Islamic Banking in Somalia; Challenges and Opportunities

Abstract

Nowadays, we hear about the emerging of Islamic banking in Somalia. The most important purpose of this study was to gain the challenges and opportunity that are facing Islamic banking in Somalia. The methods and procedures used in gathering data was primary and secondary data. Document review questions and personal interviews were used to gather data for the study. Research papers on Islamic banking, textbooks, magazines, and websites were used to analyze information for the purpose. To be specific, research finding shows that The absence of Sharia advisory board in the country, lack of active central Bank and Lack of Financial institution, Lack of awareness and proper understanding is one of the challenges that facing Islamic Banking in Somalia. On the other hand, the research findings show that there are greater opportunities in the Somalia for Islamic banks because the social acceptance for Islamic banking and finance in the country is higher compared to conventional banks, and the existing of some informal practice of Islamic banking products facilitates to have a formal Islamic banking system.