Claire Scharwatt: ZAAD is one of the most successful mobile money services globally. Can you give us an overview of the service and share an update on its level of adoption in Somaliland?
Abdikarim Mohamed Eid, Telesom CEO: Mobile money has become an integral part of daily life for Somaliland’s population, allowing individuals and businesses to transact securely and instantly without any geographical barriers. Our mobile money payments system, ZAAD, has especially increased the interaction between rural and urban communities. People in rural communities are no longer required to travel for days to get monthly supplies; instead, they can now place orders remotely to be delivered directly to their location. As adoption and efficiency of the service has grown, the need for carrying cash has become smaller and smaller, moving the country towards a digital-based economy.
ZAAD services was launched in June 2009 and allows customers to transfer and receive digital remittances and to pay bills among other services, including payroll and salary payments. As highlighted in the GSMA’s case study on Telesom ZAAD’s success in Somaliland, ZAAD quickly gained significant traction in Somaliland, with almost 40 per cent of Telesom subscribers actively using ZAAD within the first three years of launch. Over the years, registration and usage of ZAAD has increased steadily, with the service being used by 70 per cent of Telesom mobile subscribers and active ZAAD users making on average sixty transactions per customer every month.
Claire Scharwatt: Can you tell us about M-Exchange, Telesom’s latest mobile money innovation?
Abdikarim Mohamed Eid: In March 2018, we launched the Mobile Money Exchange (M-Exchange) to complement existing ZAAD services. M-Exchange gives users the flexibility to easily exchange US dollars with Somaliland Shillings in an automated way, directly on their mobile phone without the need to physically visit an exchange bureau. M-Exchange allows ZAAD users to instantly access the conversion rates offered by various licensed money exchange companies and select the best offer. They can then convert the US dollars they have on their ZAAD mobile money account into Somaliland Shillings which they can use to send money to a friend, pay for a bus ride, electricity bill or to buy food in the market.
Claire Scharwatt: Why was it important to add a currency exchange functionality to ZAAD?
Abdikarim Mohamed Eid: ZAAD was already using a dual currency platform. By adding a quick and easy way for them to convert their funds from US dollars to Somaliland Shillings on ZAAD platform, our customers are going to enjoy an unprecedented level of flexibility and convenience, which is key to sustain a strong level of mobile money usage. Somaliland’s strong reliance on remittances and the widespread usage of US dollars including for import/export and payroll payments, has created the need for an efficient way to convert foreign currency into Somaliland Shilling on ZAAD platform to improve the accessibility of funds. Remittances are a lifeline for both rural and urban communities within Somaliland.
Mobile money has created a digital economy that forges close links between the diaspora community and their relatives back home. It provides the diaspora community with the much-needed convenience of sending money quickly, at anytime and anywhere, and gives the local community the security of receiving cash into their own pockets seamlessly and without delay. In addition, M-Exchange will be particularly critical in the context of the recent regulation issues by the Central Bank of Somaliland, which restricts the use of US dollars to person-to-person (P2P) transfers and merchant payments above 100 US dollars. All transactions below that threshold now need to be conducted in Somaliland Shillings. The Central Bank of Somaliland has a supervisory role over the mobile money industry and we implement and adhere to KYC & AML policies to conform with national & international compliances.
Claire Scharwatt: As the CEO of Somaliland’s largest mobile operator, why is it important to continue investing in mobile money?
Abdikarim Mohamed Eid: Investing in mobile money remains a strategic priority for Telesom, driven by a strong motivation to bank the unbanked – particularly those with income levels of one hundred dollars or less per month, which is a large proportion of ZAAD users. We were determined to find a way to help these customers to efficiently access their dollar account in order to buy goods and services with no geographical barriers. It is a great privilege that Somaliland is the first country in the world to provide this kind of service. M-Exchange will provide faster, convenient and cost-effective ways for the customers to convert currency using their mobile which will further increase the much-needed financial inclusion of the middle and low-income families.
Mobile money propels the economic growth of the developing countries, and thus creates new business opportunities, shifting society towards cashless society. A digital economy is today’s reality; therefore, mobile network operators must strive to enhance and invest more in developing user-friendly platforms.