Somalia's Exclusion From Correspondent Banking Costs It an Estimated 210 Million Dollars a Year

Somalia's exclusion from the global correspondent banking system is costing the country an estimated 210 million US dollars a year, Birr Metrics reported, forcing every international transaction through costly intermediary channels.

The mechanism is blunt: no Somali bank can send or receive US dollars directly. Every payment is routed through a chain of intermediaries, and each link takes a cut.

What correspondent banking actually is

A bank in one country settles foreign-currency payments by holding an account with a bank in the currency's home jurisdiction. Lose that relationship and the bank does not lose the ability to price in dollars — it loses the ability to move them. Payments still happen, but through longer chains, at worse rates, with more counterparties taking fees and more delay in between.

The withdrawal of these relationships from fragile jurisdictions — usually a compliance decision rather than a credit one — is what the industry calls de-risking. The cost does not land on the banks that withdrew. It lands on the exporters, importers and households at the far end.

Why this sits on Ethiopia's desk

Ethiopia and Somalia share a long border and a working trade relationship, much of it in livestock moving east and consumer goods moving west, and a great deal of it settled outside the formal banking system for exactly the reason above.

For an Ethiopian exporter, a counterparty who cannot receive dollars directly is not a credit risk in the ordinary sense — it is a settlement risk. Payment arrives late, arrives short after intermediary fees, or arrives through channels that are difficult to document for an Ethiopian bank's own compliance file. That last problem is the one that quietly shrinks the trade.

It is also a live reminder of what the compliance perimeter costs when you fall outside it, at a moment when Ethiopian banks are working to widen their own correspondent relationships.

Open

Birr Metrics does not identify who produced the 210-million-dollar estimate or what it counts, and fact.et has not seen the underlying methodology. No figure is published for how much Ethiopia–Somalia trade is affected.

Sources: Birr Metrics, 25 September 2026