The Central Bank of Somalia has issued Somalia’s first mobile money licence to the country's largest telecommunications provider, Hormuud Telecom, according to the Bank’s Governor Abdirahman Mohamed Abdullahi.

As a result Hormuud Telecom’s mobile money platform, EVC Plus, will now be formally regulated and financially backed by the Central Bank of Somalia.

Abdullahi confirmed the development at a high-profile gathering of government officials, Somali business leaders, foreign ambassadors and international aid organisations in Mogadishu.

In attendance from the government was the Minister of Finance, Dr. Abdriaham Bailleh, Minister of Planning, Amb. Gamal Hassan and the Minister of Communications and Post, Abdi Sheilk – who attended virtually from the US.

Formalising digital payments

According to a statement released to the media, the move formalises digital payments as the primary payment method within the country and will enable further integration of the Somali financial system with the international financial system.

Speaking on the announcement, Abdullahi said: “We are pleased to issue Hormuud Telecom with Somalia’s first ever mobile money licence.

“For over two years we have worked tirelessly to develop an internationally recognised regulatory framework for the financial system. This licence is the culmination of these efforts and ensures that digital payments are financially guaranteed by the Central Bank. As a result, Somali businesses, international investors and NGOs can continue to use Hormuud’s EVC Plus with renewed confidence.

“In formalising our existing digital payments infrastructure, we are accelerating the integration of Somalia’s financial system into the global economy.”

The accreditation means that money deposited through the EVC Plus platform will now be regulated by the Central Bank of Somalia. Existing self-regulating schemes mean that an EVC Plus customer’s deposit sits in a secure account that cannot be used for other purposes.

“However, formalisation of the process aims to provide domestic businesses, service providers, developmental agencies and international investors with increased confidence in digital payments,” the statement continues.

Mobile money vital

Speaking on the news, Hormuud Telecom’s CEO Ahmed Mohamud Yuusuf said:  “Mobile money is one of the most vital pieces of infrastructure for a functioning Somali economy, and is relied upon by Somali people.

“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.

“This issuing of a mobile-money licence for the first time is arguably one of the most important steps taken by Somalia since the end of the war.

“This accreditation is the next step along the path to a prosperous Somali economy. Establishing a more stable regulatory framework will benefit consumers and businesses within Somalia, as they can rest assured that their mobile money is reliable and accredited.”

In Somalia, mobile money is an essential component of the country’s economic infrastructure. It is currently estimated that over 95% of the physical Somali shilling is counterfeit, with over two thirds of all payments made in Somalia via mobile money platforms.

The accreditation marks over two years of work between Hormuud Telecom and the Central Bank of Somalia to establish internationally recognised regulatory frameworks in the financial system as part of a wider stabilisation effort by the Somali government.

EVC Plus was launched in 2011 as the first mobile money platform within Somalia.