Somalia’s reintroduction of its national payments system after three decades is fast attracting financial services investors, with MyBank, Mastercard and Network International partnering to launch a new Mastercard debit card that seamlessly enables online shopping in the country.
The new physical card is a first for MyBank in the country, and is expected to enable consumers to transact in-store at various points-of-sale and at ATMs, while also giving them the ability to make online purchases through e-commerce channels.
The services, according to Mastercard, are aimed at benefitting underserved sectors in Somalia, through the provision of additional transaction terminals, enabling wider financial inclusion in the country.
Last August, Central Bank of Somalia’s governor Abdirahman Abdullahi said the national transaction system could boost Somalia’s economy and deepen financial inclusion.
“All 13 banks have now become interoperable, connected to the clearing and settlement system of the central bank and can transact with each other,” he said.
The interoperability capabilities have been activated on debit and credit cards, mobile network operators and ATM machines, in a country previously synonymous with internal conflict, war and constant security tensions.
In 2015, Mastercard became the first international payments network to make the issuing and acceptance of card payments possible in the country. Progress made in improving the usage benefits of cards remains paramount to growing the economy but the card industry in the Horn of Africa nations is still relatively new.
The payments system, which was last used in 1991, is now helping to facilitate transactions between vendors and their customers more efficiently, and MyBank’s agreement with Network International gives the bank access to Mastercard’s global network, thus enabling its Somali customers to enjoy more convenient, secure, and easy-to-use ways to pay.
Shehryar Ali, Country Manager for East Africa, Mastercard said the company will now play a role in enabling digital inclusion in Somalia while advancing the banking sector in the country, increasing digital payments and building choice in a strong digital economy that can help unlock financial inclusion.
“Many countries across the Sub-Saharan region are successfully adapting to e-commerce services and QR solutions, simplifying transactions and making the payment process more efficient for all stakeholders. As a leader in the payments technology industry, we are proud to partner with MyBank to grow connections, improve digitization and enhance the digital payments landscape in Somalia,” he said.
The national payments initiative is gradually contributing to boosting digital payments penetration in Somalia and enjoys support through an awareness programme that is educating customers on the card benefits and usage.
“Network’s on-ground experience in supporting the banking sector in Africa and empowering small businesses to adapt to the digital economy will play a key role in the continued success of this milestone collaboration,” said Hany Fekry, Regional President, Northern and Sub-Saharan Africa, Network International.
Through its technology, expertise, global network and partnerships, Mastercard said it will build a digital economy that can unlock a world beyond cash where everyone thrives.
The company has made a global commitment to bring 50 million micro and small businesses into the digital economy by 2025, with a direct focus on providing 25 million women entrepreneurs with solutions that can help them grow their business.
“We’re proud to be taking this important step towards providing safe and efficient access to financial services to people and businesses in Somalia. Partnering with Mastercard, and Network International which brings considerable expertise in the global payments technology space, confidently positions us to be able to do so,” said Abdulrazak Ahmed, MyBank Limited CEO.
Having received a boost in the penetration of mobile money in recent months, Somalia’s central bank is now connecting financial institutions to a clearing and settlements platform to allow real-time money transactions, with plans to issue a new Somali currency underway.
“Despite its deep well of tech talent, until August, Somalia’s financial system meant that lenders could only interact on a superficial level. This made payments inconvenient and reinforced a reliance on the US dollar, while holding back businesses looking to grow across the country. This is now poised for change,” says Ahmed Yusuf, CEO of Somalia’s biggest telco network, Hormuud Telecom.
He adds that the Somali diaspora can now send remittances home, and with the government having secured a debt-relief deal with the World Bank and the International Monetary Fund last year, the Horn of African nation is on the right path in building back better to the global financial system.
Over the past five years, Somalia’s central bank has achieved progressive milestones in regulation and encouraging financial inclusion in the country and Mr Mohamed says such developments are an indication that Somalia is on a good path.
“It is a positive step for the country and shows Somalia is rising from the ashes of civil war. We are now part of the global financial markets. We encourage all Somalis to adopt banking as a way of strengthening the country’s economy.”
According to the 2020 World Bank report, citizens operating mobile-money bank accounts are more than 80 per cent of the urban population and 55 per cent of rural dwellers.