Letters of credit (L/Cs) may soon be available in the unrecognised East African state of Somaliland.

One of the state's largest moneylenders, Dahabshiil, plans to open a fully-fledged bank in the capital, Hargeisa.

Regional operator

Dahabshiil, which was founded in Somaliland in 1970, now operates in 155 countries and is particularly active in Djibouti, parts of Ethiopia and the territory still known as Somalia.

Without a government since 1991, Somalia has essentially fractured into three parts: Somaliland in the northwest, Puntland in the northeast with the southern area of the country still known as Somalia.

Remittances

Dahabshiil has thrived on business generated by remittances worth an estimated US$1.6-2 billion remitted to Somali territories by the diaspora every year.

A large proportion of these remittances are thought to go through Dahabshiil, which operates on a 24/7 basis.

New banking law

The moneylender, that already has banking licences in Djibouti and Somalia, is now awaiting a new banking law to be approved by the government of Somaliland.

The new bank then hopes to provide full banking services, offering L/Cs, insurance and interbank financial transfers.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.