The Central Bank of Somalia has issued the first Mobile Money license to the country’s largest telecommunications provider, Hormuud Telecom. The move seeks to formalize the country’s digital payments system and integrate it with the global financial system.
Hormuud Telecom runs the Electronic Voucher Card or EVC Plus, a free mobile money service used by 3 million of its 3.6 million subscribers in Somalia. With the licence, EVC Plus will now be subject to central bank regulation, which should boost confidence in the country’s mobile money system.
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. 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.
According to the World Bank’s 2018 report, approximately 155 million transactions worth $2.7 billion are recorded per month in Somalia.
Mobile money services emerged ten years ago but remained unregulated. Thus, this new regulation formalizes digital transactions as the primary payment method within Somalia and enables further integration of the Somali financial system with the international financial system.
Hormuud Telecom Somalia is a privately held telecommunications company based in Mogadishu, Somalia.