Reports have emerged of a new bank to be launched in Somalia by a group of Somali businessmen. The Universal Bank of Somalia (UBSOM) will be the first commercial bank to emerge since the collapse of the government of Muhammad Siyad Barre in 1990.

Mahad Adan Barkhadle, the bank's acting general manager, told the United Nations Integrated Regional Information Network (IRIN) that it is "a joint venture between Somalis and foreign investors." The bank is 51 percent owned by Somalis, representing all Somali clans, and 49 percent by foreign investors, he said. The main foreign investors are from, Belgium, Norway, the Netherlands and Ireland.

Branch network

The bank's official headquarters will be in Brussels, with the operational headquarters in Dubai, while the main Somali branch will be in Mogadishu, Mahad told IRIN. He said the bank would also have branches in Hargeisa, the capital of the self-declared independent Republic of Somaliland, northwestern Somalia, and another in Bosaso, in the self-declared autonomous region of Puntland, northeastern Somalia.

Speaking in January, he said the bank would open its doors for business "in about a month's time ". Once that happened, "Somalis from all walks of life will be able to buy shares."

L/C facilities

The bank would start with an operating capital of US$10 million and, when operational, would have relations with 62 corresponding banks in 72 countries around the world, Mahad said. "We will be able to provide all commercial banking activities, such as issuing of credit cards and letters of credit," he added.

Central bank caution

However, Mahmud Muhammad Ulusow, the governor of the Central Bank (CB) of the Transitional National Government (TNG), told IRIN that the proposed new bank did not exist as a legal entity. "There are procedures for the establishment of private financial institutions, and they have not followed them," he said.

Ulusow said the CB was ready to cooperate with anyone - foreign or national -

who wanted to set up business in the country, but "we have to stick to the laid-down procedures to protect the interest of the public from unscrupulous people."

Mahad told IRIN that UBSOM would meet all the CB's requirements, and that he foresaw no problem in this context. "It is a simple misunderstanding, and we will resolve it before we start business," he said.

Wider reservations

Not with standing the CB's apparent reservations, Somalia's stability remains uncertain. The country was without a government throughout most of the 1990s and although the TNG was installed last year in an effort to unify the whole country, the self-declared autonomous regions remain powerful. Should Somalia become the next target in the US-led war on terrorism, any chance of maintaining the fragile efforts to restore order and a functioning state there could evaporate.

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