About 10 commercial banks and 11 money transfer businesses (MTB) were licensed by the Central Bank of Somalia (CBS). According to the IMF, at the end-September 2017, the commercial banks’ total assets and credit to the private sector were about 4 percent and 1.3 percent of GDP, respectively. Nonetheless, banks’ assets have continued to improve since 2015, and their capitalization remains broadly adequate. The loan-to-deposit ratio reached 40.1 percent, up from 33.3 percent in September 2016, and credit to the private sector increased to 31.2 percent (as a share of total assets), from 24.8 percent in the previous year.

Some of these private banks are a mixture of money transfer businesses and banking at the same time. Some examples of the mixture services of hawala and banking are Dahabshil Bank International (DBI), Salaam Bank and Amal Bank. Dahabshiil is one of the old money transfer companies in Somalia, and Salaam Bank is a sister organization of Hormuud telecom. On the other hand, Premier Bank and International Bank of Somalia (IBS) are new financial institutions that are only offering banking services. These two banking institutions currently provide Master and Visa Cards that consumers can use worldwide transactions. The majority of these financial institutions are headquartered in Mogadishu with branches in the regions.

MTBs play a crucial role in providing financial services in Somalia. In 2017, MTBs provided trade finance amounting to about US$ 2.1 billion. Due to this demand, money transfer businesses continue to dominate the formal and informal financial sector and facilitate the transfer of remittances from the Somali diaspora, donor resources, and foreign investments, and are flourishing.

Despite the fact that Somali Shillings (SOSh) is not widely used for business transactions, CBS is responsible for regulating the dollarized transactions in the private financial institutions.

In addition to the aid that the country receives due to lack of strong mechanism for local revenue collections, remittances remain the highly dependent income mainly for household consumption. As it is indicated in the Ministry of Planning report on aid flows in Somalia published on May 2019, the ODA to GDP ratio in 2018 was 27%. On the other hand, inflows of Foreign Direct Investment (FDI), according to the preliminary report, are rising as is domestic revenue collected by the Federal Government; however, relative to GDP, their levels remain low at 5.5% and 2.6% respectively in 2018.

In 2016, the Federal Government of Somalia has passed into law the Anti-Money Laundering and Countering the Financing of Terrorism Act which was a critical legislation in improving financial sector confidence