Mogadisho (Dawan Africa) – The Central Bank of Somalia has announced last week a new directive capping annual U.S. dollar cash exports at $15 million per bank, in a decisive move to curb liquidity outflows and address growing concerns over a domestic cash shortage.
In a formal circular issued to licensed financial institutions, the Central Bank stated:
“Commercial banks shall not exceed an annual limit of USD 15 million in physical cash exports. This applies to all foreign-bound transfers involving actual banknotes transported by air or other means.”
The measure is part of an urgent policy response to what monetary officials describe as a “significant tightening in local dollar liquidity”, which has raised alarms across Somalia’s import-reliant economy.
Pressure Mounts as Dollar Cash Drains Out
For years, Somalia has operated under a dollarized economy heavily reliant on three major inflows of hard currency:
· Diaspora remittances (estimated at $1.3–$1.7 billion annually)
· International aid
· Limited export earnings (below $300 million annually)
Most diaspora money enters Somalia through digital hawala systems but remains physically outside the country—particularly in Dubai, where Somali remittance firms maintain reserves. The actual cash rarely enters Somalia, even as domestic consumers spend heavily on imported goods.
According to market observers, the situation worsened in recent years with the entry of Ziraat Bank, a Turkish lender operating in Somalia. The bank provided cheaper and faster SWIFT services than traditional money transfer firms, attracting major importers who began depositing cash locally. That money, in turn, was flown out of the country at an estimated $70 million per month to fund international purchases.
Central Bank's Intervention
Officials say this unregulated capital outflow placed intense pressure on the domestic availability of physical dollars, prompting the CBS to act.
“The directive aims to ensure prudent management of liquidity, minimize system-wide shocks, and preserve essential market stability,” the CBS statement read.
The move effectively disrupts what had become an unsustainable financial loop, in which no new cash entered Somalia, while existing physical dollars were continually exported, either via commercial operations or cross-border cash movements.
Return to Hawala Channels Likely
With the new restrictions in place, analysts anticipate a reversion to traditional hawala systems as the preferred means for financing imports.
“Formal banks cannot fulfill high-volume, fast-turnaround international payments under the current cap. This makes Hawalas more attractive again,” said Ahmed Adde, an independent financial consultant in Mogadishu.
Such a shift could strengthen informal systems, but also undercut efforts by Somali regulators to promote banking formalization and compliance with global financial standards.
This marks one of the most assertive interventions by Somalia’s Central Bank in recent years. However, experts warn that without formal mechanisms to repatriate cash, the liquidity crisis may persist.
The Central Bank has not indicated whether further measures—such as mandating diaspora remittance inflows in cash or limiting commercial bank offshore transfers—are under consideration.
For now, the $15 million annual limit is expected to serve as a temporary stabilizer—buying time for broader monetary and fiscal reforms to follow.
