Governor Abdinasir Hersi
By Prof. Nassir Hussein Kahin, International Affairs Writer & Managing Editor, bridgingsomaliland.com
Somaliland’s efforts to integrate into the global financial community took a major step forward this week as the Bank of Somaliland was formally admitted as an Associate Member of the International Association of Deposit Insurers (IADI).
The decision, approved at IADI’s Executive Council meeting in Taipei on September 11, coincided with the association’s Core Principles International Conference and the 40th anniversary celebrations of Taiwan’s Central Deposit Insurance Corporation (CDIC).
For Somaliland, a territory that has operated for three decades without international recognition, the move represents a rare institutional breakthrough. It provides not only a measure of legitimacy but also a technical lifeline for strengthening financial governance.
Building Credibility
Membership in IADI, the global standard-setting body for deposit insurance, offers Somaliland access to policy guidance, best practices, and technical expertise that could prove pivotal as it seeks to modernize its underdeveloped banking system.
“This recognition strengthens Somaliland’s place in the global financial community and opens the door for deeper integration into international systems,” said Abdinasir Ahmed Hersi, Governor of the Bank of Somaliland. “It validates our commitment to building a sound, transparent, and resilient financial sector.”
Analysts say the move signals Somaliland’s determination to demonstrate that, despite its lack of formal recognition, its institutions can meet global benchmarks. “Joining IADI won’t immediately solve Somaliland’s financial isolation, but it marks an important step in building credibility with investors and partners,” said one regional financial expert.
Modernization Through Partnership
Governor Hersi’s visit to Taipei underlines Somaliland’s strategy of pairing technical reforms with diplomatic outreach. His meetings with the Central Bank of Taiwan, the Financial Supervisory Commission, the CDIC, and the Ministry of Foreign Affairs focus on institutional cooperation.
Key priorities include:
Capacity building through training programs and staff exchanges.
Financial technology infrastructure, including cybersecurity, core banking systems, and payment platforms.
Regulatory frameworks to enhance oversight and stability.
International payment systems, particularly pathways toward SWIFT integration—a longstanding challenge for Somaliland’s banks.
Taiwan, itself diplomatically constrained, has emerged as a critical partner for Somaliland. The two governments established ties in 2019, and cooperation has since expanded into trade, technology, and governance.
“Our partnership with Taiwan demonstrates that nations outside formal recognition frameworks can still advance meaningful cooperation,” Hersi said.
Economic Stakes
The financial reforms are not happening in a vacuum. Somaliland is positioning itself as a trade and logistics hub in the Horn of Africa, anchored by the expansion of Berbera Port, the Berbera Economic Free Zone, and the Berbera–Ethiopia trade corridor.
Its location on the Gulf of Aden, near the Bab al-Mandab chokepoint—through which more than a fifth of global trade passes—gives these projects added significance. A stronger financial system, officials argue, will provide the credibility needed to attract foreign investment and facilitate trade.
“Somaliland has always faced a paradox: strategically located but financially isolated,” said a Nairobi-based analyst specializing in frontier markets. “If it can show that its institutions are reliable, that could change investor perceptions.”
Challenges Ahead
Still, obstacles remain formidable. Somaliland’s banks operate without correspondent relationships with major international institutions, limiting access to global payment networks. The lack of recognition also blocks engagement with the International Monetary Fund and World Bank, restricting access to development financing.
IADI membership, while symbolically powerful, is not a substitute for full integration. However, observers note it gives Somaliland a platform to align with international standards—a crucial step if it is to overcome financial exclusion in the long run.
Looking Forward
For Governor Hersi, the focus is on gradual but tangible progress. “With determination and the support of our partners in Taiwan and beyond, we will build a stronger, more inclusive, and globally connected financial system,” he said, congratulating the CDIC on its 40 years of service as an inspiration.
Whether this week’s breakthrough translates into meaningful financial integration will depend on Somaliland’s ability to sustain reforms and deepen partnerships. Yet for a territory often on the margins of global finance, IADI membership is more than symbolic—it is a foothold in the international system.
