MOGADISHU (Halbeeg News) – Mobile money superseded the use of cash in Somalia, with over 70% of adult Somalis using mobile money, the World Bank said Thursday.
The global lender noted that approximately 155 million transactions, worth $2.7 billion or 36% of gross domestic product (GDP), are recorded every month.
The mass adoption of mobile money raises concerns about the magnitude of system vulnerabilities, and potential macroeconomic effects in cases of disruptions – with potentially serious implications on the wider economy.
“As we explore in the latest Somalia Economic Update (SEU), customers have no guarantee that their e-money can be redeemed for cash, as there is no parity requirement between monetary value held virtually on the mobile money wallets and physical funds held on deposit,” the International Financial Institution said, “Know-your-customer (KYC) data used to identify clients and determining the risks of illegal intentions, is not systemically registered for mobile money wallets, and there are no formal frameworks to protect consumers in dispute cases.”
The lack of regulatory and supervisory oversight of mobile money services is a source of added concern.
Ensuring stability and reliability of the mobile money system is a priority, focusing on safeguards for consumer funds, improving compliance and risk management, reducing opportunities for fraud, strengthening regulatory reporting, and protecting consumer data.
“In the SEU, we recommend a phased-in approach for regulating mobile money services. The top priority must be to safeguard consumer funds and ensure continued and undisrupted service delivery. The second priority should be to strengthen service delivery via greater innovation, including stronger agent networks, internal controls, and holding providers responsible for agents,” the statement. “Once the protection of consumer funds and service delivery are guaranteed, it will be important to strengthen consumer protections, including data privacy, and create platforms for complaints and access to redress mechanisms. Regulation could then address the requirement for clear, consistent, and effective reporting and disclosures from providers.”
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