Mobile money in Somaliland

Since its launch in 2009, Zaad, which means “to grow” in Somali, has swelled to 850,000 users—roughly one-quarter of the nation’s population. Locals use the platform on battered old cellphones and, less frequently, on smartphones and a designated app.

Without mobile money, cash has a hard time flowing through the country. No commercial banks really operate here, and hauling physical cash over rough roads is time-consuming. Companies use Zaad for their monthly payrolls, instead of handing wads of cash to their employees.

Today, each user on average makes 35 Zaad transactions a month, and Somalilanders say they try to use Zaad for most transactions. A rudimentary texting system makes it easy even for the many Somalilanders who are illiterate.

It seems to be a kind of free banking:

Apart from phone-to-phone transactions, users can top up their mobile wallets by handing cash—shillings [the Somaliland currency] or dollars—over to an official agent, who is often a single person in a shack on the side of the road.

“This service has been a driving force for the smooth operation of our economy,” said Abdikarim Dil, Telesom’s chief executive.

Since mobile-money services aren’t regulated by the central bank, they aren’t subject to the restrictions that traditional banks face, including requirements meant to block terror financing.

Here is the story (WSJ) by the consistently interesting Matina Stevis-Gridneff (there are few journalists better to read these days), via the excellent Samir Varma.