The new law approves Somalia's membership in the ICD to support Sharia-compliant private sector growth.
Somalia has enacted Law No. 3, approving the country's membership in the Islamic Corporation for the Development of the Private Sector (ICD). The law incorporates the international agreement establishing the ICD into Somali law.
The Act was enacted to support economic development by encouraging private enterprise in line with Sharia principles. By joining the ICD, Somalia gains access to an international institution dedicated to financing and developing the private sector, complementing the work of the Islamic Development Bank.
Law No. 3, the Law on Islamic Development Corporation Membership was enacted and entered into force on February 21, 2016.
Many members of the Islamic Development Bank have been shifting financing from the public sector towards private enterprise. By joining the ICD, Somalia signalled its intention to follow that path and to give its private sector access to international, Sharia-compliant support.
Article 3 (Purpose) of the incorporated agreement sets the ICD's mission as promoting economic development in member countries according to Sharia principles. Article 4 (Functions) allows the Corporation to help finance the establishment, expansion, and modernisation of private businesses.
The agreement sets out how the ICD supports enterprises.
The Corporation's financial foundation is clearly defined. Article 8 (Capital) sets its authorised capital at US$1 billion, with half initially available for subscription by founding members, and Article 10 (Payment of Subscriptions) sets the instalment terms for members.
The agreement also protects the integrity of its investments. Article 15 (Limitations) restricts investments to enterprises in or serving member countries, and Article 29 (The Shari'a Committee) requires a committee of Islamic scholars to confirm that investments comply with Sharia principles.
This law is important because it connects Somalia to an international institution focused on private sector growth and Sharia-compliant finance. Membership in the ICD can bring investment, financing, and expertise to Somali businesses, helping to diversify the economy.
“Access to international, Sharia-compliant finance can be a powerful catalyst for private sector growth. By joining the ICD, Somalia opens a channel for investment and expertise that complements its own development efforts.”
, Osman Osman, JD (Juris Doctor), M.Sc. (Master of Science)
Managing Partner at Mogadishu Law Office
This release is provided for general information and does not constitute legal advice. Professional legal advice should be obtained before acting on any matter discussed here.