Somalia's Central Bank orders closure of Forex accounts

MOGADISHU, Somalia - In what could be a big blow to booming forex trading businesses, Central Bank of Somalia has on Tuesday ordered for their closure, Garowe Online reports.

Those affected are forex accounts held by trading companies in all commercial banks across the country, a move that the government says could save the struggling economy of Somalia.

Central Bank issued an order dated October 28th following a meeting with the Board of Directors, instructing all commercial banks to close the accounts with immediate effect.

Also, the order directs commercial banks to submit names of the account holders and all monies held therein, a move that caught forex companies unaware.

The order now deals a blow to the booming forex trade in the country. Several forex trading companies have opened particularly in Mogadishu in the last few months attracting Somalis to the forex business.

The common form of forex trading in the country has been through brokerage where individuals pay a certain amount of money to forex companies and receive a percentage on a monthly basis.

In April this year, the government settled on Abdirahman Mohamed Abdullahi for the top job at the Central Bank of Somalia.

The announcement ended speculations that a foreigner had been earmarked for the position, igniting disquiet among politicians and professionals.

Until his appointment, Abdullahi was the senior economic policy advisor in the office of the Prime Minister for two years. He has a background in finance and banking.

Abdullahi is said to have been a key player in the ongoing financial reforms and the 30% internal revenue increase reported by the government last year.

The Central Bank is key in regulating Somalia's financial institutions, including finding ways of curbing increasing debt that stands at $4.8 billion.

Somalia is also pursuing calls to have the international community to give it debt relief, as the country struggles with decades of political unrest.

The order could raise eyebrows from among financial players, with the Central Bank failing to give reasons for the closure of forex companies.

GAROWE ONLINE