Mobile Money in Somalia: A double-edged sword of financial inclusion and economic risk

[Deeq A.]

In recent years, Somalia’s financial landscape has undergone a profound transformation thanks to mobile money platforms such as EVC Money, operated by Hormuud Telecom, and ZAAD Money from Telesom. In a country where traditional banks remain inaccessible or scarce for much of the population, these digital services have emerged as essential tools, enabling millions of Somalis to participate more fully in the economy.

Transforming Somali Commerce and Society

Mobile money has revolutionized how Somalis conduct business and manage their finances. Entrepreneurs and small businesses benefit immensely from instant, cashless transactions, enabling faster payment of employees and suppliers as well as smoother customer interactions. This shift has spurred local economic growth and encouraged investment in micro and small enterprises.

Perhaps one of the most significant impacts of mobile money is its role in financial inclusion. Large segments of the population—especially women, youth, and those living in rural areas—now have access to financial services through their basic mobile phones. No longer confined to traditional banking’s limited reach, they can save, borrow, and spend securely, reshaping Somalia’s economic participation from the ground up.

Additionally, Somalia’s heavy reliance on remittances from its global diaspora has been streamlined. Mobile money platforms allow families to receive funds more quickly, safely, and with fewer transactional hurdles, thereby injecting vital income into local economies and households.

Challenges and Risks Ahead

Despite these transformative benefits, mobile money services in Somalia face significant challenges that threaten the sustainability of their impact. One of the foremost concerns is the dominance of the U.S. dollar on these platforms, which—coupled with a weak and counterfeit-prone Somali shilling—has exacerbated inflation and accelerated the depreciation of local currency. As mobile money facilitates rapid money flow without a proportional increase in goods and services, inflationary pressures continue to mount.

The technological backbone supporting mobile money also reveals vulnerabilities. Dependence on stable telecommunications infrastructure means that network outages or cyber-attacks could potentially disrupt economic activity for entire regions, eroding user confidence.

Moreover, Somalia currently lacks comprehensive regulatory frameworks for digital financial services. This regulatory gap leaves users exposed to fraud, operational risks, and limited avenues for recourse in the event of service failures or disputes. Furthermore, a lack of interoperability between different mobile money services limits market efficiency and user flexibility.

Lastly, despite their reputation for inclusivity, platforms like EVC and ZAAD inadvertently exclude marginalized groups—especially the elderly, illiterate, or those without mobile phone access—highlighting the need for strategies to bridge these divides.

Looking Toward a Balanced Future

Mobile money services have undeniably opened new pathways for economic engagement and empowerment in Somalia. However, without deliberate actions to address their risks, these advances may contribute to long-term instability.

Experts suggest a multifaceted approach to sustain progress: creating robust digital financial regulations, investing in reliable telecommunications infrastructure, fostering financial literacy across all population segments, and promoting the Somali shilling’s stabilization and increased use within mobile platforms. Such measures are essential to harness the promise of mobile money while mitigating its economic vulnerabilities.

EVC and ZAAD stand at a crossroads between opportunity and risk. Their continued integration into Somalia’s economy demands balanced policies and regulatory reforms to ensure that mobile money remains a catalyst for inclusive and sustainable development—rather than a source of inflationary pressures or financial exclusion. As Somalia navigates this critical juncture, building stronger institutions and inclusive digital ecosystems will be key to securing a prosperous economic future for all its citizens.

Salim Abdullahi Elmi
Senior Advisor – Protocol Department
Ministry of Foreign Affairs and International Cooperation
Federal Republic of Somalia

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