Somalia awarded its first mobile money licence to Hormuud Telecom on Saturday, in a move aimed at formalising the Horn of Africa country’s digital payments system and integrating it with the global financial infrastructure.
Hormuud Telecom began operating in Somalia in 2002 and has some 3.6 million subscribers among the country’s population of more than 15 million people. It said in a statement that around 3 million people use its mobile money platform EVC Plus.
By granting Mogadishu-based Hormuud the licence, EVC Plus will now be subject to central bank regulation, which should boost confidence in the country’s mobile money system, the governor of Somalia’s monetary authority said.
“The mobile money sector in Somalia has never been regulated, which added to the perceived risk of the financial sector in Somalia,” Abdirahman Mohamed Abdullahi told Reuters in a telephone interview.
“This will help for the sector to have corresponding banking relations and integrate with the international financial system,” he added.
More than two thirds of all payments made in Somalia are via mobile money platforms, Hormuud Telecom said, and the licence will help Somalia move towards becoming a cashless economy and tackle widespread counterfeiting.
“The news today cements what we’ve known for a long time, that Somalia is moving towards being the world’s first truly cashless economy,” Ahmed Mohamud Yuusuf, Hormuud Telecom’s chief executive said.
A 2018 World Bank report said approximately 155 mobile money million transactions, worth $2.7 billion, were recorded in Somalia per month.
“Mobile money has superseded the use of cash in Somalia, with over 70% of adult Somalis using mobile money services regularly,” the bank said at the time.
Somalia has been unstable since a civil war broke out in 1991 but the fragile internationally-backed government has been trying to rebuild its institutions and rejoin the global financial system, despite a relentless Islamist insurgency.