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In the deadliest attack since the election of President Mohamed Abdullahi Mohamed -- nicknamed Farmajo -- the vehicle exploded at an intersection packed with civilians, traders and security forces.

"A suicide car bomber blew himself up inside this market at a busy time, killing at least 20 people and many others were also injured," said Ahmed Abdulle Afrah, the district commissioner of Mogadishu's Wadajir district.

Final death tolls in attacks in Somalia are difficult to establish, as relatives, public and private ambulances ferry the injured and dead away.

"There were many small-scale traders alongside the road and tea shops and restaurants. There were also members of the security forces and shoppers and the blast was so huge that it killed nearly 20 people, most of them civilians," said witness Sumayo Moalim.

The Al-Qaeda-linked Shabaab group had not claimed the attack, however it came on the same day as the group threatened to wage "vicious war" against Farmajo and his new government, according to the SITE intelligence group which monitors jihadist accounts.

The president, via Twitter, described the attack as "horrific" and shared pictures of himself visiting victims in hospital. Local media also reported he had offered a $100,000 reward for information on who carried out the attack.

A senior Shabaab official, Sheikh Hassan Yaqub Ali, said in a speech broadcast on a radio station linked to the group, that Farmajo was considered more dangerous than past presidents as he held joint American citizenship.

The blast brought international condemnation, with the European Union describing it as "yet another act of terror targeting the Somali people by those wanting to undermine progress towards a stable and secure Somalia".

The bloc added it stood behind Farmajo's efforts to bring security to his nation and build strong institutions.

The latest attack underlines the challenge facing the new president, who has inherited an administration with limited control over Somali territory due to the presence of Shabaab, and is heavily propped up by the international community.

AU troops drove Shabaab militants out of Mogadishu in August 2011 but the fighters continue to control rural areas and launch repeated attacks in the capital.

- 'I will need time' -

Farmajo's inauguration takes place on Wednesday, although he officially took office this week at a ceremony marred by a series of Shabaab mortar strikes near the presidential palace which left two children dead.

AU troops drove Shabaab militants out of Mogadishu in August 2011 but the fighters continue to control rural areas and launch repeated attacks in the capital.

Farmajo, whose brief stint as prime minister in 2010-11 showed him to be a no-nonsense leader set on improving governance and cracking down on corruption, is hugely popular in Somalia.

But he faces enormous difficulty in turning around one of the world's foremost failed states.

"I need the Somali public to understand how much the government is in need of their support. Government will need enough time to address things," the president said during the ceremony.

Somalia's limited election process, in which only several thousand delegates voted for lawmakers, is seen as a step toward full democracy.

Somalia has not had an effective central government since the collapse of Siad Barre's military regime in 1991, which led to civil war and decades of anarchy.