Leading African nations in mobile money traffic great merit for Somalia—WB
New report on African nations’ Economic Update complied by the World Bank (WB) has spotted Somalia’s economy as emerging leaders in the continent’s drive to mobile money transactions, saying the economy is projected to grow at an annual rate of 3-4%.
The report titled ‘Rapid Growth in Mobile Money: Stability or Vulnerability?’ further assessed Somalia’s vibrant mobile money market and provides recommendations on introducing mobile money regulation that can boost a secure system for widespread financial inclusion.
Mobile money in Nigeria is still at a lower level of penetration, but a consortium of telecoms operators led by the Association of Licenced Telecoms Operators of Nigeria (ALTON) recently called on the federal government to consider opening up the industry to allow them take leading role.
According to them, Nigeria will leapfrog to 90m uptakers on 30 months should ALTON members allowed to drive the scheme currently handled by special purpose vehicles who ride on their networks.
Business Hilights gathered that the report provided a comprehensive analysis of economic data, trends and outlook and sets out a series of recommendations to stimulate reform, growth and improved fiscal performance.
On the special focus of the report on mobile money, World Bank despite Somalia’s economic fragility linked to years of internal wars and underdeveloped financial institutions, Somalia has one of the most active mobile money markets in the world, outpacing most other countries in Africa.
According to the report, approximately 155 million transactions, worth $2.7 billion, are recorded per month. Read more: Somalia unveils project to improve municipal infrastructure delivery
Mobile money has superseded the use of cash in Somalia, with over 70% of adult Somalis using mobile money services regularly. This presents exciting opportunities for the country.
In his remarks, Tim Kelly, Lead ICT policy specialist at the World Bank averred that “Private sector actors have given Somalia a unique opportunity to leapfrog towards widespread financial inclusion. We will continue to support the partnership between the Central Bank of Somalia, the National Communications Authority and the key private sector actors as they deliberate on an appropriate regulatory framework for the sector”.
The World Bank noted that the mobile money sector lacks robust consumer protection, and know-your-customer requirements.
The mass adoption of services – while impressive – presents opportunities for promoting financial broadening and deepening that will lead to more competition and contestability in the financial services market.
The challenge for policymakers and regulators is how to mitigate system vulnerabilities and avoid macroeconomic effects in the event of service disruptions.
Also commenting, Thilasoni Benjamin Musuku, senior financial sector specialist at the World Bank Finance, Competitiveness and Innovation Global Practice and co-Lead Author of the SEU said “Reducing costs and promoting greater stability is a top priority for the overall development agenda for the financial sector, ensuring that regulation does not stifle innovation by levelling the playing field is a very close second. There is a need to improve the balance between cooperation and competition between banks, MNOs and other non-bank financial institutions and ensure better integration of mobile money within the broader financial system. This is key to deepening and broadening the financial services market in Somalia for inclusive growth.”
