Somali Government should take the leadership and courage to recognize and reap in the unexplored benefits of digital economy and ICT so that Somalia can reach new heights as far as development is concerned. Somalia Needs a visionary who has the courage to take the first leap.

1. Ali Said Mohammed (Nacnac)
LinkedIn id: https://www.linkedin.com/in/alinacnac
Digital Economy for
Somalia
How it can help the Nation

2. What is the digital economy?
The digital economy has certainly changed the way business is conducted worldwide and
how we live our lives. But the digital economy is not just about connectivity as normal
perception has been, but it is about ensuring that people from all walks of life receive
adequate facilities related to education through modes of communication. It also helps
to track the progress made by human in their lives in other parts of the world too. The main
impetus of the digital economy lies in how it allows citizens to be active game changers in
their communities.
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3. Digital Economy in Africa
With the long-standing initiative of the World Bank, most of the
African countries have started to embrace the digital influence in
their economies. The African people, by and large, have started
to understand how technology has dramatically changed every
single aspect of their lives and businesses, including the way they
shop, communicate, travel and work.
It was emphasized in the recent initiative by the World Bank named the
Digital Economy for Africa or the DE4A which brought the Central Bank
Governors and Finance Ministers of many African countries, many tech
giants, global digital entrepreneurs and development partners under one
platform. This initiative also emphasized upon the fact that digital changes
are transforming and enabling the developing countries to rapidly move
past decades of industrial development. There is no doubt that the digital
economy has huge potential in Africa but to fulfill its true potential there is a
need that the five pillars of the digital economy must be firmly in place.
These are- digital infrastructure, financial services, literacy and skills,
innovation and digital entrepreneurship.
The World Bank initiative has underlined the impact of the digital economy as a driver of growth,
emphasized upon how to build the framework and explored the risks of being untouched by this
impact. One of the perceived goals of the DE4A is to enhance connectivity among the
countries in this region and bring the poor (in both urban and rural areas) to the ambit of
digital government and financial services, information and markets. Through this, they are
looking forward to building a platform for raising the digital literacy level and establishing a
skillset towards a vibrant digital entrepreneurship.
Many African countries have embarked upon the path towards the digital economy. Senegal has
targeted to generate 10 % of its GDP from the digital economy by the year 2025. Rwanda has
started to deliver digital e-governance services, based on fast 4G fiber connectivity, across the
country. Kenya has been one of the premier beneficiaries of mobile money over the years.
For actively participating in this digital revolution, affordable and available internet connectivity is
a must. However, the African region is yet to be fully exposed to the broadband
infrastructure. Only about 25 % of people have accessibility to the internet and out of 25
least-connected countries in the World, 21 lies in this region. One way of ensuring this it will be
to focus on establishing effective business models for connectivity and facilitating the regulatory
environment towards private sector investment.
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The African people, by and large, have started to understand how
technology has dramatically changed every single aspect of their lives

4. Economic welfare and Somalia
As stated by the World Bank, the state institutions of Somalia collapsed inside two years of
the civil war in 1988. During this time, most of the social and economic assets and
infrastructure were destroyed. But, as per another report of the World Bank in 2003 [1], in
spite of the non-functioning of the state-run institutions the private sector in this country
showed impressive growth initially. Gradually, many of these sectors experienced stagnancy
because of lack of trained manpower, investment, proper regulatory and legal framework and
quality control. Moreover, due to the absence of formal financial and banking services in the
country, it was impossible to encourage domestic savings and hence, capital formation was
not happening at all. The long absence of a stable national government also prevented
the country from accessing the international capital markets and in establishing
economic management institutions.
Economists have divided opinions on the impact of the civil war on the Somalian economy.
In a research conducted in 2007 [2], Peter. T. Leeson pointed out that the collapse of the
Somali state, in fact, has boosted the economy as 14 key development indicators becoming
positive during 2000-2005v, as compared to 1985-1990. Economists Ryan Ford, Benjamin
Powell, and Alex Nowrasteh are of the opinion that the relative economic performance of
Somalia has shown signs of improvement during the phase of statelessness and it was faring
much better under anarchy. [3]. But another economist Ersun Kurtulus is of the opinion that
the fall of a state may improve civil and personal liberties, but such a theory often ignores the
exogenous factors impacting the state economy and over-emphasizes the endogenous
factors prevailing in the domestic environment.
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The long absence of a stable national government also prevented
the country from accessing the international capital markets and in
establishing economic management institutions.

5. Impact of globalization on the economy of Somalia
Somalia had to go through a phase of statelessness for a duration that is much longer than any
other country in the modern world and it also ranks among the lowest countries as per the
Human Development Index by UNDP. Therefore, it will only be fair if we judge Somalia as one of
the countries left out from the ambit of the new global technologies, politics, markets, and
cultures.
Globalisation, in fact, is the assembly of influences and trends (concepts, ideas, ethics,
knowledge, technology, behaviours etc) across barriers (linguistic, ethnic, cultural, political,
religious and environmental). Different people react differently towards globalization and some of
these trends are accepted by groups, while some others are rejected out rightly. The same thing
applies to Somalia as well.
The end of the Somali Civil War and the subsequent collapse of the State were influenced, in
some ways, by the impact of globalization, though there are other endogenous factors leading to
these as well. On the other hand, the assimilation of globalization in the country was hastened
by the fall of the state as the absence of the command and control of the erstwhile state
facilitated the penetration of the ideas and trends of globalization.
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Some of the key indicators of Globalisation are a fast inflow of FDI,
rapid expansion in communications, dynamic changes in trade, rapid
capital movements…
Globalization is affecting Somalia through direct or indirect changes in its major markets.
Increasingly integrated economic activities, global markets, financial flows, and investments are
making the national policies less effective. As we are aware of, some of the key indicators of
Globalisation are a fast inflow of FDI, rapid expansion in communications, dynamic
changes in trade, rapid capital movements etc. But for successful implementation of these
ideal scenarios, countries need to be liberal enough with a lower degree of market regulations
and they must possess a certain standard of physical infrastructure and human capital. But,
Somalia, in its current state, is in doubt of meeting any of these ideal scenarios of economic
globalization. No doubt, with the collapse of the state and the subsequent disappearance of the
"government" influence on the economy, deregulation has come into effect.
This has allowed the impact of globalization to go deeper than any other
African country. In presence of a strong government, market
regulation measures would have slowed the progress down.

6. Nowadays, Somalia is well-integrated into the
global markets. Telecommunication and the free
exchange rate, for example, can take credit for this.
Additionally, the negotiability of direct taxes and the
non-existence of distortions are major steps towards
building an efficient incentive framework in future.
This is a phase of transition for the Somali economy and it
remains to be seen how a country without the desired level of social
and economic infrastructure, a favourable policy environment and a competent
workforce can embrace the global economy in its full flow
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Another effect of the globalization can be seen in the environment of a country. Globalisation
can very well impact the environment by creating demands for resources or crops that are
harvested in different environmentally unsustainable ways. Globalisation, these days, call for an
effective system of environmental governance where people can use and have access to
environmental services and goods in an eco-friendly manner. But, when it comes to Somalia,
the communities traditionally struggled due to an absence of basic resources like water.
Global effects like a change in climate patterns may further affect rainfall in the country, which
may further limit the use of natural resources here.
Another important point in relation to the impact of Globalisation on Somali economy is that there
exist several local administrators in different parts of the country, but these are rooted in
corruption. Although deregulation of the market is an important feature of globalization in Somalia,
it is not quite the ideal free-market economy by any means. It is plagued with impediments such
as lack of a legal framework, lack of security and lack of regulatory practices etc.
Another field where local private investors are getting benefits from the absence of the state
machinery and market regulation is the field of power generation. Most power generators are
earning profits by selling their surplus power to others. They are forming associations and setting
up formal infrastructures for power supply in bigger areas. One advantage Somalia is having due
to its partial assimilation into the global economy is that it is less vulnerable to crises of
globalization as compared to other countries. Because of the heavy outflow of Somali labours to
the Gulf oil-fields and Western countries, income from remittance increased and it remained an
important avenue of income for Somali families. The economy of Somalia is unique in many
ways. There are negligible foreign capital inflows, few local banks (only remittance companies)
and limited exports. This is the reason why the financial crisis happening in other parts of the
world has had no effect on the Somali economy. Somalia has also been benefitted by the
decline of oil imports as the subsequent impact on the Asian crisis has put only positive effects
on the trade terms and trade balance in Somalia.
Amidst all these, the remittance industry is making its presence felt in Somalia and this is one
favourable impact of globalization in the country. A large amount of sums is received in
remittances by Somali people from their relatives living abroad. The remittance companies are
making merry, with their national and international networks, are moving millions of dollars
across factional and clan conflict lines, with a commission ranging from 0.5 to 5 % depending the
origination of the transaction. This business is also favouring the telecommunication sector as
well. Some of these companies are also issuing sms vouchers and are providing limited banking
functions as well.
In the meantime, new trade avenues came out in Somalia, in spite of the internal turmoil. The
setting up of the quota system by the European Union for bananas coming to Somalia has been

7. profitable to the Somalis. The fighting leaders have also recognized the importance of this trade
and allowed it to prosper in spite of the situation.
However, more recently, because of the WTO rules, trade liberalizations and entry of powerful
companies to the EU market, the Somali producers are finding it increasingly tough to sustain
and maintain their profits. The compensation packages offered by WTO and EU to the poorer
countries cannot also reach Somalia due to the absence of a stable central government. If the
banana exports are discontinued, it is bound to disrupt the stable relationship between the
farmers, the export companies, and the fighting militias and this will again destabilize the security
in the area. The poor farmers, in absence of a safety net during the adjustment period, will find it
extremely tough to sustain. A loss of about 60 to 80 thousand jobs is predicted which will
have dangerous effects on the security scenario and poverty
levels of the country.
Another important feature of the impact of globalization in Somalia
is the trans-nationalization of its trade infrastructure. A lot of
international aviation players have come to Somalia due to lack
of government control and global deregulation of airlines.
Somali people are now well-connected to Dubai, Nairobi and Ankara
thanks to these aircraft players. This has facilitated the advent of an
informal economy connected to East Africa, Ethiopia and
Eritrea as well. Also, a re-orientation of trade and travel is
observed towards Asia, particularly the Gulf region.
Somalia has been plagued by issues of natural resources and land
ownership for ages and these have been aggravated by issues
associated with globalization. The traditional patterns of land ownership
and practices have been changed dramatically, thanks to the western
influence of private ownership and monetary ideas.
The issue of large-scale land grabbing by well-connected people came to the fore. Acres of
prime and suitable land was snatched from rural and farmers to establish large state farms
which have made many farmers landless. This also led to numerous confrontations between
farmers and these powerful landlords. The advent of civil war aggravated this tussle for land
and weapons started to come in use for snatching land from weaker sections. The militias
started to lay their claims on the harvests. As an effect of this disruption, food production started
to decline, and land degradation started to increase.
In the context of Somalia, the most negative effect of globalization is the increase in illicit
commercial affairs such as arms smuggling, drug trafficking, money laundering, and other
international crimes. The anti-social elements use to shield such crimes through the rapid
transfer of electronic funds and transfer commodities illegally to the neighbouring countries.
Environmental issues have also crept into Somalia, as an evil effect of globalization. Depletion
of wildlife and degradation of land are two such issues. Dumping of wastes (that are toxic in
nature) into Somalia and over-fishing by international vessels have been criticised by
environmentalists. Such issues are increasingly posing big threats to the vegetation cover and
the overall climate of the country.
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8. 07
of the Somali people
over 16 years of age
owned one SIM card
at least
Existing Status of Digital Economy in Somalia
In one of our earlier sections, we have mentioned about five pillars of the digital economy.
These are- digital infrastructure, financial services, digital entrepreneurship, innovation,
and literacy and skills and these pillars, slowly but surely, are finding their feet in Somalia.
a) The existence of Digital Infrastructure
Mobile money has been a pathway of economic growth in the country as it has made it possible
for the Somali public to have access to the level-playing field of global economy, at a rapid
pace. People are embracing mobile money to such an extent that the mobile money services of
the country (EVC+, Edahab, Imal, Zaad & Sahal) have been working as virtual currencies. A
research aided by the World Bank in 2016 showed that while only 15 % of the people had
access to formal banks, 73 % of the population are exposed to mobile money usage. Mobile
network providers and money transfer businesses or MTBs work hand in hand and mobile
money is used extensively to transfer international remittances. But, due to the complex
operating system in the country, investment in telecommunications and MTBs are largely
dominated by Somalis, both from inside or outside Somalia. As a result, unique products,
suiting the Somali environment have been created.
The telecommunication revolution has well and truly penetrated into the lives of the
Somali people. The 2016 report also showed that almost 88 % of the Somali people over
16 years of age owned one SIM card at least and 83 % of them used mobile money
extensively. They were adept at using mobile money in making deposits, collecting salaries or
paying bills. They used to maintain funds in mobile accounts instead of taking out fistfuls of
cash. Extensive use of mobile money in merchandise and bill payments and disbursements
suggested the strong presence of an ecosystem and businesses and institutions were very
much parts of it.
88 % 83 %
of them used mobile
money extensively.

9. 08
b) Status of financial services
These days in Somalia, very few people carry the Shilling notes. Rather, they carry out their
day-to-day financial activities (payment of bills or purchase of goods and services) with a few
touches on their mobiles. Everyone has his own bank at his disposal, in the form of his mobile.
Somalia is well and truly on the path to giving a stiff competition to Kenya as an African
leader in the implementation of mobile money technology. Actually, the mobile money is
having a more significant impact on the Somali people because of the fact that it has nicely
supplemented (not replaced) the banking system of the country, which has been ravaged by
years of economic disruption and political conflict. It was not too long back when Somalia was
described as the "Sick man of Africa" in terms of economic stability and trade. However, in
recent times, the country has been able to achieve a sense of stability and capital Mogadishu
has been the centre of all such activities. Nowadays, almost every merchant (every hawker on
the street of Mogadishu, for that matter) accepts payment on their cell phones.
In a revolutionary step in 2011, Hormuud did away with its old system for the EVC Plus as well
as SomTel’s edahab, very popular systems of electronic virtual cash today. It is free and user-
friendly and hence, it has been embraced by over three million users, as stated by the
company. As a matter of fact, the functionality and simplicity of the mobile money
technology have helped towards its widespread use, in a country that is plagued by a
high degree of illiteracy. By typing just a few numbers, followed by a unique code, anyone
can avail such services. Even the most ordinary mobile phones can be used in this process
and users can move money among themselves by dialling these codes and numbers just as
they use to top us their cell phones. These Mobile Services in Somalia have changed the way
Somalis conduct their daily transactions.
This has cashed in on the benefits from the fact that the Somali diaspora annually sends a
whopping $ 1.6 billion into Somalia. The country has been plagued by droughts many times in
the recent past and this has ravaged the traditional agro-pastoral livelihoods of thousands of
people across the country. Now, the mobile money technology has made it possible for the
Somalis in urban areas or in other parts of the globe to send money quickly to their starving
and impoverished rural relatives.
Somalia is well and truly on the path to giving a stiff competition
to Kenya as an African leader in the implementation of mobile
money technology extensively.

10. This service has also contributed immensely to the reconstruction of Somalia, amidst the lack of
retail banking in the country in recent times. Carrying cash is considered risky due to the
prevailing unrest and the first Somali financial mobile application called T-Plus by Tawakal
Express has gained popularity among the Somali people as a virtual bank.
The Somali mobile money services are very much like M-Pesa, the popular mobile money
transfer platform, with one notable difference that Somali Mobile Money Services uses USD as
the preferred trade currency. Here, the users can transfer as many as 300 USD per day
throughout central and southern Somalia. All mobile money platforms operating in the northern
region of Somaliland and Puntland are also enjoying similar success but larger transfer benefits
and local currency denominations.
Among other benefits, Mobile money in Somalia allows users to buy mobile airtime for their
family members, pay electricity and water bills and transfer money to their relatives. Though any
operator they choose, the users can also establish automated payments, financial reports and
set SMS reminders without the need of an internet connection.
With so many facilities provided to the Somali people, mobile money has very much
become a part of the everyday trade in Somalia and has been a vital cog in the wheel of
the economic and financial growth. Thanks to mobile money, people can now do business
without any risk of losing cash to conmen or militants. The telecommunication sector of the
country has also contributed immensely to this growth.
c) Entrepreneurship in Somalia
The young entrepreneurs in Somalia are also finding their feet in the ‘highway' of the global
economy, thanks to the advancement of the digital economy in Somalia. Earlier, it was difficult
for young Somalis to get adequate guidance regarding investments and start-ups. Now, with
the growing influence of ICT, any entrepreneur can gather useful insights on market
research, business plans and potential investors from any part of the world. Opportunities
also started to come from other parts of the world. As Somalia slowly returned towards
normalcy after a civil war spreading two decades, more and more young Somalis returned to
their country and started using technology to bridge the gap with the global economy. The
high-speed internet, boosted by the welcome introduction of fiber-optics, has boosted
this transformation to new heights.
The high-speed internet, boosted by the welcome introduction
of fiber-optics, has boosted this transformation to new heights.
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11. d) Innovation
As we have already discussed, the age-old instability and absence of the banking sector have
transformed Somalia into more of a cashless society, thanks to the advent of mobile money. This
avenue has been carried forward by Fursad Fund, the first independent fund of the country,
for innovative crowdfunding activities. It is roping in more than 5000 Somalis, who would pay
$1 every day and funds such collected over the period of a year will be used for financing programs
in poverty reduction, job creation, infrastructure development and education. This fund has also
contributed towards helping female entrepreneurs and organizing job fairs for local job seekers.
Such initiatives are also attracting the attention of investors who are interested to fund, promote
and connect Somali start-ups.
Another example of the tremendous benefits provided by digital economy can be cited from
its life-changing application among the livestock farmers in Somalia. Ari.farm is an innovative
app developed by a firm in Stockholm which has brought the nomadic livestock farmers of
Somalia into the ambit of the digital economy. This app connects investors and farmers via a
digital platform, based on a concept called "crowd-farming" and allows users to invest in and
purchase livestock in Somalia through a mobile-based framework. Users can purchase animals,
and these are then raised by the nomadic farmers. After the animals are sold or they have
offspring, profits are shared between the stakeholders on the digital platform. The users can also
monitor the health of these animals through real-time statistics on the digital platform.
This app gives the users important information about the market and helps them
to make business decisions. They can also decide to withdraw or re-invest the
money in the market. The inclusion of digital services in these sectors has also
opened the door of job opportunities for the nomads in rural Somalia and helped
farmers to recover their losses from natural calamities or seasonal droughts.
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Ari.farm is an innovative app developed by a firm in Stockholm
which has brought the nomadic livestock farmers of Somalia
into the ambit of the digital economy.

12. e) Enhancing literacy and skillsets
Digital tools can provide important insights regarding enhancing literacy and skillsets. It can help
in building the future of a country by empowering the youth and eradicating the evil called
unemployment. With the use of digital tools methods of data collection (market, personal and
other big data sources) and methods of analysing them can be improved. Digital tools can then
be employed to improve skill sets and the overall employability of the youth as with these
tools, global best practices can be imparted and shared By adding to the growth of
entrepreneurship (particularly in the digital sector), digital economy can also contribute towards
eradicating the problem of unemployment in Somalia. This can also saw the seeds for a vibrant
economy by the year 2020. As per a report by United Nations Development Program (UNDP), the
rate of unemployment in Somalia is 67 % in the age group below 29 years, which is one of the
highest in the world.
Entrepreneurship and subsequent economic empowerment can work as a panacea for
unemployment. As discussed above, the culture of entrepreneurship has touched the youths of
Somalia, thanks to the advancements of digitization and digital economy can be used as a
powerful tool among the youths towards ensuring stability, peace, and development. Due to the
prevailing adverse scenario of widespread unemployment, the Somali youths are close to the grip
of terrorism and self-destruction. The power of digitization can help in imparting appropriate
skills, education and capacity-building measures.
Entrepreneurship education in the digital sector has a huge potential as a way of enhancing self-
reliance, financial security, poverty eradication and a sustainable development. This can bestow
the Somali youths with appropriate skills and opportunities and can divert them from the path
adopted by the militias. Non-government organizations and international agencies can also join
hands in this and can make conscious efforts to alleviate the problem of unemployment.
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The power of digitization can help in imparting appropriate skills,
education and capacity-building measures.

13. However, the absence of a competent legal platform in financial and ICT sectors
is being considered to be an obstacle in the progress of the growth of the digital
economy in Somalia. Critical fields such as mobile banking, insurances, remittances and
mobile money services are controlled by big companies. As a result, the market is evolving
around these big companies and alliances and mergers are happening regularly in the
market. Consumers are getting benefitted in the short run, but for the digital economy to grow
in the long run, the competition policy and regulatory framework need to be in place with
immediate effect. With this vision in mind, the Ministry of Somalian Posts and
Telecommunications has recently passed some important regulations in the ICT sector of the
country. The draft of the new Communications Act was prepared in 2012 and the Federal
Government approved the draft Act in 2014. The results of the important milestone has yet
to be seen.
The ICT Sector Support Program of the World Bank in Somalia has been working in
collaboration with the Somalian Federal Government to maximize the positive impact of
these recent progresses happening in this sector. This initiative aims to implement the twin
goals of boosting shared prosperity and ending poverty
Steps taken for the growth of ICT in Somalia
As we have seen in our previous sections, due to
the absence of the public sector, private mobile
companies, with their satellite communication
systems have been largely successful in meeting
the communication demands of the Somali diaspora.
This has also resulted in the high mobile penetration
rates in Somalia, at lower cost, as compared to
neighbouring countries like Ethiopia, which enjoy higher
internal stability, albeit with the presence of state-owned
monopolies in the market. Another ‘event' happened
in July 2014 also provided momentum to the growth of this
sector in Somalia when a historic agreement of interconnection
was signed between three main operators in the country.
The same year also saw the entry of the new-age optical fiber
connectivity to the Somalian capital.
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14. The features of this ICT Sector Support programme are-
• Phase 1 of this project is concentrating on providing technical support for preparing a
regulatory and legal ICT framework. This will also focus on creating an environment that
will include an effective licensing framework as well as to create pilot communication
facilities in key ministries in the Government. Early results are showing positive inclinations
and the approval of the communications act is a welcome step for laying a strong
foundation for the ICT sector.
• The Phase 2 of this project will concentrate on establishing effective connectivity in
the country by
a) Enhancing the scope of pilot communication facilities to 15 key ministries
and different institutions across economic zones.
b) Facilitating the use of improved connectivity in education resource
networking with the involvement of universities in Hargesia, Mogadishu,
and Garowe.
c) Supporting the evolution and implementation of highly efficient mobile
money platforms and efficient systems of SIM card registration.
• Phase 3 is planned to focus on extending the connectivity up to the interiors of the
country. This will be done in collaboration with the Horn of Africa initiative of the World
Bank and different public-private partnership (PPP) programs.
It is heartening to observe that the Federal Somali Government has been in active
consultation with industry stakeholders to properly implement the Communications and
Financial Act especially recently passed regulatory authority in Telecommunication and KYC
regulation to provide sustained and enhanced ICT and financial regulations to the Somali
citizens. These are other milestones that are yet to be seen but very hopeful ones.
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15. Challenges in the implementation of
the “Five Pillars of Digital Economy”
in Somalia
In the sections above, we have seen the advent of the
Somalian economy, thanks to the contribution of mobile
money in financial transactions. The economy of the country
has managed to maintain reasonable levels of progress amidst
state collapse and disruption caused by the civil war.
As the political transition and recovery are slowly underway, the phase of economic
reconstruction is facing new challenges. The immediate challenges faced by the country in
this regard are-
a) Trade difficulties
Somalia does not belong to any economic blocs and it does not have too many trade deals
with other countries as well. The European Unions and the US have no formal trade
agreements with Somalia. These factors are adding to the problems faced by local firms
while competing regionally and globally.
Somalia exports far less than other African countries. It stands at 171st on the list of exporting
countries in the world and is 4th lowest on the list of per capita GDPs (Source: The CIA World
Factbook). Over 80 % of Somalia’s exports are taken care of by Oman, Yemen, and UAE and
these are mainly limited to livestock. Often, regional partners also impose restrictions on
Somalia, basically due to security fears. As a result, local entrepreneurs are having to face
a lot of issues while doing trade with the neighbouring countries. The business is also
not without layers and less transparency is visible in all spheres.
b) Issues in certification
Due to lack of participation by the Somalian Government in global certification schemes or not
being able to provide authentication to businesses to sell commodities globally, the firms are
having to look for costly and unconventional alternatives. Therefore, exporting commodities
has been a big challenge for them. Due to this absence of a proper certificatory regime, the
Government of Somalia is also losing a fair amount of revenue. Establishing a stronger
regulatory framework in this regard is a must for the local firms to do business properly.
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16. c) Currency reform
It is quite a challenge for the Somalian Government to restore the credibility of the national
currency. The Government is on the verge of introducing a unified currency in order to
stabilize the economic growth. At present, a number of versions of the currency (Shilling)
are in operation and this is not at all encouraging for the economy. The collapse of the Central
Bank and subsequently the entire banking system has left a void in the regulatory and
monetary control and has completely disrupted the payment system of the country. This has
resulted in the growth and substitution of the alternate or parallel currency market and the
different militias started issuing own currencies. This is also the reason for the existence of an
organized black market for different currencies.
Somalia experienced one ray of hope when the International Monetary Fund (IMF)
agreed to resume relations with the country in 2013, after a gap of 22 years. IMF did not
assure Somalia of any loan but decided to provide assistance towards its currency reforms.
But the Government still has to do a lot in terms of eradicating the deep-rooted corruption in
order to facilitate working with the international partners. There are many positive signs that
the current government is on right path to fight against corruption which can lead proper
governance and trust between Somali Government and its citizens.
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17. Factors for the growth of the Digital Money ecosystem in Somalia
There is no doubt that the digital money ecosystem in Somalia is on the rise and this country
will play an important role in the growth of mobile money subscribers in entire Africa by 2020.
The following factors will contribute even more towards a sustainable growth in this regard-
- Establishing a sync between offline and online credit in relation to mobile payments
- Ensuring proper interconnection of mobile payment systems between network operators
in Somalia and transparent payment eco-system led by Central Bank of Somalia.
- Establishing a reliable “Know Your Customer” or KYC system-
- Initiating a mobile money transaction system based on Somali Shilling, along with the
existing USD-based system
- Proper licensing of the mobile network operators.
The World Bank, with the help of its State Peace building Fund and
the Multi-partner fund, is constantly supporting the Somalian Central
Bank and Ministry of Telecom and Ministry of Technology to build a
framework for bulk mobile money payments, in joint collaboration
with the telecom operators. This framework aims to prepare a model
of business-friendly best-practices related to mobile payments and
mobile money transfers. For this to become a success, the
operators also need to offer diversified value-added services to
increase the user base and facilitate the heavy use of mobile
finance and agree a common payment platform. Both the public
and private sector need to join hands to establish a reliable
regulatory platform and boost the consumer security requirements.
This will do a world of good towards gaining more trust from Somali
consumers, as well as from the international business community
especially foreign correspondent banks.
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18. Proper Implementation of 'five pillars' of the digital economy
As we have seen above, the ‘five pillars ‘of digital economy are already finding their feet in the
economy of Somalia but their ‘footing’ is not firm enough as yet to guarantee a sustainable
development for the economy of the country. Advancements happening in the field of digital
technology can contribute in a big way towards achieving this goal of the Somalian
Government.
The Information and Communication Technology (ICT) sector and mobile communications have
been a few of the success stories of Somalia of late. They have the potential to reach their peak
anytime soon where equitable distribution, demand-driven efficiency, and market competition will
grow sufficiently, and the operating business environment will be more suitable for
entrepreneurs.
But for this to happen, it is extremely imperative that the state machinery of the country should
understand and harvest the importance of ICT and implement it in its internal functioning and
interactions with public and business alike. ICT, more precisely the mobile technologies have
given a tremendous weapon to the Somalian Government to spread its reach to more number of
citizens than ever before, that too, in much quicker time. On the other hand, as citizens can have
access to Government services and information in no time, it will enhance transparency,
trust, and accountability between the citizens and the Government of Somalia.
The Government can leverage such benefits of ICT through the services of an independent
ICT agency and this proposed agency may be called “Somalia Innovation and Technology
Agency” or SITA, in short. This agency could compliment the recent announced National
Economic forum by President Mohamed Abdullahi Farmajo.
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ICT agency and this proposed agency may be
called “Somalia Innovation and Technology Agency”
or SITA, in short.

19. proposes to build technology platform/mobile portals called
Somalia eGov/mGov which will look forward to removing existing barriers, promoting
innovations in business, combating corruption and empowering citizens. Through these
portals, the Somali public will be able to connect to their Government in many areas
such as health, education, revenue and tax collection, licenses and permits, corporate
registration, motor vehicle registration, property registration and many more. But, these
are not meant to eliminate the existing off-line and on-line modalities of the public service
delivery. Rather, these portals add transformational and powerful tools to the public sector by
increasing the access to available services and also by enhancing the delivery and design of
new services. They can add new levels of pubic engagement in democratic decision making
process and modalities in policy development and hence, can make tremendous
improvements upon the existing approaches to Government service delivery. Thus, these
portals can effectively monitor and protect Somali citizens and, at the same time, will improve
their overall quality of lives.
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SITA Portal Overview
Mobile
user
Browser
user
Officer
SITA e-Government Portal
Governed by Somalia
Vehicle
Registration
Land
Registration
Business
Registration
Central Bank
Of Somalia
(CBS)
Somali National Virtual ID
Common resources:
Authentication, mobile GW
Emergency
Alert
Citizen
Registration
User
Management
Smart-phone
user

20. By using these portals, the Somalia Authorities will also have a proper reach to the
citizens across the country and able to: -
• Deliver improved emergency medical alerts, natural disaster outreach and notifications.
• Collect sales taxes from over 3,000,000 registered Mobile Money merchant
account holders in the country
• Collect tax on local mobile money and international money remittance transactions
• Provide business registration to all existing and new business.
• Register land and properties online in a transparent manner and deliver Blockchain based
public data, accessible to all citizens.
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Business
Registration
Emergency
Alert

21. SITA could contribute towards the ongoing Governmental efforts to build a new and
vibrant Somalia and it could be achieved by-
• Creating an atmosphere where both the private and public entities will look at this
initiative as a win-win situation.
• Integrating the currently available systems and making sure that there will not be any
technical duplication among the major players.
• Creating a highly effective system operated and owned by SITA under the able guidance
of the Prime Minister or President’s office.
• Encouraging the working knowledge and expertise of the private sector by incorporating
their wisdom into the Public-sector activities.
• Exploring Public-Private Partnership (PPP) models that will help the Somalia Government
to grasp what is adequate, possible and help the private sector to better understand the
needs of the public sector and offer useful solutions.
• Creating a technology advisory team in SITA, with people who have tremendous expertise in
this arena.
• And Many more
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22. Conclusion:
Somali Government should take the leadership and courage to recognize and reap in the
unexplored benefits of digital economy and ICT so that Somalia can reach new heights as far as
development is concerned. This requires leadership that wants to improve the economic and
social conditions in Somalia by establishing co-ordinated efforts through -
• Willingness to create an independent agency called the Somali Innovation
Technology Agency "SITA" reporting directly to the President or the Prime
Minister's Office.
• Willingness to lead Somalia into the Millennium Development Goals (MDGs).
• Willingness to pass completion policies so that young Somali entrepreneurs can
have access to the digital ecosystem to innovate new product and services.
• Willingness to pass necessary regulations to govern the Somali Financial industry
and consumer protection laws.
Countries across the globe have now understood the importance of distinguishing between
natural and artificial aristocracy. They have realized that the usual focus of an artificial
aristocracy on wealth and birth can only strangle the economy of a country. Somalia can and will
move on from its troubled past and tackle demons such as corruption, tribalism based on 4.5 and
foreign aid dependence and can build trust and transparency with its citizens. This will build an
important platform towards building a strong yet vibrant Somalia.
21

23. References:
1. UNDP/World Bank. (2003). "Country re-engagement note: Somalia “. Retrieved from
http://documents.worldbank.org/curated/en/830051468781503521/pdf/282760Somalia0
Country0reengagement0note.pdf
2. Leeson.P.T.(2007). “Better off stateless: Somalia before and after government collapse”.
Retrieved from
http://www.peterleeson.com/Better_Off_Stateless.pdf
3. Powell, Benjamin. Ford, Ryan. Nowrasteh, Alex. (2006). “Somalia After State Collapse:
Chaos or Improvement?”. Retrieved from
http://www.independent.org/pdf/working_papers/64_somalia.pdf
4. Kelly, Tim. (2015) “ICT challenges for Somalia …. and how the World Bank can help”.
Retrieved from
http://pubdocs.worldbank.org/en/67841437690416175/01-Intro-ICT-Challenges-in-
Somalia-and-ICT-regulation-in-Africa-Tkelly.pdf
5. “Report of the African Union Commission on the strategic review of the African Union
Mission in Somalia (AMISOM)”. Retrieved from
http://www.peaceau.org/en/article/report-of-the-african-union-commission-on-the-
strategic-review-of-the-african-union-mission-in-somalia-amisom
6. DISCLAIMER: Absolute no copyright infringement is intended. All rights to all materials
remain courtesy of their respective owners. All images used in this document is from
Google Search www.google.com and for reference purpose only. For Non-profit,
personal and non-commercial educational use.
7. Some of the Featured Image came from irisehub.so
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Ali Said Mohammed (Nacnac)
LinkedIn id: https://www.linkedin.com/in/alinacnac