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Al Huda CIBE to Develop Islamic Banking Regulations with the Central Bank of Somaliland

AlHuda CIBE partners with Somaliland’s central bank to build a modern, fully Shariah-compliant banking system and expand formal credit access as financial institutions widen their presence in the Horn.

By Angus Anderson
Al Huda CIBE to Develop Islamic Banking Regulations with the Central Bank of Somaliland
Al Huda CIBE to Develop Islamic Banking Regulations with the Central Bank of Somaliland
by Angus Anderson

Dubai, UAE – AlHuda CIBE has launched a major consultancy project with the Central Bank of Somaliland, marking a significant step toward establishing a modern, fully Shariah-compliant banking and credit system in the territory.

Mr. Muhammad Zubair, CEO of AlHuda CIBE, attended the inaugural meeting at the BoS headquarters noting the transfer of Emirati financial expertise to Somaliland’s emerging banking sector.

Governor Ali Abdillahi Dahir Hirsi underscored Somaliland’s strategic goal of a 100% Shariah-compliant banking system, while Director General Yasin Axmed reaffirmed the central bank’s commitment to creating a regulatory environment conducive to Islamic finance product development.

Transforming a Nascent Financial System

Currently, informal hawala networks dominate transactions and bank financing accounts for only 12.7% of GDP, limiting credit availability for households and SMEs.

Establishing modern regulations is expected to:

  • Facilitate formal credit markets and improve lending frameworks.
  • Strengthen risk management and Shariah compliance, increasing trust for domestic and foreign investors.
  • Support financial inclusion and provide alternatives to informal networks, particularly for rural and underserved populations.

Investor and Regulatory Opportunities

  • Diaspora-driven capital flows: With many Somalilanders in the UAE, formal Islamic banking can channel remittances into productive investment and structured financial products.
  • Islamic finance growth: Potential to expand Murabaha, Musharakah, and Ijara-based products, SME financing, microfinance, and future Sukuk issuance.
  • Digital integration: Regulatory clarity enables mobile banking, fintech solutions, and digital Shariah-compliant platforms, crucial for reaching underbanked regions.
  • Improved oversight: Modern frameworks can reduce systemic risk by enhancing AML compliance, credit-risk evaluation, and transparency.

Next Steps: Capital and Infrastructure

While regulations lay the foundation, physical and digital banking infrastructure investment remains essential including branches, payment networks, and professional capacity building for regulators and Shariah boards.

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