Business
A 1970s civil code, new financial legislation, and business running on trust networks
The Civil Code of 1973 and older commercial legislation remain nominally in force, supplemented by recent banking, communications and company legislation. In practice much commerce operates through clan-backed trust networks and hawala rather than through registered entities and courts.
Key rules
- Jurisdiction — Federal and member state licensing overlap; the Central Bank of Somalia licenses financial institutions.
Governing law
- Civil Code 1973 — Italian-derived
- Financial Institutions Law 130/2012
- Communications Act 2017
- Foreign Investment Law and successor investment legislation
In practice
The formal private law descends from Italian civil law through the colonial and trusteeship periods, and the 1973 Civil Code has never been comprehensively replaced, so on paper Somalia is a civil-law jurisdiction. The functioning commercial order is different: enforcement rests substantially on reputation, clan guarantees and xeer-mediated settlement, and money movement runs through hawala remittance networks that predate and outperform the formal banking system. Rebuilding has been real in specific sectors — the Central Bank has licensed commercial banks under the 2012 Financial Institutions Law, mobile money is near-universal, and telecommunications is unusually competitive — but company registration, insolvency and judicial enforcement of commercial contracts remain weak and jurisdictionally contested between federal and member state authorities. This entry is research because the operative rules of commerce are largely not the published ones.