The Central Bank of Somalia has issued the first Mobile Money license to the country’s largest telecommunications provider, Hormuud Telecom as the country moves to formalize digital payments system and integrate it with the global financial system, the Kenyan Wall Streets reports.
With over 3.6 million subscribers using Hormuud Telecom’s Electronic Voucher Card or EVC Plus, a free mobile money service, the licence will make it now subject to central bank regulation, which should boost confidence in the country’s mobile money system.
More than two-thirds of all payments made in Somalia are via mobile money platforms, Hormuud Telecom said, and the license will help Somalia move towards becoming a cashless economy and tackle widespread counterfeiting.
The circulation and use of Somali banknotes has been declining because little new paper currency has been printed, and also the absence of central monetary policies. Nevertheless, private businesses have flourished in Somalia, where unregulated mobile money is extensively used for most buying, selling and transfers.
“The mobile money sector in Somalia has never been regulated, which added to the perceived risk of the financial sector in Somalia. This will help for the sector to have corresponding banking relations and integrate with the international financial system”Governor of Somalia’s Monetary Authority, Abdirahman Mohamed Abdullahi
A 2018 World Bank report said approximately 155 mobile money million transactions, worth $2.7 billion, were recorded in Somalia per month. Mobile money superseded the use of cash in Somalia, with over 70% of adult Somalis using mobile money services regularly.
Although the EVC Plus recognizes both Somali and U.S. dollars, it only operates on dollars because Somalia’s economy is being dollarized due to devaluation.