Somalia issues first mobile money licence

Somalia has taken a significant step towards formalizing its digital payment system by issuing its first mobile money license to Hormuud Telecom. The move aims to integrate Somalia's active mobile money market into the global financial infrastructure. Governor of Somalia's Central Bank, Abdirahman Mohamed Abdullahi, highlighted the importance of this development during a recent interview with CNBC Africa. Abdullahi emphasized that Somalia's mobile money service is one of the most active in the world, with a penetration rate estimated to be over 73%. The service provides accessible financial solutions to individuals and businesses, and is currently offered free of charge due to competition among telecom companies. This competitive environment has made mobile money an attractive option for the population. The emergence of mobile money services in Somalia dates back about 10 years, however, regulatory frameworks have only come into place recently due to the country's turbulent history. With the collapse of public institutions during instability and civil war, the rebuilding process, including establishing the Central Bank, has been challenging. Abdullahi noted that limited resources and staffing have contributed to the delay in implementing regulations for the sector. However, the Central Bank is now in a position to enforce regulatory standards and issued the first license to Hormuud Telecom. This move aims to enhance consumer confidence, ensure compliance with regulatory standards, and prevent financial risks. Abdullahi also mentioned that other telecom companies are lining up to apply for licenses, indicating a positive response to the new regulatory framework. The formalization of the mobile money sector under the Central Bank's supervision is expected to benefit the country's economy by providing accountability, reducing risks for consumers and investors, and enhancing the overall financial sector. The regulatory framework will enable the Central Bank to license and supervise mobile money service providers effectively, contributing to the country's GDP and strengthening its financial infrastructure.