so

 

"It might not be as useful as other reports around the world," said Omer. "But for us it is a giant step."

 

Other routine central bank activities, such as issuing treasury bills, are further off. Omer said debt sales were "at least 24 months" away. He also said it was too early to discuss the bank's reserves.

 

But in the meantime, he said there were other ways to repeat his Washington experience in his new post. "What would be considered a triple A bond for Somalia is ... to provide our people security and quality of life." (Editing by Richard Lough and Giles Elgood)

[Xaaji Xunjuf]

Somalilanders always doing great in the financial sectors. The chairman ceo of the national bank of Djibouti is also a Somalilander.Kenya iyo Ethiopia uun ba hadhay.

[Mario B]

Xaaji Xunjuf;951902 wrote:

Somalilanders always doing great in the financial sectors. The chairman ceo of the national bank of Djibouti is also a Somalilander.Kenya iyo Ethiopia uun ba hadhay.