By Abdiqani Haji Abdi

Somalia’s financial services and telecommunications sectors have emerged as rare success stories in the country’s post-collapse recovery, demonstrating remarkable resilience and innovation despite decades of institutional challenges. While these private sector industries have achieved sustained growth – with mobile money penetration now among Africa’s highest and new financial technologies reaching previously unbanked populations – Somalia’s political landscape continues to struggle with chronic instability.

President Deni Reveals Alarming Financial Links Between ISIS and Local Banks

President Said Abdullahi Deni, speaking to attendees at a high-level conference, disclosed shocking findings that millions of dollars had been funneled by ISIS terrorists through local banks, ultimately reaching their affiliates in Mozambique and Nigeria.

“We have recovered bank documents, including receipts and mobile-based transfer records, from underground bunkers used by these terrorists,” President Deni revealed. “Our technical teams are now compiling a comprehensive report, which we plan to share with the broader banking sector.”

He criticized the reluctance of financial institutions to cooperate with security efforts, saying, “We repeatedly requested local banks to provide transaction records linked to persons of interest, but these requests were consistently denied under the pretext of client confidentiality—referred to as ‘Amaano’.”

He added with emphasis, “This culture of non-cooperation has played a significant role in enabling illicit financial flows and has, in turn, exacerbated the economic challenges we are now confronting.”

While the president’s speech at the financial development conference was largely aimed at distancing Puntland from the political dysfunction of the Federal Government in Mogadishu, his broader message triggered serious concern among financial professionals and economists alike.

The President also publicly criticized local banks for prioritizing housing projects over investments in the productive sector. He went further, declaring that “an acute liquidity crisis” now grips the banking system, warning that, “if savers demand their money, the banks can’t afford to pay.”

These comments, made in a high-profile forum and broadcast to the public, is being seen as a direct breach of one of the most fundamental principles in financial governance: public trust in the solvency of banks.

“This crosses a red line,” said a senior financial analyst in Garowe, speaking on condition of anonymity due to the sensitivity of the issue. “A sitting president suggesting that banks are enabling extremist and also might not be able to meet withdrawals is an invitation to panic — no financial institution can withstand a mass run on deposits. It’s a textbook example of what not to say.”

Unintended Panic or Strategic Pressure?

Bankers across Puntland are said to be in damage control mode following the president’s remarks. Several private sector executives described the statement as reckless and unfounded, arguing that while liquidity challenges exist — as they do in many developing economies — public speculation by the head of state undermines the very foundation of the financial system: confidence.

“This isn’t just rhetoric,” warned one banker. “It can translate into a stampede of withdrawals, triggering exactly the crisis the president appeared to warn against. Ironically, the statement risks becoming self-fulfilling.”

International financial norms dictate that public officials, especially heads of government, must exercise extreme caution when discussing the health of banking institutions. Even vague comments about liquidity can trigger market instability. In Puntland’s case, where regulatory protections and crisis response tools are limited, the stakes are even higher.

While Deni may have intended to criticize loan distribution patterns — specifically, the preference for mortgage financing over investments in agriculture, industry, or energy — experts say his language was ill-chosen and poorly timed.

“Critiquing the banking sector’s investment priorities is one thing,” said a regional economist. “Implying they’re on the verge of insolvency is something else entirely.”

The president’s remark appeared to conflate economic strategy with solvency risk — a dangerous overlap in a climate where economic uncertainty is already high. In a region striving for stability and investor confidence, the fallout could be significant.

Silence from the State Bank

Notably, the Central Bank of Puntland has yet to issue a public response to the remarks. Financial professionals are urging the institution to step in quickly and clarify the actual health of the banking sector to avoid unnecessary alarm and restore depositor confidence.

“Silence is not an option,” said a senior economic consultant. “Markets hate uncertainty — and the president has introduced a level of uncertainty that, if not corrected, could escalate into a serious financial event.”

Some are now calling for a formal clarification from the presidency as well, to reassure the public that the banking system remains stable and that depositors’ funds are safe.

Political Rhetoric Meets Economic Fallout

Observers believe the president may have been attempting to appeal to public frustration with perceived inequality in lending or misaligned development priorities. But in doing so, critics argue, he has inadvertently created the conditions for a crisis.

“The president may have been trying to show he’s tough on elite interests or taking bold steps toward reform,” noted one analyst. “But economic messaging isn’t a political stump speech — it must be careful, calibrated, and responsible. This was not.”

As of Tuesday, there were no confirmed reports of mass withdrawals or bank runs, but several banks are reportedly increasing their liquidity buffers as a precaution. Banking sector leaders are also urging the public to remain calm and continue normal financial activity.

A Wake-Up Call

In the aftermath of the president’s statement, there is growing consensus that Puntland’s leadership must develop stronger communication protocols when addressing financial issues. Economies in post-conflict or developing states are particularly vulnerable to sentiment-driven crises. One misplaced phrase from a powerful figure can upend years of careful economic institution-building.

If President Deni’s remarks were a genuine slip, they may serve as a wake-up call for better financial literacy within the political class. If they were intentional — a pressure tactic against banks to reform their lending practices — they may have opened a dangerous new chapter in the relationship between politics and Puntland’s economic stability.

For now, all eyes are on the State Bank — and the president — to correct course before confidence in the financial sector erodes any further.

Abdiqani Haji Abdi
Email: Hajiabdi0128@gmail.com