Somalia's Premier Bank becomes the first to offer letters of credit

[embarassing]

Somali Premier Bank has initiated the first ever Credit of Letter service in its banking service that was absent from the country for a period of over two decades.

The service will assist local and foreign business companies to make business transaction services with ease and without the involvement of a travel cost.

The opening ceremony took place today inside the port of Mogadishu were the new system was displayed in a joint venture between Premier Bank in Mogadishu and Egyptian banks.

The event was graced by officials from the federal government, Egyptian Embassy and representatives from the business community.

Speaking on the event, minister of commerce and industry of Somalia Khadra Ahmed Duale noted the crucial step taken forward and expressed her gratitude to the Premier Bank and Egypt for this initiative.

“We pass our gratitude to the government of Egypt and Premier Bank. The government has struggled a lot to develop the commerce sector. Nothing is more crucial than assisting the business people to invest and work in the country including shopping from outside” said Minister Duale.

Premier Bank head of Investments Ahmed Noor Mohamed Abdi stated the long road they took to implement this service in Somalia.

“Today this successful first ever program of Letter of Credit (LC) in Somalia since 1991. It was provided to the bank by IMBO, a medical company that imports medicine. I pass my thankfulness to all who took part” said Abdi.

Head of Egyptian Consulate in Mogadishu, Tamir Safwat shared the challenges faced by Egyptian business people when dealing with Somalia.

“Today we are witnessing a crucial incident which strengthens the relationship between the two countries especially on trade. Before it was difficult in this field where Egyptian traders could not export due to lack of banking system” said Ambassador Safwat.

A representative from IMBO Company Ismail Hassan Noor confirmed to the attendees that his company will be the first Somali firm to make use of this crucial service.

“I am thrilled today in representing the IMBO Pharmaceuticals to participate in this vital event. This company is working in Somalia more than 20 years. Earlier [LC] is a service not present in the country which posed a challenge of its own kind. I am to be the first firm [to use the service]” said Noor.

In the business field, a Letter of Credit is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. Due to the nature of international dealings, including factors such as distance, differing laws in each country, and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade.
http://goobjoogbusiness.net/2017/11...vice-in-somalia-after-two-decades-of-absence/

 

[Steamdevolopment]

Somali Premier Bank has initiated the first ever Credit of Letter service in its banking service that was absent from the country for a period of over two decades.

The service will assist local and foreign business companies to make business transaction services with ease and without the involvement of a travel cost.

The opening ceremony took place today inside the port of Mogadishu were the new system was displayed in a joint venture between Premier Bank in Mogadishu and Egyptian banks.

The event was graced by officials from the federal government, Egyptian Embassy and representatives from the business community.

Speaking on the event, minister of commerce and industry of Somalia Khadra Ahmed Duale noted the crucial step taken forward and expressed her gratitude to the Premier Bank and Egypt for this initiative.

“We pass our gratitude to the government of Egypt and Premier Bank. The government has struggled a lot to develop the commerce sector. Nothing is more crucial than assisting the business people to invest and work in the country including shopping from outside” said Minister Duale.

Premier Bank head of Investments Ahmed Noor Mohamed Abdi stated the long road they took to implement this service in Somalia.

“Today this successful first ever program of Letter of Credit (LC) in Somalia since 1991. It was provided to the bank by IMBO, a medical company that imports medicine. I pass my thankfulness to all who took part” said Abdi.

Head of Egyptian Consulate in Mogadishu, Tamir Safwat shared the challenges faced by Egyptian business people when dealing with Somalia.

“Today we are witnessing a crucial incident which strengthens the relationship between the two countries especially on trade. Before it was difficult in this field where Egyptian traders could not export due to lack of banking system” said Ambassador Safwat.

A representative from IMBO Company Ismail Hassan Noor confirmed to the attendees that his company will be the first Somali firm to make use of this crucial service.

“I am thrilled today in representing the IMBO Pharmaceuticals to participate in this vital event. This company is working in Somalia more than 20 years. Earlier [LC] is a service not present in the country which posed a challenge of its own kind. I am to be the first firm [to use the service]” said Noor.

In the business field, a Letter of Credit is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. Due to the nature of international dealings, including factors such as distance, differing laws in each country, and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade.
http://goobjoogbusiness.net/2017/11...vice-in-somalia-after-two-decades-of-absence/

Things are looking forward. Does that mean that Somaliland/Puntland don't have such a service?

 

[embarassing]

Things are looking forward. Does that mean that Somaliland/Puntland don't have such a service?

They said it's a first for Somalia since the war so I guess not.

 

[DR OSMAN]

Oh I nearly got excited but nah this is just collateral damage which I don't know how it will be enforced anyways since it's different countries with differing laws. How can an Egyptian hold me accountable for any cash payment for goods other then the good old 'gentleman agreement'. This one of the areas holding Somalia back from developing, a strong justice system where everyone locally or foreign has a right to access if things go sour. I simply don't see how the premier bank will foot the bill if one of their customers don't pay the egyptians!!! I do realize the customer will need to pass over the cash to the bank and the bank gives them letter of credit, but what's stopping the bank from giving our dodgy or false letter of certificates to customers?

Is this one of those where the bank gets a 'certificate' from a trusted establishment in the world that your a good bank and can give letter of credit? if it works like that, that's enforceable, you can take away their certification if they fail to live by the standards of the letter of credit standard. But if it isn't enforceable and you must rely on the good nature of the bank, that's problematic if that country has a weak or corrupt justice system internally, they can just bribe of the courts to rule in their favor which means you lost your money!!!

I hope we develop a good justice system, it's one huge factor holding us back from developing. No1 invests in any nation if they can lose it tomorrow due to a weak justice system. But also the fact we don't provide loans to investors is a huge problem. The way it works usually is the govt prints the money and the bank are told what interest rate to apply and they sell it to customers in terms of loans be it business or mortgage or whatever. That simply isn't available in Somalia, there is no access to capital for customers so small or medium businesses can't take off nor can real estate in any big way!!! I've spoken on this issue before in a thread regarding somalia economical challenges.