Over the past decade, fintech has revolutionized the way we think about money transfer and finance. In Somalia, where traditional banking are confined to major cities, fintech has played a particularly important role in enabling financial inclusion and promoting economic growth.
Somalia is widely regarded as a hub for remittances, with an estimated 2 million Somalis living abroad and sending money back to their families and communities., For many years, the country lacked a reliable and efficient system for transferring money. Traditional banks were few and far between, and those that did exist were often confined to big cities, and very in efficient. As a result, many Somalis turned to informal methods of money transfer, such as hawala networks, which were often risky and unreliable.
Fintech has helped to change this situation, by providing secure and efficient methods for transferring money across borders. Companies like Hormuud have developed innovative mobile money platforms that allow Somalis to send and receive money using their phones, without the need for a traditional bank account. These platforms have become hugely popular in Somalia, and have helped to promote financial inclusion and economic growth.
But fintech has not just transformed money transfer in Somalia – it has also revolutionized the way we think about finance more broadly. Through digital lending platforms, Somalis can now access credit more easily than ever before, without the need for collateral or a lengthy application process. This has given small businesses and entrepreneurs the opportunity to grow and expand, which in turn has helped to drive economic development in the country.
However, fintech is not without its challenges. As the industry continues to grow, there is a need for robust regulation and oversight to ensure that consumers are protected and that the financial system remains stable and secure. There is a need for continued investment in digital infrastructure and education, to ensure that all Somalis have access to the tools and resources they need to participate in the digital economy.
The fintech companies like Hormuud have played a crucial role in promoting financial inclusion and economic growth in Somalia. By providing reliable and efficient methods for transferring money and accessing credit, Fintech has helped to create opportunities for millions of Somalis, and has paved the way for a more prosperous and connected future.
Indeed, Hormuud Telecom has played a vital role in providing a lifeline for Somalis, particularly in remote and underserved areas. Through its mobile money platform, EVC Plus, Hormuud has enabled millions of Somalis to access financial services and participate in the digital economy.
However, the lack of a strong and stable government in Somalia has posed significant challenges for the fintech industry, particularly in terms of cybersecurity. Without proper National ID based on the latest biometric technology and oversight, fintech companies may struggle to comply with the stringent Know Your Customer (KYC) regulations.
It’s worth noting Hormuud EVC Plus, a mobile money service, uses biometric phone identification to prevent theft and robbery. Biometric data, such as fingerprints, makes it harder for a burglar to steal money. This technology secures mobile transactions by allowing only the phone and account owner to access funds. Biometric identification reduces theft and robbery, making Hormuud EVC Plus a safe and dependable mobile money service.
To address this issue, fintech companies & Federal Government in Somalia must work together to provide biometric based nation ID while investing in robust cybersecurity measures and work closely with the other stakeholders to develop effective policies and regulations. This may include measures such as encryption, multi-factor authentication, and regular security audits and testing.
The success of the fintech industry in Somalia will depend on the Government ‘s ability to build trust and confidence among customers and stakeholders, by prioritizing compliance and regulations such as KYC (know your customer) and AML (anti-money laundering) and working collaboratively to address the challenges they face.
It’s without a doubt that fintech companies can help to create a more secure and prosperous future for all Somalis.
Ismail D. Osman: Former Deputy Director of Somalia National Intelligence & Security Agency (NISA) – Writes in Somalia, Horn of Africa Security and Geopolitical focusing on governance and security. You can reach him firstname.lastname@example.org @osmando