More phones, few banks and years of instability are transforming Somalia to a cashless society



Mogadishu, Somalia–Ahmed Farah Hassan no longer carries the tattered Somali shilling notes that were the currency of his war-torn country’s economy for years.

At a gas station in Mogadishu recently, the 32-year-old filled up his car and then paid with a few clicks of his phone.

“It’s easy nowadays. I don’t need to carry my cash. I just use my phone to pay bills everywhere I buy goods and services,” said Hassan, a driver at the Kheyre Development and Rehabilitation Organization, a local NGO that works with UNICEF to help street children. “Everyone here has his own bank. It’s safe.”

In the streets of Mogadishu, the future has arrived: cash is disappearing, credit cards are unnecessary, and daily shopping is speedy and digital.

While Kenya is now well-known as a global leader in mobile money technology and implementation, Somalia is often overlooked in the same discussion even though the same technology is having a more profound impact on the populace. That is because the country’s banking system—devastated by years of conflict and economic disruption—have been supplemented, if not replaced by, mobile money.

The Hormuud Telecommunication Company, a Somali firm established in 2002 during a lull in violence, introduced mobile banking in the East African country around six years ago. Now, it is one of at least three companies offering mobile money transfers in Somalia, where 51 out of every 100 people has a mobile subscription (compared to 22, only three years ago), and around 40% of adults use mobile money accounts, according to 2014 data from the World Bank(pdf).

Somalia has for decades been described as the sick man of the sub-Saharan Africa in terms of trade and economic stability after two decades of civil war and terrorism.

However, the country has achieved a semblance of stability in recent years, and its capital Mogadishu has become a hive of activity. Somali businesses line the streets of the city center. Mobile-phone wielding consumers buy groceries at the supermarket, oranges from market stalls, shoe shines on the street, cups of sweet milky tea at open-air cafés, and even an afternoon’s worth of khat, a herbal drug favored by many Somalis.