The Horn Of Africa States: The Region’s Need For More And Better Accountants And Bankers

A banker without reliable information is a pilot flying through fog. An accountant helps turn on the radar.” This is one of the sayings mostly used by profesional accountants, when introducing the subject in major speeches or lectures.

The region of the Horn has no shortage of entrepreneurs, traders, and ambitious business owners. Across it, family enterprises have built impressive commercial networks, moved goods across borders, created employment, and survived in some of the world’s most challenging business environments. But when these businesses knock on the doors of banks seeking finance, many encounter a familiar question, “Where are your financial statements?”

For many entrepreneurs, the answer is uncomfortable. The business may be profitable, but the numbers exist mostly in the owner’s head, in handwritten notebooks, or in informal records understood only by family members. To the entrepreneur, the business is obvious. To the banker, it is a mystery.

This is where the Horn’s financial development challenge begins. The region does not only need more banks. It needs better information. And that means it needs more and better accountants. It is the missing link between businesses and banks.

Banks are often described as engines of economic growth. They collect deposits and transform them into loans that finance businesses, infrastructure, and investment. But even the best-run bank cannot lend confidently without knowing who is borrowing, how much they earn, and whether they can repay. Credit decisions depend on trust, but modern finance requires more than trust. It requires evidence.

A banker cannot approve a large loan based on a customer’s reputation alone, even if the customer is respected throughout the community. The famous phrase “everyone knows him” may work in a village marketplace, but it rarely satisfies a modern credit committee.

This is why accounting matters. Financial statements are not simply documents prepared for tax officials or auditors. They are the bridge between businesses that need capital and financial institutions that have capital to provide.

Where accounting systems are weak, banks become cautious. They demand more collateral, limit lending, or focus only on large established companies. Smaller but potentially successful enterprises remain trapped without the financing needed to grow. It is the challenge of many family businesses in the region.

Much of the private sector in the region consists of family-owned enterprises. These businesses have been among the region’s greatest economic assets. They understand local markets, build customer loyalty, and often demonstrate extraordinary resilience. However, many remain informal in their management systems even when their commercial activities have become significant.

A company may import millions of dollars of goods but still lack audited financial statements. It may employ hundreds of workers but have no structured financial reporting system. It may generate strong profits but struggle to prove its performance to an outside investor.

The irony is that some of the region’s strongest businesses are sometimes invisible to the very financial institutions that could help them expand. Governments cannot build modern economies without financial transparency. They have an important role to play. A modern economy requires more than entrepreneurs and banks; it requires rules that encourage transparency. Many countries in the region have laws requiring companies to maintain financial records and submit reports, but the challenge is enforcement.

When companies can operate indefinitely without producing proper accounts, governments lose valuable economic information, tax systems become weaker, and financial institutions face greater uncertainty. A country cannot effectively manage an economy that it cannot measure.

Strengthening corporate reporting requirements, improving auditing standards, and supporting professional accounting institutions should, therefore, be viewed as economic development policies, not merely administrative reforms.

But accountants alone will not solve the problem. Although better accounting is necessary, it is not sufficient. The region’s financial sector faces wider structural challenges. Political instability in parts of the region remains a major obstacle. Investors and banks naturally become cautious when governments change unpredictably, conflicts emerge, or economic policies shift suddenly.

Weak legal and judicial systems create another problem. Lending depends on contracts. If recovering debts through courts is slow, expensive, or uncertain, banks will naturally reduce their willingness to lend.

Credit information infrastructure also remains underdeveloped in many markets. Without reliable credit bureaus and information-sharing systems, banks struggle to distinguish between responsible borrowers and risky ones.

Macroeconomic pressures add another layer of complexity. Inflation, currency volatility, and fiscal challenges can undermine business confidence and make long-term lending more difficult. In Somalia, they seem to have chosen just to stay with foreiign currencies, mostly the United States Dollar, not bothering with the local Somali Shilling as a currency!

Finally, the size of the informal economy remains a defining feature of the region. Informal businesses provide livelihoods for millions, but their lack of registration and financial records limits their access to formal finance.

The answer is not simply to demand that businesses become more formal. Banks themselves must continue to improve. Traditional banking models based heavily on collateral often exclude businesses with strong ideas but limited assets. Modern banking requires better risk assessment, improved technology, stronger customer analysis, and greater understanding of small and medium-sized enterprises.

The best banks of the future will not simply ask, “What property can you pledge?” They will ask, “What business model do you have, what are your cash flows, and what evidence supports your growth potential?” And that requires better bankers working alongside better accountants.

The Horn has many of the ingredients needed for economic transformation in the form of a young population, strategic geography, entrepreneurial energy, natural resources, and growing regional trade. But capital cannot efficiently reach opportunity without information.

Accountants make businesses visible. Bankers make capital available. Governments create the rules that allow both to function effectively. The region does not need to choose between accountants and bankers. It needs both.

The next generation of economic growth may not be built only by entrepreneurs opening new businesses or banks opening new branches. It may also be built quietly by accountants preparing accurate financial statements, auditors strengthening trust, and regulators creating systems where transparency becomes the normal way of doing business.

In the long journey toward economic transformation, bankers provide the fuel. Accountants provide the map. And every successful journey requires both!