Oct 16, 2018

African Philanthropy is entering a new era. A hotbed of innovation, it can make a decisive contribution to addressing the continent’s challenges, and also inspire work in other parts of the world. 

Aligned with the general formalisation and greater impact orientation of philanthropy, African self-made entrepreneurs are now also engaging in structured giving and are promoting the discourse of “giving back” to the benefit of individuals, communities and countries.

While African Ultra High and High Net Worth Individuals ((U)HNWIs) have a deep desire to contribute towards socio-economic empowerment and many also want to leave a legacy, it should be noted that their giving is not on a similar level to their counterparts across several other markets.  The African Grantmakers Network Sizing the Field Report suggests that HNWIs in Europe, for example, allocate 9% of their wealth towards philanthropic efforts while the estimated 145,000 African HNWIs holding wealth of approximately $800 billion1, give only 1% of their wealth. 

Adapting philanthropic models to the local context

There is also a powerful, observable trend among African philanthropists to select elements of established models of philanthropy, and then adapt them to on-the-ground needs, structures and preferences, realising results in the local context.  This mirrors what is happening in private sector projects too – a recognition that while global methodologies can offer best practices for incorporation, their assumptions do not always apply in Africa.

The co-joining of the two approaches is however, regularly at the root of commercial successes.

Therefore, it is no surprise that given the multi-faceted nature of African philanthropy, these efforts often co-exist with philanthropic action on the ground by foreign philanthropists, international organisations and national governments’ to fast-track socio-economic development.  In turn, these all increasingly converge under the shared social impact framework of the Sustainable Development Goals.

All in all, this makes for an exciting environment for philanthropy, but also one that is challenging, requiring sound analysis, humility, and the expertise of the right partners to sustainably translate aspirations into action across the full spectrum of philanthropic opportunities.


Key trends and opportunities

African philanthropy is a powerful way to express African humanism. This spirit of Ubuntu and the universal bond of sharing that connects all humanity has all the potential to be instrumental in helping translate the tremendous opportunities associated with scientific progress and advances in technology to help solve many of the continent’s challenges and create opportunity for all.

Three key trends in particular can distinctly shape the trajectory of African philanthropy, and help it drive impact:

  1. Africa can be an innovative hub for philanthropy. The need for sustainable philanthropic efforts in Africa is critical. Combined with the strides made using mobile payment technology, such as M-Pesa, this could see the continent rise as an innovator and early adopter.  Another example is Safaricom, which in partnership with UNHCR, launched Bamba Chakula enables people to turn leftover data into cash donations towards refugees or event to top up refugee accounts.
  2. African philanthropy will increasingly integrate the continent’s rich cultural heritage in its twenty-first century approach to giving. As the numbers of (U)HNWIs multiply, this will influence the philanthropic identities African (U)HNWIs want to build. They will draw on their rich history, culture and the needs intrinsic to their countries/ regions. Equally, these contributors will desire to incorporate their own aspirations, family dynamics and preferences for a specific type of philanthropic infrastructure and will require the flexibility and access to expertise in order to ensure these needs are met.
  3. African Philanthropy is at the forefront of leveraging technology for good. Already, the global nature of technology is increasingly enabling access to expertise, infrastructure and other essential resources. CodersTrust, a Bangladeshi company, provides opportunities to young Kenyans to become ‘rockstar freelancers.’ Learning an IT skill enables them to make a living anytime, anywhere in the online IT labour market. This also helps fill the growing global programming skills gap, create much-needed high-value youth employment opportunities and build the local expertise.  Ultimately, philanthropic investment in initiatives such as this will meaningfully enable the country to seize the possibilities of the digital revolution.

Driving development today and tomorrow

Philanthropy around the world is itself in the middle of an impact/ effectiveness revolution and in Africa, this is equally relevant.  The Sustainable Development Goals are gradually becoming a new frame of reference and experimentation with new forms of financing is moving mainstream. As the rigour demanded of measurement methodologies increases, the process of incorporating the use of data to create transparency and accountability is becoming more sophisticated.

While much of what is highlighted within global philanthropy is consistent across the world, the African continent has a distinct identity and set of challenges.  Illiteracy, poverty, poor sanitation and a myriad of other challenges persist, creating a strong need for philanthropy to be relevant on the ground now, while also making a strong contribution tomorrow in a continent that will undergo deep transformation. 

This means that a “one-size-fits-all” approach is not meaningful in Africa. The combination of different perspectives and modes of intervention ultimately render African Philanthropy extraordinarily multi-faceted and innovative.  Surely no one is better qualified to consider how to address these than the philanthropists who call Africa home?

Oct 15, 2018

The U.K. and the European Union are on course to miss this week’s key milestone on the road to a Brexit deal after talks broke up in stalemate on Sunday, people familiar with the matter said.

A weekend of intense negotiations -- including a surprise dash by Brexit Secretary Dominic Raab to meet his EU counterpart Michel Barnier in Brussels -- failed to break the deadlock. 

There will be no further attempt to resolve the impasse before EU leaders gather in the Belgian capital on Wednesday for the summit they’d hoped to use to finalize the divorce.

Officials on both sides have now all-but given up on a breakthrough this week, and are increasingly concerned that time is running out to get an agreement before the U.K.’s exit in March, the people said, speaking on condition of anonymity because the talks are confidential.

“Despite intense efforts, some key issues are still open,” Barnier said on Twitter after his hour-long meeting with Raab. For his part, the Brexit secretary left Brussels and traveled back to London without making any comment.

Hopes Dashed

The weekend was meant to be a chance to crack the thorniest issue in talks -- what to do with the Irish border -- so that leaders meeting for a summit on Wednesday could declare progress and signal that a final deal could be signed in mid-November.

That timetable -- which markets have started to price in -- has been thrown off and there’s likely to be more talk of how to prepare for a chaotic and acrimonious no-deal split. The pound fell early on Monday.

A key meeting of EU governments scheduled for Monday was canceled and negotiations will likely to be paused for some time, according to EU diplomats.

The major sticking point remains how to avoid the need for a hard customs border at the land frontier between Northern Ireland and the Republic of Ireland after Brexit. One proposal is to keep the U.K. inside the EU’s customs union on a temporary basis, which would mean no new checks on goods passing from Northern Ireland to Ireland would be needed.

But pro-Brexit ministers in May’s Tory party -- including Raab -- are determined to make sure any such arrangement has a strict end date, to avoid Britain being trapped inside EU rules and tariffs indefinitely. They want the U.K. to be free to strike trade deals around the world, something that is impossible for countries in the EU customs union.

Despite the pessimism, some observers believe a showdown moment may simply be a necessary piece of theatrics that will act as a precursor to a deal.

The September EU summit in Salzburg ended in a diplomatic disaster for Prime Minister Theresa May, yet she used the occasion to her advantage. A breakdown in relations in October could potentially help the premier at home by showing she had stood her ground.

Some EU diplomats speculate that she needs to have a fight in order to get the deal she does eventually deliver through a divided British Parliament. May is probably going to have to count on opposition votes, and will need to present it as the only viable alternative to chaos.

Sabine Weyand, Barnier’s deputy, told ambassadors it was clear from Sunday’s talks that for domestic reasons the U.K. needed more time before it could make concessions, according to a diplomat in the meeting.


- Bloomberg

Oct 15, 2018
Samsung announced the Galaxy A9, which debuts as the world’s first rear-quad camera.
The Galaxy A9 allows you to capture dynamic photos with little effort. It the camera has four lenses to offer users a 2x Optical Zoom, an Ultra-Wide Lens, an adjustable manual depth of field lens, and a massive 24MP Main Lens.
To make things even easier, Samsung have also equipped the cameras with a scene optimiser and a smarter AI Scene Recognition system to identify subject and adjust settings accordingly for the best photos.
Source: Business Insider
Oct 14, 2018
The Shippers Council of Niger has abandoned a Memorandum of Understanding (MoU) it signed with the Nigeria Shippers’ Council (NSC) to ship transit cargo through Nigeria, NSC Executive Secretary, Hassan Bello, has said.
The country however considered Ghana and Cotonou ports as alternative routes to ship its cargoes.
Bello disclosed this last Friday at a seminar organised by the Lagos Chamber of Commerce and Industry’s Freight Forwarders Group in Lagos.
According to him, Niger Republic found it easier to transit their cargoes through ports in Ghana and Cotonou rather than Nigeria.
Bello, who was represented by NSC Assistant Director of Enforcement and Compliance, Public Service Department, Akujobi Chukwuemeka, attributed the refusal of the operators to honour the agreement with the Nigerian agency to time wasting, insecurity and poor customer service.
“If it will take them two days to clear their consignment in Cotonou while it takes them two weeks to do that in Nigeria, they will choose Cotonou.
“So, they abandoned that agreement we had with them. If you go to Shippers Council, you will still see them there but they are not doing anything,” he said.
Bello said many importers preferred to clear their cargoes through ports of neighbouring countries because of the poor customer service delivery in the seaports.
“Do the ports provide good service and in a reliable manner? Is the service consistent? What of the safety of the cargoes, security of the shipment and the issues connected to documentation? How long does it take for documentation processes to be finalised in respect of clearance of cargo?
“So, when we talk of customer service, these are small ingredients that will make a customer rate the port as an efficient one. When all these things are not there, you cannot be talking about customer service,” Bello added.
The NSC Executive Secretary pointed out that it only takes few hours to discharge oversized cargo in other ports, while in Nigeria, it takes days because the operators would need to hire equipment to perform the duty, making customers spend more days.
Besides, he mentioned that the port charges in Nigeria are also high when compared to other ports, noting that this and the usual gridlock at seaports in the country could discourage most of the customers.
Source: The Ripples
Oct 14, 2018

The Central Bank of Nigeria (CBN) governor, Mr Godwin Emefiele, says maintaining stable exchange rate to avoid depreciation of the Naira is better than building foreign reserve buffers.

Emefiele told newsmen on Sunday that this was part of the outcome of the Nigerian delegation’s meetings with investors and institutions at the International Monetary Fund (IMF) and World Bank Group (WBG) Annual Meetings in Bali.

He said that all frontiers and developing markets have suffered not just depreciation, but had also lost reserves.

“We are very conscious of the need to build buffers but unfortunately I must say that we are in the period where it will be difficult to talk about building reserve buffers.

“We can only build reserve buffers if we want to hold on to the reserve and then allow the currency to go, and wherever it goes is something else.

“So it is a choice we have to make and at this time the choice for Nigeria is to maintain a stable exchange rate so that businesses can plan and we do not create problems in the banking system assets.”

According to him, like other emerging markets nations, Nigeria has also lost reserves but only marginally because it had managed to sustain stability in its foreign exchange market.

The CBN governor said that the IMF and the World Bank advised that nations should build country specific policies and fiscal and structural reforms that would boost economic growth.

Mrs Zainab Ahmed, Minister of Finance, said the World Bank’s Human Capital Development Index (HCI) ranking, which placed Nigeria low at 44 per cent on stunting, was disheartening and depressing.

She, however, said that the Federal Government saw the rating as a wake-up call.

“We admit that this pervasive action was due to long years of under-investment in human capital, which we have before now realised and for which we have been addressing.

“Apart from major policy actions, some decisive actions are being taken to address the situation.”

According to her, the delegation held meetings with the two rating agencies-Fitch and Moody’s and presented to them the summary and synopsis of the recent economic and financial developments in Nigeria.

She added that it was an opportunity for the rating agencies to be able to objectively evaluate Nigeria’s credit.

Ahmed said she also met the IMF Managing Director, Ms Christine Lagarde and discussed Nigeria’s economy in view of the 2019 general elections.

She assured Lagarde that the election year would not pose any threat to the nation’s economic prospects.

Mr Udoma Udo Udoma, Minister of Budget and National Planning, said that to improve HCI, the nation had improved budgetary allocation to health and education.

He said that allocation to education moved from N22.5 billion in 2015 to N102.9 billion in 2018.

He added that allocation to health was reviewed from N26.6 billion in 2015 to N86.49 billion in 2018.

He said also that N55.19 billion had been added to the health budget in 2018 through the National Health Act.



Oct 14, 2018

The World Bank and IMF have endorsed Zimbabwe’s plan to clear more than $2 billion in foreign arrears, the finance minister said, adding that the lenders had also backed his two-year economic recovery programme.

President Emmerson Mnangagwa has promised to revive the struggling economy, pay foreign debts that the country has defaulted on since 1999 and end Zimbabwe’s international pariah status gained under Robert Mugabe’s near four-decade rule.

Finance Minister Mthuli Ncube, who is attending the International Monetary Fund (IMF) and World Bank meetings in Bali, Indonesia, said in a statement his plans to clear the arrears to the World Bank, African Development Bank and European Investment Bank had been accepted.

“All the cooperating partners and creditors present uniformly expressed their support for Zimbabwe and its arrears clearance Road Map,” Ncube said. He did not give details and none of the creditors had an immediate comment.

The lenders and Western donors urged Ncube to “judiciously” implement his two-year economic recovery programme announced last Friday, the statement said.

Ncube’s plan will see cuts in government spending and its wage bill, and privatisation of loss-making state-owned firms.
Zimbabwe, which adopted the U.S. dollar after hyperinflation left its own currency worthless in 2009, is gripped by acute shortages of cash dollars. Prices of basic goods and medicines have risen in the last few days.

Hyperinflation trauma

At the heart of its economic problems is a $17 billion domestic and foreign debt, a $1.8 billion trade deficit that has worsened dollar shortages and lack of confidence in the ruling party by citizens still traumatised by hyperinflation.

Prices of basic goods, medicines and drugs, building materials and public taxis have risen by at least 50 percent in the last week.

The economic crunch is increasing political tension after a July vote that was supposed to lay the foundation for Zimbabwe’s recovery was instead followed by turmoil that left six people dead after an army crackdown.

The latest crisis was triggered by fiscal and monetary changes announced on Oct. 1, including a 2 percent tax on money transfers and separation of cash dollars and foreign inflows from bond notes and electronic dollars, that caused the collapse of the surrogate currency on the black market.

When the changes were announced, $100 in bond notes was worth $49 cash dollars but was worth only $26 on Wednesday.

In a separate statement, Ncube said the bond note and electronic dollars would remain officially pegged at 1:1 to the U.S. dollar as the government seeks to protect people’s savings.

He said the government would also gazette rules protecting foreign dollar inflows to ensure the money was not taken by the central bank or government, good news for mines outraged by the U.S. dollar shortages.

On Wednesday, some shops and restaurants, including the local franchise of fast-food chain KFC had closed their outlets because some suppliers of goods and medicines were demanding cash dollars. – Reuters

Oct 14, 2018

Informal settlements continue to remain a significant component of many cities in the developing world. UN Habitat describes them as lacking security of tenure, not having durable housing and short of basic services. Globally, almost one billion people are hosted in informal settlements. This is expected to increase to 1.5 billion by 2020.

In sub-Saharan Africa, about 60% of all urban residents reside in slums and their level of deprivation is considered to be comparatively severe. In view of the recent urbanisation trends on the continent, much of the projected urban population growth is expected to be absorbed by slums.

In spite of this reality, slum dwellers continue to be marginalised, brutalised by the state and forcefully evicted. They are also frequent victims of demolitions and displacements. However, slums are critical for the future wellbeing of many urban residents across the continent because they provide a refuge.

This is true in Accra where close to half of the city’s population live in informal settlements.

In this article, we shed light on the broader dynamics of urban housing, and the rental regime that has pushed many people into the informal settlements. We argue that slums are more than just marginalised spaces of abject poverty and neglect.

Accra’s housing crisis

Housing in Accra is something of a paradox: a boom in supply for the wealthy, and scarcity for those at the lower ends of the income strata.

According to the Ghana Housing Profile, 60% of all urban households in Ghana occupy single rooms. Only 25% of households own a house. The remainder either rent or live rent-free in a family house. Urban housing is also regarded as very expensive.

Because of a lack of affordable, decent and secure shelter for the low-income population it’s generally accepted that there’s a housing crisis in the Ghanaian capital. This crisis was instigated by the withdrawal of the state as an active provider of housing.

The state withdrew following the adoption of the World Bank and International Monetary Fund’s structural adjustment programs introduced in the 1980s. At that point market-led policy became the mainstay in housing provision. The private rental housing market was commercialised resulting in a boom in profit-driven housing production that targetted high-income residents.

Exclusive apartments, gated communities and high-end residential units mushroomed across the poorly controlled housing landscape.

Thanks to rising land prices, a decline in the access to land, and a lack of access to housing finance, many low-income and lower-middle class workers are pushed out of the housing market.

This has pushed most of them to rely on the informal rental sector. There, landlords exploit the vulnerability of the their tenants often demanding several years of rent in advance.

Can upgrading slums help solve the crisis?

About 45% of Accra residents live in some form of slum housing. These areas are overcrowded, have limited access to piped water and poor sanitation facilities. But this is only part of the picture. Slum housing means more to local residents than the stereotypical depictions of deprivation and poverty.

Urban slums like Old Fadama allow many people to escape the near homelessness that Accra’s housing crises creates.

Old Fadama is the largest informal settlement in the city of Accra. In media and political circles it is often cast as dystopian. But for many it’s the one of the few places they can be assured of access to cheap and alternative housing while still remaining close to core services in the city of Accra.

This informal settlement sits on public land that was initially acquired by the Government of Ghana for the Korle Lagoon Ecological Restoration Project. The project was abandoned and the land remained undeveloped until the 1980s when the informal settlement began.

Since then the population has grown substantially. Between 2004 and 2007, for instance, the population doubled from 24,000 to 48,000. The most recent data suggests that nearly 80 000 people now live in the area.

This exponential growth can be attributed to the fact that Old Fadama provides cheap, centrally located housing. Moreover, not all housing is substandard. Relatively better-quality houses can be found in unplanned areas at more affordable prices than other areas in Accra.

This is borne out by the fact that Old Fadama doesn’t only house the informal poor. A recent study suggested that about 15% are formal sector employees.

Old Fadama is an entry point to basic housing for those in both low-paid formal and informal employment. For many in this slum, access to cheap housing in the city’s economic heartland has made it possible to capitalise on their capabilities, and enabled them to try and move out of poverty.

Policy and project experimentation

There’s an urgent need for targeted interventions around slum housing in Accra. Fortunately, the 2015 National Housing Policy, and the newly established Ministry for Inner City and Zongo Development, are good starting points. Both emphasise support for the urban poor and low-income housing.

Additionally, civil society groups are experimenting with collective self-help housing– such as the Amui Dzor Housing and Infrastructure Project implemented by the Ghana federation of the urban poor in collaboration with the government and UN Habitat– for low-income groups. In view of this, we suggest that there is a need to combine policy support with project experimentation for house improvement in urban slums.

This should be considered as part of a housing program that involves state leadership in providing ‘real’ affordable housing. There is also a need to provide funds for social housing, enforce regulation of the rental market, and support the informal housing sector. This would add up to a solid commitment towards every citizen’s right to decent, secure and affordable housing.The Conversation


Seth Asare Okyere, Assistant Professor, Division of Global Architecture, Graduate School of Engineering, Osaka University; Jerry Chati Tasantab, PhD Candidate, School of Architecture and Built Environment, University of Newcastle, Australia, and Matthew Abunyewah, Casual Academics and PhD Candidate, School of Architecture and Built Environment, University of Newcastle

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Oct 14, 2018

Shipping goods to Nigeria by sea from the United States can leave a big hole in your pocket.

Analysis on overseas cargo and freight costs by MoverDB, an online resource for international shipping, shows that the cost of shipping both 20-foot and 40-foot containers to Lagos ports from New York is the most expensive globally. The report covers the shipping costs from New York and Los Angeles to 47 port cities globally.

The high costs of shipping to Nigeria do not correlate with distance. For instance, shipping from New York to Nigeria is nearly double the cost of shipping to South Africa even though Nigeria is closer, by nautical miles, to New York compared to South Africa.

Port city20-foot container (from New York)40-foot container (from New York)
Zayed (United Arab Emirates) $1,723 $2,572
Haifa (Israel) 1729 2581
Montevideo (Uruguay) 1816 2711
Beirut (Lebanon) 1943 2900
Buenos Aires (Argentina) 1993 2975
Cape Town (South Africa) 2542 3795
Auckland (New Zealand) 2645 3949
Sydney (Australia) 2797 4175
Jeddah (Saudi Arabia) 3086 4606
Apapa, Lagos (Nigeria) 4982 7436

Much of the high costs of shipping to Nigeria is tied up in entrenched inefficiency at its local ports. For starters, Nigeria has very few functional ports even though its economy—Africa’s largest—continues to rely heavily on imports. The slow pace of inspections and offloading of shipping arrivals means that congestion and bottlenecks are nearly perpetual in Nigeria’s biggest port in Apapa, Lagos. The ports’ inefficiencies have for years enabled and incentivized corruption from official and unofficial middle men promising to clear goods for a “fee”.

Last year, in a bid to ease import and export flow, the government launched reforms at the ports. The government worked to clear the ports of local touts who extort bribes and also mandated that the Apapa port run 24-hour operations. Yet, despite a federal executive order, neither measure has been fully implemented, according to a regular user of the port.

While the shipping prices in MoverDB’s report are accurate as of early 2017, anecdotal evidence suggests the reality hasn’t changed much since the reforms were introduced. Indeed, inefficiencies at the ports remained primed to allow clearing agents continue to play a key role in processing goods for importers while likely in cahoots with local customs officers. ”You can try to clear your container yourself but the problem is that customs will frustrate you. You have to go through an agent.” says the regular user, who asked not to be named as he still has to work with officials at the port.


Source: Quartz Africa

Oct 14, 2018

Twenty people have been arrested as police press a manhunt for Africa’s youngest billionaire who was kidnapped in Dar es Salaam two days ago, a minister said Saturday.

Mohammed Dewji, who at 43 is Africa’s youngest billionaire, was snatched by gunmen as he entered a hotel gym in Tanzania’s economic capital on Thursday morning.

“Up until now, 20 people have been arrested,” Interior Minister Kangi Lugola told reporters, without giving any detail on their identities. “Security forces are working day and night” to find him.

Officials have implicated the involvement of foreigners, saying he was taken by “whites”. Dewji is chief executive of the MeTL Group which operates in some 10 countries and has interests in agriculture, insurance, transport, logistics and the food industry.

According to Forbes, he is worth $1.5 billion (1.29 billion euros) and ranks 17th on the list of African billionaires. Between 2005-2015, he served as a member of parliament and in 2013, he became the first Tanzanian to grace the cover of Forbes magazine. Two years later, he was named Forbes’ Africa Person of the Year.

Dewji is also the main shareholder in Tanzania’s Simba FC football club.



Oct 12, 2018

A recent World Bank report showed that Somalia has one of the most active mobile money markets in the world, outpacing most other countries in Africa. It’s even superseded the use of cash in the country of 14 million people.

Victor Owuor asked Tim Kelly, an information and communications technology policy specialist at the World Bank and the report’s author, to explain the findings and what they mean for the country.

Why is mobile money so successful in Somalia?

Mobile money initially started as a simple exchange of airtime credit between users. Over ten years ago, mobile network operators formalised this by offering mobile money services. It was quickly perceived as a convenient and safe way of making transactions and storing money.

Unlike Kenya’s famous Mpesa mobile money transfer services, Somalia’s transfers are mainly available in US dollars. Though the companies offering mobile money services are mobile network operators, as in Kenya, they are increasingly forming part of large conglomerates that also offer banking and money transfer services.

In Somalia mobile money transactions are worth about $2.7 billion a month.

Several factors have encouraged the impressive uptake of mobile money:

Many Somalis own mobile phones – about nine out of ten Somalis, above the age of 16 own one.

Nearly 60% of Somalia’s population is nomadic, or semi-nomadic, and move around a great deal, to find adequate grazing and water for their livestock. So mobile money suits their lifestyle and is also used to facilitate trade.

Concerns over the high prevalence of fake money, absence of monetary regulation, capacity, and limited access to traditional banking services also make mobile money an effective substitute for cash.

Today, mobile money also facilitates vast remittance flows which are critical to most Somali households due to a lack of opportunities in the Somali labour market. Taking advantage of this trend, remittance companies are increasingly partnering with mobile operators to transfer funds directly to recipients’ mobile money accounts.

How many people are using it and what is it mostly used for?

Our household survey data suggests that about 73% of Somalis above the age of 16 use mobile money services at least once a month – though most use it a few times a month, and high income earners use it a lot more. About 155 million mobile money transactions take place every month.

It’s used for a wide range of things.

One of the most common is to pay bills – for purchases between $2 and $300. Mobile money is thus far more widely used than cash. Two thirds of those surveyed use it to pay for items like water, electricity and charcoal. A third claim to use it to buy groceries, durable goods and livestock.

Close to 40% use mobile money to pay their children’s school fees. It’s also frequently used to send money to friends and family.

We also found that it’s being used to save.

Currently, transactions made are mainly person-to-person payments, but there is growing uptake among businesses. We have seen that receiving salaries through mobile money has, for example, been an important factor encouraging further uptake.

What have the benefits and the risks of this growth been?

Somalia lacks a strong formal banking system. Only about 15% of the population has a bank account. Mobile money has helped to expand financial inclusion.

For vulnerable groups, it’s a convenient and fast way to access money quickly. And because it’s viewed as faster and safer than cash handouts, many aid agencies use it to reach remote villages.

As most shops accept mobile money, it also offers beneficiaries more flexibility, and avoids a requirement to travel, which can in turn minimise risk of security incidents.

Nevertheless, there are some considerable risks in the mobile money system. The biggest is a lack of regulation which makes the system fragile and fragmented.

It is also vulnerable to money laundering and terrorism financing. This is because there is a weak “know your customer” compliance, in line with global banking standards, meaning few SIM cards and mobile money accounts are registered using a valid form of identification. Ultimately, this results in limited accountability and tractability.

Another risk is the fact that there’s no assurance that the funds will always be available, as they would be in a normal bank account. That’s because there’s no guaranteed parity between the mobile money balances held by mobile operators and those held in individual and business accounts.

Transfers in Somalia are predominantly available in US dollars, which isn’t healthy for the country’s economy. This is changing – for example, Somaliland obliges that sums under $100 be made in Somali shillings.

The industry also remains largely untaxed, meaning it fails to help raise critical government revenue.

How is mobile money in Somalia different from other African countries?

A few things are different.

Banking, telecommunications and money transfers are so closely intertwined that its resulted in the emergence of two large conglomerates, with partnerships between a mobile network operator, bank and money transfer organisation. This is not really the case elsewhere in Africa.

Also, operators have adopted a different business model, based on indirect revenue generated from other services – like the sale of airtime. They are therefore able to offer mobile money between users as a “free” service (without transactions charges or taxes). This is not the case in many other countries in the region.

Another factor that’s different is the virtual absence of regulatory supervision despite the fact that mobile network operators control vast sums in circulation.

Operators also rely on their own distribution network, not external agents (as they do in Kenya). This means that coverage is more limited.


An earlier version of this article carried an incorrect number for total mobile money transactions in Kenya. It has been removed.The Conversation

Victor Odundo Owuor, Senior Research Associate-One Earth Future Foundation, University of Colorado

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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