Somalia’s open for business and strongly worth investors’ consideration
By: Ahmed Mohamed Yusuf, CEO, Hormuud Telecom
Somalia’s financial systems have improved and securitised exponentially over the last 10 years. The country is now on the cusp of becoming the world’s first cashless society, a reality that remains far off for developed economies such as the US and UK.
The introduction and adoption of mobile money over the past 10 years, culminating in Hormuud Telecoms being awarded the country’s first ever ‘mobile money licence’ by the Central Bank, is a mark of pride. Customer support of Hormuud’s EVC Plus mobile money payment system has propelled Somalia to world leader status in the use of ‘mobile money’ by population.
The latest reform by the Somali Central Bank introduced a central payments system which connects lenders, making payments easier for citizens everywhere. This means that the untapped market of Somali business is a ripe opportunity, at least for those savvy enough to seize this moment. This comes on top of debt-relief deal the Somali government secured with the World Bank and the International Monetary Fund last year.
Somalis and the Somali diaspora can now have confidence that when they carry out business in Somalia, they will have the same financial power they do elsewhere. The reforms and the security of Hormuud’s payment system is creating a Somalia where soon working abroad is a career perk, not a business necessity.
Proven domestic confidence in our improved financial infrastructure also showcases Somalia’s potential for foreign investment. This is not to say that investments are not without risk. Thirty years after our civil war, we are still dealing with protracted security issues, producing the sort of headlines in international press to discourage outside investment. All investments are risky, it is the nature of business. Investment in Somalia remains riskier than in most places, but with risk could come higher rewards.
60% of Somalia’s population is under 30 years old. They are scrappy, hardworking, and eager to grow their skills and better themselves and their country. They are tech savvy; 85% of Somalis use mobile money (compared to fewer than four in ten in Nigeria, Africa’s biggest economy, and far more than the populations of the UK and US). A World Bank report referred to Somalis as having a “well-known entrepreneurial spirit,” this cultural tendency in addition to our securitised financial systems should encourage foreign investment.
Despite mobile penetration, until this month Somalia’s financial set up meant that lenders could only interact with each other on an extremely limited basis. This made payments needlessly difficult and reinforced a reliance on the US dollar while holding back businesses looking to grow across the country. Thankfully, this is now poised to change.
Somalia received no foreign investment for a 20-year period up until 2013. Early investors in Somalia understood, to see it simply as the headlines portray it is short-sighted. Somalia’s economy will likely expand 2.9% this year, according to the IMF. The amalgamation of this and Somalia’s new payments system should propel foreign investors forward into the state with confidence.
Hormuud is proud to work with the government to provide the foundations necessary for domestic and foreign investment, raising Somalia’s standing on the world stage. Our focus continues to be on enriching the lives of Somalis and building conditions in which Somali entrepreneurs can thrive.
