SOMALILAND: LACK OF FINANCIAL SECTOR REGULATIONS

UNCLAS LONDON 001303 SIPDIS SENSITIVE DEPART FOR INR/B E.O. 12958: N/A TAGS: EAID PREL EFIN PINR SO UK SUBJECT: SOMALILAND: LACK OF FINANCIAL SECTOR REGULATIONS INHIBITS PRIVATE SECTOR DEVELOPMENT REF: 08 LONDON 2188 ¶1. (SBU) Somaliland's economic growth and development are hindered by having no legislative framework to regulate the financial services sector, Saad Ali Shire of Dahabshiil, the UK's largest Somalia remittances transfer firm (reftel),told Poloff June 2. He offered the following thoughts: -- The USG should press Somaliland authorities to pass legislation to regulate the financial services sector. Shire explained that Dahabshiil had paid consultants to draft legislation, in coordination with the World Bank, but Somaliland politicians had not enacted it. He said many thought it was because the Central Bank Governor and Minister of Finance fear that robust financial institutions could diminish their authority. -- The USG should work with Central Bank Governor Abdul Rahman and the Minister of Finance to "update their thinking" on management of financial services. Shire said both have a "leger-based mentality" when considering finances and would benefit from trips abroad to learn how governments should support financial services industries as engines of economic growth. ¶2. (SBU) On Dahabshiil's operations, Shire said that remittance transfers are down by 20 percent over the same period last year due to the decrease in strength of the British Pound and the increasing number of UK-based Somalis who are unemployed. He said Dahabshiil, an organization which Embassy London has been encouraging to offer Sharia-compliant microloans in Somaliland, offers limited financial services in Somaliland in addition to money transfer services, such as non-interest earning savings accounts. He also noted that Dahabshiil had just received a license to operate as a fully functional bank in Djibouti. Comment -------------- ¶3. (SBU) Shire is very engaged in the UK's Somali Diaspora community, where he actively cultivates business relationships. He plans to travel to Somaliland in late June to undertake a comprehensive study of Somaliland's financial services sector and to encourage the Somaliland authorities to create a regulatory framework, with the hopes of enhancing Dahabshiil financial services products in Somaliland. Visit London's Classified Website: http://www.intelink.sgov.gov/wiki/Portal:Unit ed_Kingdom LeBaron