Raxanreeb Online Mogadishu: The central bank of Somalia has rolled out a new era in the microfinancing instructions by licensing the first seven non-deposit-taking microfinance institutions, following the recent approval of the updated Financial Institutions Act of 2025.

The seven financial institutions to have their licenses approved include Asal Microfinance, Haldoor Microfinance, KIMS Microfinance, Bushra Microfinance, Midnimo Microfinance, and RAAS Microfinance.

The new reforms in the finance sector intend to align the Somalia financial systems with the globally accepted regulations. The updated regulation now demands that all microfinance institutions should obtain their license from the central bank of Somalia; this moves the sector from largely being unregulated into a formally regulated system.

globally strict regulatory standards where institutions should meet the minimum capital threshold to ensure stability and resilience to operate in the market.

The institutions will now be required to protect consumers from unfair lending and other financial practices, hence building consumer confidence in the sector. The institutions will now be required to regularly report and disclose financial operations to the central bank of Somalia.

Historically, Somalia’s financial systems have largely depended on money transfer businesses, which were being conducted informally. The current changes were spearheaded by the central bank of Somalia through the support of the federal government of Somalia.

Somalia’s The central bank of Somalia has further directed the remaining microfinance institutions to submit their licensing applications by 6th December 2025. The noncompliant institutions are at risk of facing regulatory action under the Financial Act of Somalia.