Salaam Somali Bank digs up innovation ingredients to spur growth

By Steve UMIDHA

Since its establishment in 2009 Salaam Somali Bank has played a pivotal role in rejuvenating Somalia’s banking sector.

Traditionally, the country leaned heavily on informal money transfer methods like Hawala. But recognising the inherent limitations of such unregulated systems, the bank embarked on a mission to bolster financial stability.

As the first commercial bank registered with the Central Bank of Somalia, Salaam Somali Bank helped drive the monumental task of reconstructing the country’s banking infrastructure from scratch. The lender sought to create an advanced banking network that would seamlessly connect Somalia to the global financial system. This vision resulted in a safe and efficient platform for depositing, receiving, and sending funds.

Today, Salaam Somali Bank remains at the forefront of financial innovation, serving the diverse financial needs of Somali citizens, businesses, and entrepreneurs.

Financial Fortune Media’s Managing Editor Steve UMIDHA recently had a chat with Shuayb Haji-Nur, CEO of Salaam Somali Bank to understand the lender’s longterm plans.

Here are the excerpts,

Q: SSB is the largest privately owned bank in Somalia in terms of branch coverage and customer base. In your 14 years of existence, how would you (SSB representative) quantify the bank’s growth not only in terms of net income, but also the impact (both to the shareholders and direct customers) created over that time?

A: Our success is deeply entwined with the prosperity of the Somali economy. Since 2013, Somalia has seen robust GDP growth, progress we believe our bank has significantly contributed towards.

We’ve concentrated our efforts on creating reliable financial frameworks that empower individuals and businesses to flourish. This has allowed us to achieve significant milestones that have reshaped Somalia’s banking sector, including introducing the country’s first automatic teller machine (ATM) and debit card.

Additionally, we’ve poured resources into infrastructure development and renewable energy production. We financed the construction of Daaru Salaam City, a luxurious, eco-friendly neighbourhood in Mogadishu. We also played a crucial role in setting up Somalia’s first solar panel plant via our investment in BECO, the nation’s largest energy provider.

These initiatives draw in the Somali diaspora, ushering in a wealth of new knowledge and business opportunities.

Q: Remittances are estimated to be worth 25% of Somalia’s GDP. How is SSB looking to tap into this opportunity to boost its diaspora income?

A: There’s no denying the crucial role remittances play in our nation’s economy. We view remittances not just as financial transactions, but also as a means to maintain a connection with our diaspora and to bolster local commerce.

Over the years, we’ve forged a secure, streamlined pathway for money transfers, bridging our diaspora with their families and businesses back in Somalia. We’ve made these transactions even simpler through an account-to-account banking system, and DEEQTOON our mobile banking service, allows customers worldwide to effortlessly transfer funds to their SSB accounts and pay for goods and services. Above all, safeguarding the hard-earned money of our diaspora remains our utmost priority.

We strive to be a dependable partner for international organisations operating in Somalia too. Our role is to provide a secure platform for their funds and aid in the administration of programs such as the ‘cash for humanitarian relief’ initiative, to make a lasting positive impact on our community.

Q: Tighter anti-money laundering and counter the financing of terrorism (AML/CFT) regimes have made remittances harder to send, how is SSB navigating through this even as you eye the foreign transactions?

A: SSB is committed to complying with both local and international standards. Our current focus lies in bolstering the safety and security of our Telegraphic Transfer (TT) and SWIFT systems, which are vital for international payments and settlements. This opens valuable avenues that align with the country’s aspirations to strengthen its private sector, draw investment, enhance public services, and generate jobs.

With these improvements, we assure our customers of secure and safe methods to engage with our bank and carry out their transactions, whether they’re local or international.

Q: Financial markets are one of the crucial sectors still reeling from the impact of Covid-19. How has the bank navigated through this challenge nearly 4 years later?

A: The Covid-19 pandemic had a profound impact on our lives. Yet, amid those challenges, we found opportunities to hone valuable skills such as adaptability and resilience. After we ensured the safety of our employees and customers, we swiftly implemented safety guidelines across all our workplaces.

We also invested in our digital banking services, ensuring seamless transactions and account access without the need for physical branch visits. Our mobile banking service, DEEQTOON launched in 2010 and was instrumental in catalysing this shift towards digital banking.

Throughout the pandemic, Salaam Somali Bank maintained open and transparent communication with our customers and stakeholders, reinforcing our commitment to their needs and concerns.

Q: Russia’s invasion of Ukraine in February last year has left a devastating trail of hardships and global inflation and its impact has spared commercial banks in Somalia. How is SSB guarding itself against the ripple effects that would potentially spring should a recession hit Africa? Are you confident in your own Central Bank to steady the financial market should such a scenario play out?

A: The geopolitical turmoil caused by the Russia-Ukraine crisis has created economic uncertainties worldwide. Although the impact may be less pronounced in Africa and Somalia, it is still affecting our economic growth and contributing towards inflation.

It’s often during these times of hardship that customers look for stable, trusted institutions to help manage them through difficult times. We’re more than confident in the Central Bank’s ability to steer our financial market to stability during these difficult times.

As the longest-standing and most trusted private financial institution in Somalia, we are ready to face head-on any challenges brought by this hardship. Our commitment is to remain the stable and reliable bank our customers have come to trust over the years.

Q: What are some of the painful measures SSB has had to pass on to its customers in a bid to sustain its profitability while at the same time continue to lend at reasonable rates?

A: As an Islamic banking institution, we adjusted the terms of our financial products to adapt to market changes during COVID-19, but we never raised prices.
While we’re aware that these changes might impact our customers, our focus on ethical and reliable financial solutions remains unchanged.

Q: The year 2023 looks promising for the Somalia banking sector. What product offerings and expansion plans should we look out for this year from SSB?

A: We’re excited to see what the future holds for Somalia. With the country now stable and attracting more international investors, the outlook is positive.

Our mission to make financial services accessible to all our customers, spurring economic engagement and ownership, will stay at the forefront of our work.

In the long run, we hope to empower each of our customers to take charge of their financial future and contribute to Somalia’s growth. To make this happen, we’ll keep our financial system secure and work on strengthening ties with both the Somali Diaspora and international investors interested in doing business here. We’re also preparing to take advantage of the opportunities that joining the East African Community (EAC) will bring.

Q: Climate Change: Climate change has now turned into a race against time as most nations aim to net zero carbon emissions by the year 2050 by investing in clean sources of energy in their industrialisation.

As a result, a growing number of startups are coming up with innovative solutions to mitigate this threat, but lack of tailor-made financing alternatives remains a big bottleneck for them to develop such solutions. How is SSB bridging this gap by playing a role in addressing climate change, whose adverse effects has made Africa vulnerable to droughts, famines, flooding, human-wildlife conflicts, and wars between communities and nations, among other calamities?

A: The harsh drought in Somalia has led to a significant loss of livestock. In 2022 alone, lost 1.5 million animals, leaving pastoralist communities on the brink of famine and financial ruin. This situation also strained the social bonds within these communities and impacted our foreign exchange earnings.

To help combat the effects of the drought, Salaam Somali Bank teamed up with the World Bank and ZEP-RE (PTA Reinsurance Company) to kickstart the groundbreaking De-Risking, Inclusion, and Value Enhancement (DRIVE) Project.

The DRIVE Project aims to broaden access to financial services specifically for drought risk mitigation. It provides savings accounts and subsidized livestock insurance, offering pastoralists a way to manage the drought’s impact.

This DRIVE initiative acts like a lifeline, promoting financial resilience and reducing dependence on external aid. It’s a significant stride towards empowering Somalia’s vulnerable communities during these challenging times.

And we’re staying firm in our resolve to contribute to the development of more sustainable practices moving forward.