Horn of Africa banking systems are transactional, not developmental: Banks focus on short-term commercial lending and profits rather than long-term investment in productive sectors like agriculture, manufacturing, infrastructure, and industrialization. 

Need to treat banks as strategic development tools: Governments should align financial policy with national development goals, using regulation, incentives, and public development banks to direct credit toward expanding productive capacity. 

Lesson from the Arabian Gulf: Development-oriented banking, integrated into national strategy, drives wealth creation; passive financial systems limit economic transformation even when institutions exist.

The central weakness in the economic strategy of many Horn of Africa states is not the absence of banks or financial institutions. It is the failure to recognize and mobilize them as strategic engines of economic development. While governments have often viewed banks as institutions that provide financial services, they have rarely treated them as instruments for transforming the productive structure of the economy.

This contrasts sharply with the experience of the Arabian Gulf. There, banks are not simply intermediaries........

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