Somaliland leads world to cash-free culture
Abdul Rashid has sold sweet Somali tea on the muddy streets of Hargeisa, Somaliland for decades.
As night falls in the capital and the faithful flood out of a mosque, a handful congregate around his rickety table.
While he pours from a flask into paper cups, buyers type a string of numbers into mobile phones, take their tea and go on their way.
A cup of Mr Rashid’s tea costs 2,000 Somaliland shillings – equal to $0.25 Dh0.92 – and his customers pay almost exclusively with their mobile phones.
“I never see cash,” he tells
The National.
Mr Rashid is not alone. Across Somaliland, which declared independence from Somalia in 1991 but is yet to gain recognition from the international community, people are turning away from cash and embracing mobile money.
This makes the region, with its tiny, livestock-dependent economy, a candidate for the
world’s first cashless economy. “It is the most incredible service we have,” says Abdinasir Hersi, director general of Somaliland’s Foreign Ministry.
Mr Hersi was buying a new mobile phone, using the one he already had, in the clean but soulless Deero Mall in downtown Hargeisa.
“It’s so inclusive, whether you are in a rural area or in the city,” he said.
From roadside stalls selling qat, a chewing leaf with mild narcotic properties, to more high-end malls, cash is rare.
Instead, buyers punch in numbers and the seller’s code into their mobile and the money is transferred immediately.
For now there are no fees, as two main companies – eDahab and Zaad – control the market. Cash can be quickly withdrawn from, or added to, mobile accounts at special outlets that dot the streets of Hargeisa.
Musab Mohamed, who sells home furnishings and accessories from a shop in central Hargeisa, says more than 90 per cent of his customers now use digital payment. The World Bank says 73 per cent of the adult population of Somalia, including Somaliland, now relies on mobile money.
With low rates of literacy and just a handful of ATMs, Somalilanders are attracted to the simplicity of mobile money. Because it does not require a smartphone or internet access, even the most rudimentary mobiles can be used.
It also eliminates the threat of theft posed by carrying large quantities of cash.
But it is currency troubles that spurred the technology’s extraordinary growth over the past five years. Since its introduction in 1994, the value of the Somaliland shilling has fallen every year.
Once the currency of choice for weapons smugglers as war raged in neighbouring Somalia, and then opportunist politicians who printed it with abandon to fund political campaigns, the shilling now trades at about 10,000 to the US dollar.
Its fluctuations are such that the central bank texts the dollar exchange rate to every Somaliland-registered mobile phone each morning. The 500 and 1,000 shilling notes are the most common and $100 (Dh367) will set you back a million shillings.
“You can’t carry a million shillings in your hand,” says Mustafa Ali, who sells drinks and cigarettes from the Rayaan corner shop in Hargeisa. “You would need a wheelbarrow.”
When a drought struck Somaliland two years ago, ripping through farming communities and destroying livelihoods, those living and working in cities and towns such as Hargeisa and Berbera used mobiles to send cash to needy relatives.
So extensive is the technology’s reach today that many receive their salaries through Zaad or eDahab. Minister of Telecommunications Abdiweli Jibriil says even ministries used mobile money during particularly tough times for the Somaliland shilling.
“It is the main platform for payment in Somaliland,” Mr Jibriil said. “It reduces the costs of transactions between people and allows rural areas to make a formal contribution to the economy.”
There are concerns about the over-reliance on US dollars, which are traded on the platforms, and the growing power of Zaad and eDahab, which have monopolised the market and sidelined the country’s central bank.
Mr Jibriil says such fears spurred government regulation to fight inflation. People now have to use shillings for digital purchases worth less than $100.
Zaad is owned by Telesom, a telecoms company in Hargeisa. EDahab is owned by Dahabshiil, an international money transfer company with its headquarters in Dubai.
Although mobile money has been used in Somaliland for more than five years, larger African nations, from Rwanda to Ghana, have had their own dalliances with the technology.
Most notable is Kenya, one of the continent’s largest economies, where half the population of 48 million people regularly uses M-Pesa, a mobile money app.
Farther afield, some European nations such as Estonia and Finland have also embraced mobile money.
Its effect is not always beneficial. A new economic crisis is gripping Zimbabwe where the government effectively printed billions of now-worthless electronic dollars. Once again, shop shelves in the capital Harare are bare.
But in Somaliland, with its small impoverished population and minuscule economy, mobile money has so far been a powerful force for good.
From the lively streets of Hargeisa to the republic’s arid countryside, Somaliland is not the obvious setting for a technological revolution. But its slow pioneering march towards a truly cashless society might just offer an example for the world.
So extensive is the technology’s reach today that many receive their salaries on Zaad or eDahab