MOGADISHU, Somalia — Thousands of Somalis are at risk of losing their savings as several banks in the country face potential collapse due to mismanagement of customer deposits, according to information obtained by Shabelle Media Network.
The banks, based in Mogadishu, are experiencing a severe cash crunch, making it challenging to honor withdrawal requests or return the deposits to their clients. These financial institutions had invested in real estate, constructing homes in hopes of generating profit. However, the properties have been deemed unsuitable for habitation, leading to a lack of tenants and an inability to resell the land.
Economic experts have pointed out that the banks’ predicament is exacerbated by the government’s seizure of these lands, which has deterred potential buyers. This leaves the banks unable to liquidate their assets to recover funds.
Private banks in Somalia are crucial for holding the savings of many citizens, who rely on these institutions for financial security. The potential failure of these banks could lead to significant financial losses for depositors.
Adding to the banks’ woes, more than 100 members of Somalia’s Federal Parliament from both houses have publicly advised against buying land sold by the government through what they describe as “questionable and irregular procedures.” This advisory has directly impacted the ability of banks to sell off their land investments, deepening their financial distress.
The situation underscores the fragility of Somalia’s banking sector and the broader implications for the country’s economic stability.
