By Zablon Oyugi, January 27, 20126— Pastoralist and agro-pastoralist communities in Ethiopia’s Somali Regional State are set to gain greater access to formal banking services and credit following the signing of a strategic agreement between the Somali regional administration and the Commercial Bank of Ethiopia (CBE).
The deal, finalized in Jigjiga on Saturday, last week, aims to deepen financial inclusion for rural residents whose livelihoods depend on livestock and farming.
The signing ceremony brought together senior regional officials and CBE representatives and follows earlier discussions between the Somali regional state’s Vice President, Ibrahim Osman Farah, and bank officials.
The agreement is designed to ensure that rural communities — which make up the overwhelming majority of the Somali Region’s population — can benefit from improved access to credit, savings accounts, and other banking services.
Pastoralists and farmers account for approximately 80 per cent of residents living outside urban areas in the region.
“This is a programme to ensure access to banking services, particularly for pastoralist and farming communities, which constitute the largest segment of the population in the region,” said Mohamed Yousuf Roble, Deputy Minister at the Office of the Somali Regional State President.
“Since nearly 80 per cent of the population outside urban areas are pastoralists and farmers, it is essential to provide them with banking services, credit, and financing they need to improve their livelihoods and accelerate their economic activities,” added Roble while highlighting the importance of bridging longstanding gaps in financial access for rural producers.
According to officials, the agreement aligns with Ethiopia’s national Financial Inclusion Strategy, a framework established to increase the number of pastoralists, farmers, and other underserved groups accessing formal financial services.
The strategy helps banks and financial service providers to track their outreach to rural clients and tailor products accordingly.)
Roble emphasized that the initiative will expand access to a range of banking products including culturally relevant services such as Islamic banking, which is particularly important for many residents in the Somali Region.
“The agreement accelerates efforts to ensure that pastoralist communities across regions and districts can access Islamic banking services, and it will significantly improve livelihoods and raise living standards,” he said.
Officials noted that the initiative forms part of broader government efforts to support economic development and reduce poverty in rural areas.
By facilitating credit, savings, and other financial services, authorities expect to strengthen small-scale economic activity, enhance food security, and promote rural development across the region.
Financial inclusion has long been a challenge in pastoral and agro-pastoral areas where formal banking infrastructure is limited and many residents lack the documentation or collateral traditionally required for loans.
Across Ethiopia and the wider Horn of Africa, pastoralist communities have historically been underserved by formal financial institutions, relying instead on informal savings systems and limited microcredit facilities.
Development experts argue that expanding access to formal banking and affordable credit can support resilience to climate shocks like droughts — a frequent threat in arid regions such as Somali — and enable households to invest in livestock, fodder, and farm inputs to boost productivity and incomes.
Regional and bank officials said they hope the new partnership will build confidence among rural residents in formal financial services and set a precedent for further expansion of inclusive banking across Ethiopia’s pastoral zones and beyond.
