Incumbent President Hassan Sheikh Mohamud conceded defeat after two rounds of voting, and former prime minister Mohamed Abdullahi Farmajo was declared the new leader. "History was made, we have taken this path to democracy, and now I want to congratulate Mohamed Abdullahi Farmajo," Mohamud said.
The election took place under heavy security amid threats from extremist group al-Shabab, with a security lockdown closing the capital's international airport and cleared major streets.
Celebratory gunfire rang out in the capital, Mogadishu, from soldiers supporting Farmajo, police said.
"This victory represents the interest of the Somali people. This victory belongs to Somali people, and this is the beginning of the era of the unity, the democracy of Somalia and the beginning of the fight against corruption," Farmajo said after taking the oath.
Years of warlord-led conflict and al-Shabab attacks, along with famine, have left this Horn of Africa country of about 12 million people largely shattered.
Across Mogadishu, Somalis gathered around TV screens at cafes and homes, eagerly watching the vote.
"I hope they will not choose bribes over the interest of the people." said Ahmed Hassan, a 26-year-old university student, who sat with dozens of men in front of a large television screen. "We need an honest leader who can help us move forward."
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