International Bank of Somalia (IBS) is seeking to raise $10 million in what would be the first ever public share offer since war broke out in the horn of Africa country 24 years ago. The bank’s CEO told Reuters it will sell 10 percent of its issued share capital in tranches of between $500 to $500,000 to both local and foreign investors.
War-torn Somalia has only six licensed commercial banks and does not have a stock exchange. Most of the banking in the country that has been ravaged by war since 1991 is done through informal money transfer firms, known as hawalas.
Hassan Yusuf, IBS chief executive, told Reuters on the sidelines of a Somalia investment forum in Nairobi, that the country was now “ready for business” and investors in the bank IPO would benefit from being early birds in the sector.
“People who go now will be the beneficiaries in the long term,” Yusuf said.
IBS opened its first branch in Mogadishu in October last year, underscoring the relative peace the country has seen after Somalia Coalition forces and AMISOM forces drove the Al Qaeda linked Al Shabab militia out of the capital and other major towns in 2012.
Reuters reported that the bank plans to open another four branches by the end of this year and aims to introduce online banking and a mobile banking app for customers.
Somalia’s hawala systems came under pressure in February after US banks stopped money transfers to the country because of strict regulations set by the Office of the Comptroller of the Currency over concerns of money laundering and funding for terrorist organizations.
This has left many Somalis, who depend on the $1.2 billion remittance sent annually by their relatives abroad, without critical financial support. Remittances is the country’s largest revenue source, larger than even foreign aid and investments combined.