The growth of digital currency has influenced the Somalia markets where the mobile revolution has created an informal electronic banking system. Somalia becomes one of the world’s highest rates of digital transactions and the leading markets for mobile banking platforms in Africa.
It has been recognized by renowned individuals such as Bill Gates of Microsoft and international finance and development institutions for its innovations and customer reach. Most transactions are on Zaad and Edahab, services of the biggest mobile phone companies’ use across all Somalia (Telesom & Somtel). A survey last year found that the average customer made 34 transactions per month – a higher rate than almost anywhere else in the world.
Once clients have registered for the service, they can deposit cash with the mobile phone company and credits are loaded onto their phone. They can then send to other people signed up for the service at the press of a button.
People are using mobile-money services, mainly to transfer money to family members or business partners in distant locations, but ever more for bill payments and small loans.
Mobile Money Transfers (Zaad/Edahab) have played a vital role in the Somali economy for many years, functioning effectively despite chronic conflict and absence of government.
Despite all these positive aspects, the mobile money also, has drastically increases the corruption, cost of crime, fraud which mainly blamed on weak internal controls, limited training and cyber-based fraudsters. also, the digital currency (Zaad & Edahab) caused an inflation and Instability of exchange rates where the local currency become less value. a good example, the case of Somaliland, where the local currency (Somaliland Shillings) became less value and the quantity of US Dollar in Somaliland’s Forex market has become very low while SL Shillings is being pumped into the local market and it caused an inflation.
Furthermore, regulatory authorities are required to make sure that mobile banking service providers maintain liquid assets equivalent to the total value of the customer funds collected. Mobile platforms can inherently provide complete trace-ability of all transactions, thereby ensuring security, authentication and compliance. Also, to assess the Money Laundering and Terrorist Financing Risks and for protecting Mobile Money against Financial Crimes. Since, FATF's Recommendation 29 requires supervisors to have adequate powers to monitor and ensure compliance by financial institutions with requirements to combat ML/TF, including the authority to conduct inspections. M-money is a new category of financial activity involving role players who are not necessarily overseen by financial supervisory agencies.
It has been recognized by renowned individuals such as Bill Gates of Microsoft and international finance and development institutions for its innovations and customer reach. Most transactions are on Zaad and Edahab, services of the biggest mobile phone companies’ use across all Somalia (Telesom & Somtel). A survey last year found that the average customer made 34 transactions per month – a higher rate than almost anywhere else in the world.
People are using mobile-money services, mainly to transfer money to family members or business partners in distant locations, but ever more for bill payments and small loans.
Mobile Money Transfers (Zaad/Edahab) have played a vital role in the Somali economy for many years, functioning effectively despite chronic conflict and absence of government.
Despite all these positive aspects, the mobile money also, has drastically increases the corruption, cost of crime, fraud which mainly blamed on weak internal controls, limited training and cyber-based fraudsters. also, the digital currency (Zaad & Edahab) caused an inflation and Instability of exchange rates where the local currency become less value. a good example, the case of Somaliland, where the local currency (Somaliland Shillings) became less value and the quantity of US Dollar in Somaliland’s Forex market has become very low while SL Shillings is being pumped into the local market and it caused an inflation.
Furthermore, regulatory authorities are required to make sure that mobile banking service providers maintain liquid assets equivalent to the total value of the customer funds collected. Mobile platforms can inherently provide complete trace-ability of all transactions, thereby ensuring security, authentication and compliance. Also, to assess the Money Laundering and Terrorist Financing Risks and for protecting Mobile Money against Financial Crimes. Since, FATF's Recommendation 29 requires supervisors to have adequate powers to monitor and ensure compliance by financial institutions with requirements to combat ML/TF, including the authority to conduct inspections. M-money is a new category of financial activity involving role players who are not necessarily overseen by financial supervisory agencies.
Abdihakim Hashi (Dalmar)
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