rift valley institute research paper 4

Following Mobile Money in

Somaliland

gianluca iazzolino
rift valley institute research paper 4

Following Mobile
Money in Somaliland

gianluca iazzolino
Published in 2015 by the Rift Valley Institute (RVI)
26 St Luke’s Mews, London W11 1DF, United Kingdom.
PO Box 52771, GPO 00100 Nairobi, Kenya.

THE RIFT VALLEY INSTITUTE (RVI)

The Rift Valley Institute (www.riftvalley.net) works in Eastern and Central Africa to bring
local knowledge to bear on social, political and economic development.

THE RIFT VALLEY FORUM

The RVI Rift Valley Forum is a venue for critical discussion of political, economic and social
issues in the Horn of Africa, Eastern and Central Africa, Sudan and South Sudan.

the author
Gianluca Iazzolino is a PhD candidate at the Centre of African Studies (CAS) at the
University of Edinburgh and a fellow of the Institute of Money, Technology and Financial
Inclusion (IMTFI) at the University of California Irvine. His research focuses on Kenya,
Uganda and Somaliland, focusing on ICT, financial inclusion and migration.

RVI Executive Director: John Ryle

RVI HORN OF AFRICA & EAST AFRICA REGIONAL DIRECTOR: Mark Bradbury
RVI information & programme administrator: Tymon Kiepe
rvi senior associate: Adan Abokor
editor: Catherine Bond
design: Lindsay Nash
MAPS: Jillian Luff, MAPgrafix
ISBN 978-1-907431-37-1
COVER: Money vendors sit behind stacked piles of Somaliland shillings in downtown
Hargeysa, buying cash in exchange for foreign currency and ‘Zaad money’.

RIGHTS
Copyright © The Rift Valley Institute 2015
Cover image © Kate Stanworth 2015
Text and maps published under Creative Commons license
Attribution-NonCommercial-NoDerivatives 4.0 International
www.creativecommons.org/licenses/by-nc-nd/4.0
Available for free download at www.riftvalley.net
Printed copies available from Amazon and other online retailers, and selected bookstores.
 YEMEN
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MAPgrafix 2015

Boundaries
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Buur Gaabo © Rift Valley Institute 2015

KENYA Ras Kamboni Boundaries and names shown do not imply
www.riftvalley.net
endorsement by the RVI or any other body

Map 1. Somalia
 Contents

Summary 5

1. Introduction 8
2. Outlining Somaliland’s financial landscape 13
3. An overview of Somaliland’s telecom sector 19
4. Overcoming scepticism 25
5. Challenges and convergences 35
6. Conclusions 38

Glossary of acronyms, words and phrases 40

Bibliography 41

MAPS
Map 1. Somalia 3
Map 2. Somaliland 43

4
Summary

Somaliland’s first mobile money platform was launched in 2009.

Called Zaad—meaning ‘to grow’ or ‘to prosper’ in Arabic—it was
started by the popular mobile phone company, Telesom. Zaad’s
mobile money transfer service has since become a feature of a
financial landscape hitherto dominated by Somali remittance
companies. Today, Zaad has a profound impact on the way people
in Somaliland save and transfer money, so much so that industry
organizations such as the Groupe Spéciale Mobile Association
(GSMA)—a global association of mobile telephone operators—
view it both as an example of best practice in financial inclusion,
and of the transformative potential of mobile money.
This paper uses qualitative studies to examine the way Zaad
is reshaping livelihoods and looks at the implications of its popu-
larity for the relationship between state and non-state actors and
its effect on Somaliland’s institutional framework. These studies
challenge the dominant, technocratic view of mobile money by
examining its neglected political and economic dimensions, shed-
ding light on issues of legitimacy and trust and the relationship
between the state and citizens. Far from being financial, the story
of mobile money is instead a story of converging and conflicting
narratives of statehood.
Although Somaliland broke away from the rest of Somalia in
1991, it lacks formal international recognition as an independent
nation state. As a result, no international commercial bank has
offices there. But the history of its many remittance companies
goes back to the 1970s, when hundreds of thousands of Somalis
began sending money back home from jobs abroad, mostly in
the Arabian Gulf. Zaad entered a market dominated by these
well-established Money Transfer Operators (MTOs). It has since
managed to outperform MTOs inside Somaliland, even in key
economic sectors such as livestock and trade. Its success is widely
attributed to Telesom’s business model and outreach strategy, as

Summary 5
 well as to Zaad’s flexibility, popularity with retailers, and the fact
that its money transfers are free of charge.
Zaad has grown because it uses US Dollars, meeting popular
demand for hard currency in Somaliland. This helps people
transfer and store US Dollars in Somaliland, giving them a mecha-
nism to cope with a domestic economy whose volatility the state
of Somaliland seems unable to address. In May 2015, following
pressure from the government and Somaliland’s Central Bank,
Telesom unveiled a new Zaad service in Somaliland shillings
(ShSl). Its initial operations were limited.
In rural areas, Zaad faces other constraints, with distribution
and local perceptions of the service affected by several factors.
Less reliable network coverage and network outages discourage
people in rural areas from using it when other options like hard
cash are at hand. Furthermore, Telesom’s customer policy requires
ownership of an official identity card (ID) to use the service.
Women in rural areas often lack official documentation, and even
women who can use a male relative’s ID to open an account do
not always do so, risking losing control of their money. Zaad is
primarily viewed as an interface with the urban economy, being
more popular with farmers travelling to town on market days to
sell livestock or vegetables than with other rural inhabitants.
In Somaliland there is a division between those people and
organisations who use foreign currency and those who use local
currency: the first is between the large-scale businessmen and
international relief and development workers who operate in US
Dollars and civil servants who are paid in Somaliland shillings
by the state; the second is between urban inhabitants who use
US Dollars and rural inhabitants who use Somaliland shillings.
Businesspeople, employees of NGOs and other international
organizations, and those with a sizeable flow of US Dollars from
overseas, are more able to diversify their financial practices. Stuck
within the shilling economy, most civil servants criticize Tele-
som’s influence on currency use as excessive and have called for
stricter government oversight of the company’s assets.
Zaad is shielded from the Central Bank’s scrutiny because
there are no local banking laws to regulate it. This is a reflection
of the weakness of Somaliland’s state institutions. Civil servants

6 Following Mobile Money in Somaliland

portray the popular use of the US Dollar as something that under-
mines the sovereignty of the state. While nationalistic in tone,
such anti-Zaad rhetoric is a projection of vested interests, and
is sometimes connected to a historic loyalty to the rival heavy-
weight of the Somali money transfer business, Dahabshiil, which
originated in Somaliland and started operating internationally in
the late 1990s.
Importantly, Zaad has not replaced other MTOs, which
continue to serve as a financial interface—in US Dollars—between
Somaliland and the rest of the world. Within the territory, shil-
lings continue to be the main means of monetary transaction with
the state. This is being challenged by Zaad, which facilitates the
internal circulation of dollars. Its apparent success in ‘banking the
unbanked’, however, has yet to be properly verified. Despite its
undeniable impact, many argue that true global financial inclusion
will happen only when international banks open up in Somaliland.

Summary 7
 1. Introduction

1 Zaad is also a word This report charts the distribution of mobile money across the
traditionally used by
financial landscape of Somaliland. It focuses on the country’s first
Somali pastoralists for a
group of items essential and, so far, only mobile money platform, Zaad,1 a service devel-
for travel. oped by Telesom, the leading mobile phone company or Mobile
Network Operator (MNO) in Somaliland. The report examines
the way the Zaad service is reshaping business practices, as well as
the implications of its popularity on the relationship between state
and non-state actors, and the effect this might have on Somalil-
and’s institutions. In particular, this study examines the following
questions. What drives the circulation of mobile money? How
is Zaad redefining the way Somalilanders use and think about
transferring and storing money? What underpins the differences
in their patterns of use? And, finally, how is the Somaliland state
viewing the popular use of Zaad?
This study places the phenomenon of mobile money within the
context of multiple currencies and interwoven financial circuits.
It seeks to unearth the dynamics at work in a polity immersed in
state-building and struggling for international recognition. While
discussing the key features of Zaad across Somaliland, the study
aims to engage in a broader debate on financial inclusion that, in
recent years, has held up Somaliland’s Zaad as an example of the
transformative potential of mobile money.
The paper highlights the multi-layered impact of mobile money
as local actors see it, their perspective largely depending on their
own position in relation to the state and the market. Zaad thus
emerges not only as a driver of change in the way people transfer
and save money but as the object of interpretations, reflecting
national attitudes towards legal tender as well as towards the
state’s ability to handle inflation and the international financial
system. The evolution of mobile money, as well as more ingrained
ideas of money and finance, both become lenses through which
to understand the limits and the potential of Zaad to help people
gain access to financial services. It also sheds light on issues of

8 Following Mobile Money in Somaliland

legitimacy and trust, stemming from the blurred line that exists 2 Davidson and Pénicaud,
‘State of the Industry:
in Somaliland between state and non-state actors.
Results from the 2011
Zaad is one of about 130 mobile money systems to have sprung Global Mobile Money
up across sub-Saharan Africa in the last decade. Eastern Africa, in Adoption Survey’, GSMA/
MMU, 2012.
particular, is considered one of the world’s most dynamic markets
3 Pénicaud and Katakam,
for mobile money,2 mostly because of the pioneering success of ‘State of the Industry 2013:
Safaricom’s M-Pesa mobile money transfer system in Kenya. (The Mobile Financial Services
word pesa means money in Kiswahili.) The widespread distribu- for the Unbanked’, GSMA/
MMU, 2014.
tion of the mobile phone in Africa in a very short span of time has
4 Schwittay, ‘The financial
facilitated the take-up of mobile money across the region. Given inclusion assemblage:
the low level of public access to formal banking institutions, the Subjects, techniques,
rationalities’, Critique
idea of delivering financial services through mobile phones has
of Anthropology 31/4
gained legitimacy in the debate on ‘how to bank the unbanked’— (2011): 381-401; Rahman,
namely, the possibility of reaching the roughly 2.5 billion people ‘Financial inclusion as tools
for combating poverty:
in the world who are estimated to have no access to financial Joesph Mubiru Lecture’,
services.3 Bangladesh Bank Quarterly
7/2 (2009); Sarma and
As an approach to poverty alleviation, this idea has been main-
Pais, ‘Financing inclusion
streamed in the development community, revolving, as it does, and development’,
around the concept of financial inclusion.4 Within the context Journal of International
Development 23 (2011):
of this debate, mobile money telephony is seen as a key inno- 613-628; Economic
vation, capable of bringing about development and improving Intelligence Unit (EIU).
‘Global Microscope 2014:
livelihoods. Defined as ‘a network infrastructure for storing and The enabling environment
moving money that facilitates the exchange of cash and electronic for financial inclusion’. The
value between various actors’,5 it is considered a strategic innova- Economist, 2014.

tion that can cut costs and extend the reach of financial services.6 5 Kendall et al. ‘An
Emerging Platform: From
This more development-oriented approach—as opposed to a Money Transfer System to
purely financial one—carries with it an understanding of the trans- Mobile Money Ecosystem’.
Innovations 6/4 (2012):
formational impact of mobile money that captures the complex
49-64.
way innovations are adopted in everyday use. Studies on other
mobile money platforms, such as M-Pesa in Kenya, suggest that
mobile money services reconfigure pre-existing financial practices.
And, in doing so, mobile money prompts changes not only in
businesses and livelihoods, but also in the relationships between
different financial actors.
In the case of Somaliland, this change of dynamics between
different financial players has particular relevance. Somaliland is
often portrayed as an international anomaly—an African success
story of political stability, it serves as a living laboratory for

Introduction 9
 7 Bradbury, Becoming theories on state-building. More than two decades after it split
Somaliland, Oxford and
from Somalia, though, this self-declared state is still inconsis-
Bloomington: James Currey
and Indiana University tently represented on maps, trapped in a diplomatic limbo, and
Press, 2008; Renders, yet functioning and, in some economic sectors, even thriving.
‘Appropriate ‘Governance
Technology? Somali Clan The contrast with Somalia, from which it seceded, is stark. When
Elders and Institutions the former British protectorate broke away in 1991 following a
in the Making of the
rebellion against the regime of President Siyaad Barre, it began
“Republic of Somaliland”’,
Africa Spektrum 42/3 forging a path that—despite tensions and hurdles—has led to its
(2007): 439-459. relative stability today. Much debate has since focused on why
8 The Somali-speaking Somaliland did not follow Somalia’s fragmented fate. This has
region as a whole has a
long history of non-state
involved discussing the governance structures that emerged,
currencies tracing back as well as the structures shaped by many different actors after
to the mid-19th century, declaring independence.7
when the Maria Theresa
thaler was the most The convergence of political, economic and traditional elites
popular coin in Ethiopia, lies at the very heart of Somaliland’s contemporary history. The
as well as along the Red
Sea and in the Arabian
dynamics of these relationships, which are not void of tensions,
Peninsula (Tschoegl, ‘Maria are constantly reproduced in the political, judicial, social and
Theresa’s Thaler: A Case
economic life of the state. Since declaring independence, the busi-
of International Money’,
Eastern Economic Journal ness community has been able to operate with a relative amount
27/4 (2001): 445-464). of freedom. It has played an active role in building the state’s
9 Bradbury, Becoming financial infrastructure, which in turn, whether intentional or not,
Somaliland
has lent the political leadership some legitimacy. Business people
have been involved in everything from decisions concerning the
printing of the national currency to the control of monetary circu-
lation.8 Somaliland’s two most dynamic sectors—remittances and
telecommunications—have contributed to a degree of economic
growth, even with a lack of sovereign recognition. This has
brought Somaliland from the fringes of international politics and
the global economy to being distinctly transnational.9 A significant
percentage of Somaliland’s citizens possess a foreign passport, its
international phone rates are among the cheapest in the world,
and foreign currencies—such as the US Dollar—circulate freely
alongside the Somaliland shilling, the legal tender.
The close, often overlapping relationships between Somalil-
and’s politicians, business people and traditional leaders, and
the blurred line between politics and business that is a critical
feature of the country’s political make-up, have also shaped the
rapid uptake in Somaliland’s use of mobile money. The story of

10 Following Mobile Money in Somaliland

mobile money in Somaliland is one of converging and conflicting
narratives of statehood, and offers insights that challenge the
dominant, technocratic view of mobile money to illustrate its
otherwise neglected political and economic dimensions.

Methodology
The research for this paper was carried out in Somaliland in early
2014, using qualitative methods of data collection. It focused on
how people use mobile money and how they make sense of it as
an innovation in relation to older, more familiar systems of storing
and transferring value.
The paper draws on a wide-ranging review of industry litera-
ture, policy papers, and corporate communications and official
reports; on seventy loosely structured interviews conducted in
three places: Hargeysa, Somaliland’s capital city of about 725,000
inhabitants; Berbera, a port city of about 70,000 residents; and
Tog Wajaale, an important border crossing into Ethiopia, of
some 10,000 inhabitants. Other interviews were carried out in
rural communities on the outskirts of Hargeysa and along the
Hargeysa–Berbera road.
The interviewees included key informants, such as Zaad
service managers and agents, retailers or merchants and other
individual users, as well as money transfer operators, executives
and agents. It also includes large, medium and small-scale busi-
ness owners, ministers, civil servants, traditional leaders, and
employees of NGOs and international organizations. Merchants
and customers were randomly selected in shopping areas across
Hargeysa and Berbera, while state officials were chosen for their
knowledge of, or involvement in, issues related to Zaad or to the
country’s monetary policy.
The lack of quantitative data on the money transfer busi-
ness reflects a general reluctance among those involved to give
out figures about how much money they are handling or other
aspects of their activities, as their operations depend on secrecy
and confidentiality. Time constraints meant it was not possible to
do research in the eastern Sool and Sanaag regions, where sepa-
ratist tensions run high and the Somaliland shilling is not always

Introduction 11
 accepted. This might have offered insight into the way Zaad is
providing an alternative to the Somaliland shilling.
The first part of this paper provides an overview of Somalil-
and’s financial landscape, paying particular attention to the roles
of the Central Bank and of the MTOs—especially the largest,
Dahabshiil. The second part examines the origins of Zaad as an
MNO, as well as looking at the business model. It owes its mate-
rial largely to a case study of the GSMA’s Mobile Money for the
Unbanked (MMU) unit. And the third part discusses the wide-
spread adoption of mobile money as a major method of payment,
and examines its impact on one of Somaliland’s key economic
activities, the livestock trade. The paper concludes by discussing
areas of convergence and areas of tension emerging between
Somaliland’s different financial actors.

12 Following Mobile Money in Somaliland

2. Outlining Somaliland’s financial
landscape

The legal tender of the Republic of Somaliland is the Somaliland 10 In mid-2015, the
exchange rate was ShSl
shilling, but a feature of the country’s financial landscape is
7,200 to USD 1.
the widespread use of the US Dollar, for which the shilling is
11 Khat is a small tree
exchanged.10 Given the country’s heavy reliance on imports, the and cash crop grown in
price of imported goods is often displayed in US Dollars. Yet, highland areas of Ethiopia,
Kenya and Yemen, mostly
labelling Somaliland’s economy as ‘dollarized’ is an oversimplifi- for Somali and Yemeni
cation. National currency circulates in three denominations: 500, markets, where popular
1,000, and 5,000 shilling bills—the latter introduced in 2011 to demand for it is high.
Chewed fresh, its leaves
make it easier to carry around. Ethiopian birr are also exchanged contain a relatively mild
for Somaliland shillings, particularly in borderland areas. stimulant. Also written
as qat.
The plurality of currencies in use reflects the different factors
that drive Somaliland’s economy. The US Dollar is well distributed
in urban areas because the main sources of it are remittance compa-
nies, international trade and livestock traders, and international
organizations and NGOs—almost all of them based in cities. The
Somaliland shilling is different: its main source is the Somaliland
state, which pays its civil servants in its national currency. Shilling
notes are often used as petty change or pocket money in place of
metal coins because their value is so low. Shillings are popular in
rural areas, where small transactions are common. Ethiopian birr
are usually used for the khat business—khat is exported daily from
Ethiopia—and where access to US Dollars is restricted.11
In the absence of international commercial banks operating in
Somaliland, there are two major financial institutions: MTOs and
the Bank of Somaliland.

Money Transfer Operators

The attitude of many Somalilanders towards their country’s finan-
cial institutions is rooted both in the history of engagement by
businessmen in politics and in shaping monetary policy, and in an
old distrust of Somalia’s Central Bank, before Somaliland’s 1991
secession. The two aspects are intertwined. In the latter years

Outlining Somaliland’s financial landscape 13

 12 Omer, Supporting of the Siyaad Barre era, private actors—and most particularly
Systems and Procedures
money transfer operators—began stepping into the void left by
for the Effective Regulation
and Monitoring of Somali state institutions eroded by corruption, cronyism and inefficiency.
Remittance Companies Key external sources of currency came from cross-border trade and
(Hawala), Nairobi, UNDP
Somalia, 2004. migration, the latter generating the substantial sums of money
that have shored up the Somali economy since the 1970s.
At that time, migratory routes went east towards the Arabian
Gulf, where many Somalis found employment in a booming oil
industry. Networks of agents, often connected to each other by
kinship, facilitated the transfer of value from one place to another
using a practice known across the Indian Ocean and South-East
Asia as hawala, meaning ‘transfer’ in Arabic. Within the Somali
context, it was initially based on high-value goods bought in the
Gulf and then shipped to and sold in Somalia.12 Later, transfers
became mostly immaterial, their value no longer backed by goods
but guaranteed by verbal agreement between hawala agents. This
system relied on the trust that bound customers to agents and
agents to each other. A hawala agent in one country would collect
money from a client, and instruct another agent elsewhere to
pay the money out to its intended recipient. Recipients without
valid documentation identified themselves by answering ques-
tions about their relationship to the person sending the money.
A third party vouched for them if they could not give the right
answers.
The money transfer operators that have emerged from the
hawala system over the past forty years have each followed similar
procedures. In terms of size and organization, however, they have
varied greatly, and their operating procedures have taken different
paths. While some have operated on informal agreements reached
by relatives at either end of a financial transaction, others have
diversified, building reputations as resilient and trustworthy
business enterprises. The absence of state institutions and a
functioning banking system means that familiarity with MTOs
has grown. The hawala system has been able to capitalize on the
fact that most Somali refugees and migrants do not have access to
formal financial institutions outside Somalia. Thus, today MTOs

14 Following Mobile Money in Somaliland

provide financial services to the Somali diaspora, enabling far- 13 Hammond, ‘Family
Ties: Remittances and
flung families to maintain and cultivate long distance financial
Livelihoods Support to
relationships. At the receiving end, they provide Somalis in the and between Somali
Horn of Africa with a vital lifeline to the world outside. Households’, Food Security
and Nutrition Analysis
The data on the exact value and volume of remittances to Unit, 2013.
Somaliland are imprecise—as opposed to all the Somali territo- 14 When the US assets of
ries, for which in 2015 remittances were estimated at USD 1.6 listed groups were frozen
billion—but the most updated survey maintains that about 44 per on 7 November 2001,
thousands of account
cent of households receive remittances.13 holders lost access to
The fact that MTOs are one of the few channels through which their savings. Shortly
afterwards, the US-based
Somalis can contribute to their families’ welfare became pain- international gateway for
fully clear after the 9/11 attacks in New York. In the wake of the al-Barakaat’s phone service
attacks, the US government blacklisted 62 individuals and orga- was blocked.

nizations for their alleged connections to al-Qaeda, including the 15 Cockayne and
Shetret, ‘Capitalizing
then largest Somali MTO, al-Barakaat (barakaat means blessings on Trust Harnessing
in Arabic).14 Its assets frozen, al-Barakaat went bankrupt, with Somali Remittances
for Counterterrorism,
disastrous consequences for many Somali families.15
Human Rights and State
Besides funnelling remittances, MTOs play a crucial role in Building’, Center on
Somaliland’s main trade, livestock. As a key supplier of meat to Global Counterterrorism
Cooperation, April 2012.
the Arabian Peninsula, Somaliland requires the financial infra-
16 The first category
structure to facilitate backflows of capital from the Red Sea to comprises seven MTOs:
the Arabian Gulf. Thus, its MTOs provide the auxiliary services Dahabshiil, Deero, Omar
Global, E-Kaafi, Amal
for the export of cattle, sheep, goats, and camels, becoming an
Express, Almis Remittances
important source of hard currency, particularly the US Dollars so and Amoud Express. The
widely sought by Somaliland’s citizens for hedging against local second comprises ten
MTOs: Mustaqbal Express,
inflation. It is the MTOs that make it possible to send and receive Juba Express, Kaah
payments to and from the United Arab Emirates and beyond. In Express, World Remit,
Tawakal Money Transfer,
this, the choice of using one MTO over another depends on a
Hodan Global Online,
variety of factors—anything from having a personal connection to Idman Money Transfer,
an agent, to the reputed reliability of the MTO or its reach. Busi- Olympic Money Transfer
and Xarago Express.
nessmen who trade with importers/exporters in several countries
sometimes rely on a different MTO for each.
There are two kinds of MTOs in Somaliland: those registered
with the Ministry of Trade and Commerce that hold a licence they
renew annually; and those operating with a letter of approval from
the Central Bank that operate without a valid trade licence.16

Outlining Somaliland’s financial landscape 15

 17 Manson, ‘Money Dahabshiil
man serves the Somali
The demise of al-Barakaat cleared the way for the rise of Dahab-
diaspora’, Financial Times,
24 May 2011. shiil, today the leading Somali MTO and one of Africa’s most
successful businesses.17 In many ways, the story of this company—
established in 1970 by Mohamed Saeed Duale, a businessman from
Burco—represents the story of the Somali remittance business as
a whole. It is also part of the narrative of this north-western corner
of the Somali peninsula that, after thirty years of unification with
Somalia, returned to being Somaliland.
Dahabshiil’s initial geographical focus was on the Arabian
Gulf States. There it relied on middlemen who transferred money
from Somali workers by converting the value of their remittances
into goods, which were shipped back to their families or sold by
Dahabshiil’s agents in Somalia for cash, which they then handed
to the intended recipients in US Dollars or Somali shillings. Burco
was Dahabshiil’s initial headquarters, but it moved to Ethiopia
during the civil war in the late 1980s, where it served refugees
from Somalia. After Somaliland’s secession in 1991 it reposi-
tioned itself to meet the growing demands of refugees fleeing
from southern Somalia, opening an office in Hargeysa and Dubai
with branches elsewhere is Africa and in the West where Somalis
had resettled or had sought refuge. Mohamed Saeed Duale and,
later, his son, Abdirashid, were part of the state-building process
in Somaliland, donating money to local communities and forging
loyal relationships with politicians and other leaders. By doing
so, they consolidated the company’s dominant market position
in Somaliland.
On its website, Dahabshiil says it invests 5 per cent of its
profits in community regeneration projects for schools, hospitals,
agriculture and sanitation. With 5,000 agents in 144 countries,
it works with NGOs and UN agencies transferring funds across
the Somali region. Publicly, Dahabshiil is seen as having a privi-
leged, influential relationship with the Somaliland state. Despite
its position of strength, Dahabshiil rapidly came under pressure
from Telesom’s Zaad.
In response to this Dahabshiil launched E-Cash, a debit card,
in 2009, and established an Islamic lariba—or interest-free—bank,
in neighbouring Djibouti in 2010. A debit card with a magnetic

16 Following Mobile Money in Somaliland

band that worked in Dahabshiil branches and Dahabshiil-affiliated 18 Somaliland Central
Bank, ‘Law No. 54/2012’,
merchants, E-Cash could be used to withdraw cash and purchase
Government of
goods by swiping it in a card reader. But it needed a reliable Somaliland, 2012.
Internet connection to work. Every Dahabshiil account holder is 19 Bradbury, Becoming
entitled to an E-Cash card and at its peak in 2014, there were more Somaliland; Balthasar,
‘Somaliland’s Best Kept
than 4,500 E-Cash cashpoint machines and up to 2,500 transac- Secret: Shrewd Politics and
tions a day carried out on them in Hargeysa alone. The E-card War Projects as Means of
system was also active in Burco, Borama, and Berbera. It was State-Making’, Journal of
Eastern African Studies 7/2
popular with NGOs and international organizations, whose staff (2013): 218-238.
had personal Dahabshiil accounts. However, by 2015, the number
of merchants using E-Cash had significantly dropped, and many
shop-owners expected the business to fold.

Central Bank
Somaliland’s Central Bank started working in 1994, three years
after the country declared itself independent, but its status was
not ratified by parliament until 12 April 2012.18 The dissolution
of the Credit and Savings and Central Bank of Somalia in 1991
had led to a financial meltdown in which account holders lost
their savings, a traumatic event that still affects Somalilanders’
relationship with their Central Bank today. Banks had been seen
as unreliable long before the collapse of the Somali state, and
after it, control of the Somaliland shilling became a key political
issue. In the first, troubled years of independence, the government
relied on contributions from local entrepreneurs to help print a
new currency.19 The Central Bank strove to rebuild a monetary
system and mend citizens’ trust in the state’s financial institutions
and products.
Today, the Central Bank’s flow of Somaliland shillings is
generated from revenue collected by the Ministry of Finance.
This reserve is drawn upon to fund the machinery of the state
and tackle inflation through the purchase of US Dollars, espe-
cially at the start of the month and during celebrations such as
Ramadan and Eid, when the amount of hard currency coming into
Somaliland is higher. This purchase is done through a partner-
ship between the Central Bank and as many as 1,000 licensed
money vendors in central Hargeysa, most of them operating in the
area surrounding the city’s Oriental Hotel. The mechanism has

Outlining Somaliland’s financial landscape 17

 20 USD 1: SlSh 6,400– BOX 1. hagbed
6,800 (2004–2010); SlSh
5,800–6,000 (2010–2012);
SlSh 6,500–7,000 (2012– Also known across the Somali region as ayuuto (from the Italian
2013); SlSh 7,300–7,800 word aiuto, ‘help’), or shaloongo, the hagbed is a traditional Somali
(2014–2015).
rotating saving and credit association involving mainly (but
not only) women. A group pools money, putting in the same
amount each. Money is borrowed by each member in turn, for
reasons ranging from the purchase of livestock and other agri-
cultural items, to the setting up of small businesses and social
expenses for funerals or weddings. The group sets the rules of
the club, decides the timeframe and amount, and nominates a
paid manager to keep the books. Participants sign an agreement
defining the amount of money for which each member is liable.

worked reasonably well since 2005, reducing the degree to which

the country’s official currency fluctuates against the US Dollar.20
Aside from steering the country’s monetary policy, the ques-
tion of keeping inflation at bay is an important issue for a country
with such a negative trade balance. The Central Bank should
have the mandate to oversee Somaliland’s financial institutions
and enforce their compliance, but no regulatory framework for
the financial sector is yet in place. While a law on Islamic lariba
banking has been approved by the House of Representatives and
was signed by the President on 3 October 2012, parliamentary
debate concerning commercial banking law has been dragging
on for years.

18 Following Mobile Money in Somaliland

3. An overview of Somaliland’s
telecom sector

The development of the telecommunications sector in Somaliland 21 MNOs which share

the same owners or main
should be seen within the context of the sector’s development
shareholders—as in the
in the Somali peninsula as a whole, including in south-central case of Hormuud, Golis
Somalia and Puntland, east of Somaliland. Telecom companies and Telesom—do connect
to one another.
across these regions share two main features: their lack of regula-
22 Lindley, ‘Remittances in
tion and their strong links to MTOs, the money transfer operators. Fragile Settings: A Somali
The limited reach of regulators and the prominent role of local Case Study’, Households in
people of influence combine to shape the volatile environment in Conflict Network Working
Paper No. 27, Brighton:
which entrepreneurs negotiate their access to local markets. One University of Sussex, 2007.
important side effect of the regulatory vacuum in Somaliland’s 23 Hesse, ‘Where
financial sector is the fact that MNOs do not connect to each other, Somalia works’, Journal
of Contemporary African
which restricts consumers’ ability to make calls and transfer data,
Studies 28/3 (2010):
including mobile money, across different networks.21 This explains 343-362; Harper, Getting
the popularity of mobile handsets that are compatible with more Somalia Wrong?, London:
Zed Books, 2012.
than one SIM card, from different networks.
Historically, Somali remittances and telecommunications
businesses have been intertwined. Before the 1991 collapse of the
Somali state, telephone communication centres facilitated coor-
dination between the senders of remittances abroad and their
recipients. Communicating with relatives and receiving remit-
tances from them carries an intrinsic sense of social obligation,
encouraging the cultivation of ties both within the diaspora, and
between the diaspora and the homeland.22 MTOs have provided
their customers with cheap access to fast technologies, making it
possible for Somalis to exchange information with relatives living
abroad and solicit remittances from them. The money transfer and
communications industries have thus evolved in parallel, their
mutual relationship an example of ‘what works in Somalia’.23
The capital-intensive nature of the telecommunications busi-
ness means most mobile phone companies, the MNOs, are public
companies, known as shirkaad (s.) or shirkooyin (pl.) in Somali. In
the absence of a financial trading floor or stock market, shares

An overview of Somaliland’s telecom sector 19

 in these phone networks are traded through established MTOs,
which have become, almost by default, the most important finan-
cial institutions in the different Somali territories, by virtue of the
fact that they operate seamlessly across borders.
Typically, an entrepreneur setting up a company will open
an account using his or his clan’s MTO as a place to collect
money. The MTO is then the place where interested buyers go
to purchase shares in their company. Shares are not, however, on
sale to everyone. Often, those allowed to buy them are either local
religious leaders or those from the same clan as the company’s
founder and principle shareholder. Offering and acquiring a stake
in a shirkaad is thus a way of forging strategic partnerships, at a
business and a political level. Typically shirkooyin have very fluid
and fragmented shareholder structures, with one or more share-
holders—connected to each other through other means—usually
in charge of the company. MNOs are mostly associated with their
main shareholders, who can include members of different clans,
but shirkooyin are perceived as having a well-defined clan identity,
usually that of the main shareholder.
In south central Somalia, Hawiye sub-clans, particularly the
Abgaal, Habar Gedir and Duduble, have dominated the tele-
communications business. This is strongly linked to the money
transfer business, which is also dominated by Hawiye busi-
nessmen in south-central Somalia, by the Isaaq in Somaliland,
and the Daarood in Puntland. The telecommunications industry
also depends on territorial control to guarantee the security of
its infrastructure. From 1991 onwards in south-central Somalia,
Hawiye militias were the best positioned to influence the telecom-
munications sector because they held military sway. The fluidity
of conflict, however, put these structures to the test. Telecommu-
nications’ network blockades are still used to renegotiate previous
political arrangements. The telecom sector has strategic value,
something that is not lost on phone companies, which use the
fact that, in conflict, all parties need mobile telephony.
Pioneering mobile networks emerged after civil war broke out
in south-central Somalia in 1991. Among them was the al-Bara-
kaat Group of Companies (BGC) whose influence on the Somali
telecom sector was far-reaching. Founded by Ali Ahmed Nur

20 Following Mobile Money in Somaliland

Jim’ale, a Hawiye from the Habar Gedir sub-clan, BGC was the 24 Pénicaud and McGrath,
‘Innovative Inclusion:
parent company of al-Barakaat Money Transfer and al-Barakaat
How Telesom ZAAD
Telecommunications, as well as of Red Sea Telecommunica- Brought Mobile Money to
tions, Globe Tel Telecommunications, the Al-Barakaat Bank of Somaliland’, GSMA, 2013.

Somalia, and the Somali Refreshment Company. At its peak, in

2001, al-Barakaat Telecommunications was southern Somalia’s
leading company and largest employer. It had over 600 share-
holders, though Ali Ahmed Nur Jim’ale remained the majority
shareholder. When al-Barakaat’s money transfer operations went
bankrupt because of the US government’s freezing of its US assets
after 9/11, its telecom network also collapsed. This shock led to
an overhaul of the entire Somali telecom sector. The year 2002
saw the emergence of three new companies built on al-Barakaat’s
old telecommunication’s facilities, both its former premises and
its technology, in Ali Ahmed Nur Jim’ale’s former strongholds.
These companies were Hormuud in south-central Somalia, Golis
in Puntland, and Telesom in Somaliland.

From Telesom to Zaad to Salaam bank

Telesom has more than one million subscribers and accounts
for 85 per cent of mobile connections in the Somali territories.
About 40 per cent of them are active Zaad users.24 Forty-nine
per cent of Telesom is owned by Ahmed-Nour Mohamed Jimale,
with the remaining 51 per cent divided among more than 1,400
shareholders. When Telesom emerged, the market in Somaliland
was shared between Sitco—Somaliland’s first mobile company—
Nationlink, Somali Telecom Group (STG), Somtel and Sotelco. In
time, Telesom gained ground against the others. As it was a sister
company to Hormuud and Golis telecommunication companies
in Somalia and Puntland, it had the advantage that its customers
could call relatives or businessmen elsewhere in the Somali terri-
tories. Gradually, Telesom expanded its shareholder base and,
within a few years, began to outperform its competitors. This
dominant market position paved the way for the launch of Zaad
in 2009.
The model for the Zaad platform—the first-ever mobile money
service in Somaliland—was drawn from the M-Pesa mobile money
service launched by Safaricom in Kenya in 2007 and by Vodacom

An overview of Somaliland’s telecom sector 21

 25 Morawczynski, in Tanzania in 2008. Kenya’s M-Pesa is considered a success story
‘Exploring the Usage and
in terms of pioneering the popular use of mobile money, and an
Impact of Transformational
M-Banking: The Case of example of financial inclusion in Kenya’s specific socio-economic
M-PESA in Kenya’, Journal setting.25
of East African Studies 3/3
(2009): 509-525. A Telesom team that studied the mobile money systems in
26 Darood clans—
Kenya and Tanzania reached the same conclusions with regards
particularly Dhulbahante in to the specific settings and made recommendations to help adapt
Sool and Sanaag regions— them to Somaliland’s context. Thus, Zaad was designed to suit
have resisted the authority
of the Isaaq-dominated characteristics specific to Somaliland’s economy. To start with, it
Hargeysa government, would initially trade only in US Dollars, whereas the money transfer
the area remaining a
bone of contention with
services in the other two African countries used their national
neighbouring Puntland. currencies. According to Abdikarim Mohamed Eid, Zaad’s CEO,
the rationale for this was threefold. Firstly, the Somaliland shilling
was not in common use throughout Somaliland, particularly in
the eastern Sool and Sanaag regions bordering Puntland where
Somaliland’s sovereignty is contested.26 Secondly, Somaliland shil-
lings are problematic to trade in because inflation is high. Finally,
the US Dollar is much sought after by Somalis for storing value
and hedging against volatility.
To retain customers and meet popular demand at the low
end of the economy, Zaad’s service was initially free, though it
had plans to introduce transaction fees. An informal agreement
was reached, ahead of Zaad’s launch, between Telesom and the
Bank of Somaliland on how mobile money transfers would be
regulated. Telesom’s CEO agreed with the then Governor of the
Bank of Somaliland’s proposal that Telesom would have a hand
in writing the regulatory framework. Because it envisaged future
expansion beyond Somaliland’s borders, Telesom put in place
measures to comply with international anti-money laundering
guidelines prescribed by the Financial Action Task Force. After
obtaining a remittance licence from the Central Bank, Telesom
adopted a Customer Due Diligence policy, incorporating Know-
Your-Customer procedures, making it common practice to verify
the identity of customers through their nationally recognized IDs
or foreign passports.
Telecom’s launching strategy relied on its network of agents to
introduce Zaad to merchants and big business owners. Thus, Zaad
built on existing trust in the Telesom brand and the agents and

22 Following Mobile Money in Somaliland

merchants pioneering it. Prominent businesspeople in strategic 27 In the case of
Safaricom’s M-Pesa, GSMA
economic sectors were approached and shown the new product.
calculated the number of
Telesom agents were sent out to the Mahamud Haybe livestock times amounts equivalent
market on the outskirts of Hargeysa where they helped merchants to a single US Dollar
circulated through the
open new accounts. Elsewhere, they convinced employers to system. Measured against
adopt Zaad to help them manage their company payrolls. Many the total volume of money
that entered and exited
began to pay their employees’ salaries directly into their Zaad
between October 2012 and
mobile money accounts. March 2013, the ratio was
This outreach strategy helped familiarize people with mobile over 4.1.

money. It also laid the groundwork for a network of merchants 28 Pénicaud and Katakam,
‘State of the Industry 2013:
who accepted mobile payments. It was successful at getting people Mobile Financial Services
to store money in Zaad. In the mobile money business, this is seen for the Unbanked’.
as overcoming the single biggest hurdle. Most transactions are 29 Pénicaud and McGrath,
‘single-loop’, meaning that putting cash in is followed relatively ‘Innovative Inclusion:
How Telesom ZAAD
quickly by taking cash out.27 Storing credit in a mobile transfer Brought Mobile Money
service illustrates that its clients have a high level of trust in it. to Somaliland’.
For Zaad’s clients, the fact that more merchants were accepting
mobile payments acted as an incentive for them to use it too.
In early 2014, about 59 per cent of them kept an average balance
of USD 37 in their accounts.28 Most of Zaad’s subscribers were
carrying out more than 30 mobile transactions a month, espe-
cially in payments to retailers, 83 per cent of whom maintained
an average balance of USD 352.
The decision to focus on people-to-business (P2B) payments
has proven a key factor in Zaad’s popularity. It means mobile
money has had a huge and positive impact on the delivery of
crucial services, such as the delivery of power by the company
Kaah, which provides one third of Hargeysa with electricity. It
receives 65 per cent of its payments through Zaad, which it began
using for this purpose in 2011. P2B has meant Telesom has also
benefited from more distribution, increased sales, and reduced
customer turnover.29
Two years after launching Zaad in late 2011, Telesom estab-
lished the Salaam bank in order to expand the range of Zaad’s
services. Zaad and Salaam are autonomous but related—their
accounts synchronized through a system called KAAFI. Money
can be moved between the two platforms, by depositing it first
in a mobile wallet, backed up in a Salaam account. Up to USD

An overview of Somaliland’s telecom sector 23

30 Interviews with Ahmed 500 can be withdrawn at one time by mobile phone. A customer
Hashi Ooley, Minister
with accounts in both Zaad and Salaam can have access to micro-
of Telecommunications,
2011–2012. loans, issued through Zaad after their collateral—Telesom shares,
31 The new two- property or livestock—are vetted by a Salaam agent. The local
step procedure now recipients of such microloans can include institutions of higher
uses Unstructured
Supplementary Service
education.
Data (USSD). By 2014, Salaam had between 12,000 and 15,000 account
holders and branches in Somaliland’s main cities. It became the
first of Somaliland’s banks to use Swift codes, common to inter-
national bank transfers. In March 2014, Salaam inaugurated the
first automated teller machines (ATM) in Somaliland, as well
as in other Somali territories. Three ATMs connected to Visa,
Maestro and Mastercard were placed in the lobbies of the Safari
and Ambassador hotels in Hargeysa—both owned by Telesom
shareholders—and at the company’s main office in Hargeysa’s
central Khairia Street. These are mainly for foreigners and Somalis
from the diaspora who are generally more wary of using Zaad than
local residents.
Telesom has thrived in Somaliland’s regulatory vacuum. This
was created by benign financial neglect, mostly by Somaliland’s
Ministry of Telecommunications, which has lacked the resources,
qualified personnel, and an overall awareness of the economic
and strategic value of the telecommunications sector.30 The
Somaliland government has been unable to rein in the sector.
In 2011, the country’s president, Ahmed Mohamed Mohamoud
Silanyo, submitted a proposal to parliament to allow the state
to benefit from the revenues generated by telecommunications
giants. Prolonged parliamentary debate came to nothing, and
government remained unable to gain access to the telecommuni-
cations sector’s balance sheets or levy taxes on its revenue.
On 28 April 2015, Telesom announced the launch of the Zaad–
Somaliland shilling (SlSh) service. The design of Zaad’s platform
underwent a major overhaul. Not only was a dual currency wallet
introduced but Telesom simplified the procedure for money trans-
fers.31 The service to transfer and store the local currency was
made available in late May. No data on the volume of transactions
in shillings are available, but anecdotally, US Dollars seemed to
remain the most traded currency on Zaad.

24 Following Mobile Money in Somaliland

4. Overcoming scepticism

Zaad was met with scepticism by many in the business commu-

nity before gaining traction in 2010. Despite their familiarity with
Telesom and satisfaction with the company as a whole, business-
people were initially reluctant to process large amounts of money
through a mobile phone. Some shop owners who had registered
with Zaad as early as 2009, only started using it in daily transac-
tions a couple of years later when customer demand to do so
increased. The first Zaad clients learnt to trust the system by
depositing and transferring small amounts of USD 20 or USD 50
at a time. But, as the number of Zaad users grew, more and more
people began asking to be paid by mobile phone. Paying salaries
using Zaad was a ‘winning strategy’ for businesspeople, as the
owner of a furniture shop in Hargeysa testified. Its large scale
use by Somaliland’s main businessmen created a critical mass
of Telesom users with Zaad mobile phone wallets. Previously,
employees had been paid in cash withdrawn from a company
account in a local hawala or retrieved from a safety deposit box.
Companies with branches all across the country would have to
transfer cash physically from their headquarters in Hargeysa,
handing envelopes to truck drivers or sending salaries through
remittance agencies, incurring additional costs in the process.
A local trader dealing in petrol, food and cigarettes, with shops
in Somaliland, Ethiopia, and Djibouti, who was openly sceptical
about Zaad in 2009, began using it in response to requests from
individual employees and eventually adopted the system for all
of them. When Salaam bank was launched, he opened an account
through which he withdrew money to put onto his mobile wallet
from which he could make payments to his staff. Transport owners
also realized how useful the service could be and, in a country
where resources are concentrated in a few urban centres and the
roads connecting them often poor, they began to use Zaad to
transfer money to truck drivers in urgent need of spare parts or
fuel.

Overcoming scepticism 25
 Zaad has also had an important impact on the conduct of
trade, enabling small shop owners better delivery of goods and
services. The owner of a small convenience store on the outskirts
of Hargeysa said his customers placed orders and sent him money
by phone, making it possible for him to deliver items by wheel-
barrow, even to other neighbourhoods. Similarly, the manager
of a khat kiosk in Berbera said Zaad had helped her business
expand. Loyal customers could pay without coming in person,
their bundles of khat delivered to their doorstep on motorbike.
Members of saving circles, the hagbed, can make regular contribu-
tions to the Zaad account of the person in charge of it. In the past,
people living far away used ‘poor transport’ as an excuse, said the
khat seller, to avoid paying their dues. The existence of Zaad had
reduced the incidence of this, easing not only members’ payments
but also transfers to the scheduled beneficiary. Merchants explain
Zaad’s good uptake as filling a gap in the market. Referring to
the saying ‘the customer is king’, a young fashion designer from
Hargeysa called Fatuma said she had opened a Zaad account as all
her customers were asking to pay her through it.

Some women asked if they could send money on my number,

and at the beginning I did not know what to do. But they told
me that I could trust the system because their husbands were
paid with Zaad, and I accepted and gave it a try. And it was good,
not only because I did not lose my customers, but also because
I gained new [ones] all across the city. On top of that, I use
Zaad to send money to a business partner in Berbera who then
purchases the fabrics I need in India and Dubai using hawala.

Thus, Zaad took hold, appealing to businesspeople whose live-

lihoods depended on a combination of long-distance connections
and mobility.

Mobile money in rural areas

The distribution of mobile money in rural areas is constrained
by the following factors.

1. Limited access to electrical power. Many villagers rely on diesel

generators or solar panels, and people in more isolated

26 Following Mobile Money in Somaliland

 32 Data from an
communities are unable to recharge their handsets regu- unpublished study by
larly. Phones are turned on every other day or only when FAO Somalia ahead of a
cash transfer pilot project
someone is expecting a call from their relatives. According
conducted in Somaliland in
to data collected by the Food and Agricultural Organiza- early 2014.
tion (FAO), the cost of recharging a mobile phone ranges
from USD 4.10–USD 12.40 when the device is left on all
day; USD 2.40–USD 7.10 when it is switched on every
other day; and USD 1.20–USD 3.50 when the phone is
active for one in every three days.32 Recharging a mobile
phone therefore involves the sort of cost that users have
to consider carefully.

2. Network coverage and reliability. Telesom network outages

discourage people in rural areas from using Zaad if they
have other options to hand. Some are also sceptical that
its services are as free of charges, as it claims. A woman
from a small village between Hargeysa and Berbera said
she ‘cannot always trust the network. When you send
money through Zaad, you have to call the other person
to be sure that he has received the payment. Therefore,
you pay something.’ People often make Zaad payments
standing face to face to verify that their transactions are
successful.

3. Identity document or ID ownership. The scarcity of identity

card ownership in the countryside means Telesom’s official
policy on ID ownership is often sidestepped. A relative
can vouch for someone else by lending him his own ID
number. This is most commonly done for women. There
are no official figures on the number of undocumented
women living in rural Somaliland, but many female inter-
viewees said they had never needed to apply for an official
document because of their limited contact with state insti-
tutions. Many had opened a Zaad account using a male
relative’s ID. Some who found Zaad useful claimed to have
applied for an ID in order to stop relying on relatives to
use the service.

Overcoming scepticism 27
 Zaad is less relevant in rural areas, where the economy is
based predominantly on subsistence farming and where the
Somaliland shilling is the main currency used, often by women
in charge of household budgets. The shilling’s use for small cash
expenses has led to the popular perception that it is a woman’s
currency, whereas a hard currency retains its value across time
and space and is a male preserve. The tension that exists between
US Dollars and Somaliland shillings captures another conceptual
dichotomy, too, between what a businessman in Hargeysa called
‘big bites’—money linked to long-term investment and cross-
border mobility—and ‘small bites’, or money used for everyday
purchases.
Mobile money is not as gender-specific, and when it comes
to using Zaad, it is difficult also to draw a sharp divide between
urban and rural. Rather, Zaad is seen as an interface between
both. It is popular among people dwelling in rural areas who use
Somaliland shillings in their daily lives, since many have frequent
contact with traders from urban areas and travel to Hargeysa on
market days to sell livestock or vegetables. Often, even if they are
paid in US Dollars, they change the money into Somaliland shil-
lings. Urban retailers respond in kind. A jewellery seller in central
Hargeysa called giving customers from rural areas their change in
US Dollars ‘a waste’. He always kept Somaliland Shillings for them
instead. ‘They prefer shillings because it is the money they use
the most.’ They also invest it in assets such as gold, which they
favour for social payments, like dowries, and as an investment.

Moving US Dollars
Zaad’s focus on employers paid off because it made paying salaries
in US Dollars significantly easier. Companies that were using US
Dollars to pay their employees’ salaries were already won over
by the fact that using Zaad made it possible to avoid the rush
for hard currency that marked the beginning of each month.
Employers could now store US Dollars in their accounts and
transfer employees’ wages directly into their Zaad mobile wallet.
Zaad, an MNO, thus facilitated the storage of hard currency,
previously something done by MTOs. On the domestic market,
it took over economic sectors that had traditionally depended

28 Following Mobile Money in Somaliland

on MTOs. At Hargeysa’s Mahamud Haybe livestock market, for
example, traders used to seal a purchase with promissory notes—
letters signed by a buyer that authorized a seller to withdraw
money from a branch of an MTO in which the buyer had deposited
US Dollars. Though initially hesitant, as people became more
familiar with the system and minor issues with the network were
resolved, using Zaad to pay for larger breeds of livestock, such
as camels and cattle, became more common. This is different for
goats and sheep as it involves lower amounts. Traders received
payments directly into their Zaad accounts, storing as much as
USD 100,000 in their mobile wallets, and using it to organize the
transfer of livestock to their destination as well.
The popular use of Zaad has reduced the ‘fraction problem’,
as one shop owner has called it, with the cost of goods displayed
in US Dollars and cents. This is especially the case for imports,
which in Somaliland is almost everything with the exception of
some local foods. Customers no longer have to use Somaliland
shillings to pay off a balance of a few US Dollar cents. Using Zaad
on their mobile phone, they can pay the full amount—cents and
all—in one go.
Key utilities have seen their business made easier too. In the
past, said Abdi Rahman Jama Farah, chief cashier of the Kaah elec-
tricity company, people from the company had gone from house
to house collecting cash from customers for their bills. Often,
the women staying at home had no cash or no small denomina-
tions. Those who paid did so partly in US Dollars and partly in
Somaliland shillings. This was a hassle for the company’s accoun-
tants, who struck up a deal with Telesom, making it possible for
payments for power bills to be made directly. Today, bills are
managed through a website, www.zaadservice.net.

Complementarity between Zaad and hawala

Zaad’s ascendance as a mobile, money transfer operator put most
of the small MTOs that had been operating in Somaliland out of
business but left large hawala companies uncontested, at least
for international money transfers. The rise of Salaam bank has
eroded the once dominant position in de facto banking of the
largest MTO, Dahabshiil.

Overcoming scepticism 29
 Abdirashid H., the owner of a warehouse storing and selling
electronic goods in Hargeysa, still maintains that each serves a
different purpose. ‘Telesom is a telecommunication company,
Dahabshiil is a bank.’ He adopted Zaad when he opened up his
shop, dealing in imports priced in US Dollars in 2011. Today, he
says 70 per cent of his customers prefer using Zaad to pay him, so
he holds a Salaam bank account into which he regularly transfers
some of the money he has received in his Zaad mobile wallet. He
cashes the rest and deposits it in his Dahabshiil account, which
he uses for international money transfers. Keeping two or more
accounts—usually one with Zaad, the other with one or many
MTOs—is a common strategy among businesspeople trading
in imported items. Leaving part of their money in their mobile
wallets, they use the rest as investment capital to turn into cash
through the hawala system.
People tend to make a distinction between Salaam bank and
Zaad. The owner of a jewellery shop in the Oriental Hotel area
in the heart of Hargeysa, Muuse M, said he used Zaad to receive
payments, cashing them in as soon as he had a balance of USD
2,000, leaving around USD 500 in his wallet, and depositing the
rest in his Dahabshiil account, from which he transferred money
to buy gold jewellery from his business partner in Dubai.
The manager of a Tawakal petrol station in Hargeysa followed
the same pattern of use: 75 to 80 per cent of his customers paid
him through Zaad and he used part of this income to pay the
company that provided fuel to him in Berbera, cashing in the
rest and depositing it with Dahabshiil, which is better estab-
lished. Most interviewees said their use of Zaad and traditional
MTOs complemented each other, largely because they operated
on distinct scales, with Salaam bank less popular at the time
of writing. Its gradual integration into the banking system has
attracted the interest of local entrepreneurs. The recent possi-
bility of transferring money using Swift codes and the opening of
the three ATMs in Hargeysa has been welcomed—particularly by
those members of the diaspora investing in Somaliland who are
less familiar with Zaad and more likely to need options other than
those offered by the hawala system.

30 Following Mobile Money in Somaliland

 33 Pénicaud and McGrath,
BOX 2. LIVESTOCK TRADE
‘Innovative Inclusion:
How Telesom ZAAD
Mohammed is a livestock trader on the Somaliland/Ethiopian Brought Mobile Money to
border. He buys livestock from Ethiopian pastoralists and Somaliland’.

sells cattle to Yemen and Saudi Arabia. He has an agent in the

southern Yemeni city of Aden whom he notifies of livestock
transfers by phone. When the livestock arrive, his agent sends
him payments via Dahabshiil. Mohammed withdraws the
money in US Dollars, converting 75 per cent of it to Ethiopian
Birr, which he uses to buy more livestock. He puts 10 per cent
in his Zaad account to pay for transportation. The remaining 15
per cent is left with Dahabshiil.
Other traders rely on agencies in the port of Berbera, from
where most of the livestock is shipped to the Arabian Penin-
sula. One such agency is Pinda, a money exchange, livestock
and shipping agency whose owner, Khadar M., acts as an inter-
mediary between traders and distributors. Zaad, he said, was
critical, allowing him to work at night as well, when livestock is
often shipped to Yemen. His customers sent him money for his
commission through Zaad, plus money for transport and taxes.
He said he charged shipment fees of USD 50 per camel, USD 25
per cow, and USD 10 per goat. Part of this revenue is converted
into Somaliland shillings to pay taxes.

Coexistence of Zaad and Somaliland shillings

According to the Groupe Sociale Mobile Association, ‘Telesom is
the first mobile money provider to create a mobile money system
that is functioning effectively as a cash replacement tool’.33 The
popularity of mobile money has not eliminated cash, however,
as becomes clear when walking in downtown Hargeysa, where
money vendors sit behind stacked piles of Somaliland shillings,
their hands on their mobile phones. Since the introduction of
Zaad, their job has undergone radical changes. In the past, their
main task was converting US Dollars into Somaliland shillings
and vice versa. Located in proximity to branches of MTOs, they
offered better US Dollar rates. They would transfer Somaliland
shillings, mainly from civil servants and rural dwellers, into US

Overcoming scepticism 31
 BOX 3. khat bUSINESS

According to Dauud Egal, Director of Planning and Statistics

at Somaliland’s Ministry of Finance, in 2012 Somalilanders
spent USD 524 million—USD 1.5 million a day—on khat. The
khat trade is Janus-faced. It is a major source of tax for the
Somaliland state and an economic sector employing thousands
of people, but it is also a drain on hard currency, has effects on
health and carries social costs.
The country’s khat market is divided between three whole-
salers, each one controlling its own distribution network. Zaad
is widely used in the khat business, particularly in its retail.
Abdikarim M. works for Gafaane, the principle wholesaler
in Hargeysa, and runs a kiosk to which bundles of khat are
delivered twice a day, at 8AM and 1PM. The bundles—geed, a
literal translation of ‘trees’ in Somali—are priced in US Dollars,
making the initial cost of it in Ethiopian birr easier to convert
to another currency and shielding it from fluctuations of price
in Somaliland shillings. Abdikarim said using Zaad has got rid
of the need for carrying huge quantities of shillings—which
are so devalued they are measured in weight, one kilogramme
going for about USD 21 in 2014. He relies on one money vendor
for converting money straight from Zaad into Ethiopian birr.

Dollars. Today, though, they convert cash of both currencies into

digital money, topping up their customers’ accounts from their
own, well-filled mobile wallets. They call this ‘Zaad money,’ a
currency distinct from others but pegged to the value of the US
Dollar. Some money vendors specialize in trading in Zaad money
and Ethiopian birr, changing US Dollars held on their mobile
wallets directly into birr. Shop owners keep Somaliland shillings
in reserve to use as spare change, either as zakat—Arabic for
alms—for beggars or as small change for people from rural areas.

Interweaving monetary circuits

Spaces where foreign citizens, urban and rural residents, and state
and non-state actors meet and interact are spaces where circuits
of different currencies and types of money interweave. These

32 Following Mobile Money in Somaliland

spaces are easy to spot and can be borderlands, markets or roads.
The village of Tog Wajaale, located on the border with Ethiopia
between Hargeysa and Burco, is one such space. The border is
a strip of land ten metres wide, crossed ceaselessly on foot by
Somalilanders and Ethiopians. Trading in US Dollars is forbidden
on the Ethiopian side of the border but allowed on the Somaliland
side where US Dollars, Somaliland shillings and Ethiopian birr
circulate. Electronic items, clothes and other imported goods
arrive from the port of Berbera and are either shipped onwards to
Djibouti, bought and sold by Ethiopian customers, or smuggled
across the border into Ethiopia. In some cases, goods are ordered
from local kiosks just inside Ethiopia, not far from the border in
an area still covered by Telesom’s phone signal. Somalilanders
make their Zaad wallets available to their Ethiopian counterparts
to convert birr into Zaad money for transferring payments. Once
these payments from Ethiopians have reached the Somaliland
vendors, the items the Ethiopians have purchased are smuggled
into Ethiopia.
Another example of such a space is Hargeysa’s livestock
market. Money vendors with stacks of Somaliland shillings are
located in the middle of the grounds. They convert US Dollars
and Zaad money into Somaliland shillings, which traders use to
buy sheep and goats from pastoralists, and to pay taxes to officers
from the Ministry of Finance, which vary depending on the kind
of animals traded there. Somaliland shillings circulate in street
markets where women sell vegetables and dairy products, both
inexpensive items that can easily be paid for with a few bills or
notes. Salt, spices and produce costing a fraction of a dollar are
priced in Somaliland shillings, though even local products are paid
for in US Dollars when purchased in bulk.
In general, the rural economy is based in Somaliland shil-
lings, something that hampers the evolution of a mobile money
ecosystem in rural areas. Here, there is little in the way of an
influx of hard currency—from international traders, hawala
companies and international organizations—and a lower volume
of financial transactions compared to urban areas. The fact that
farmers and pastoralists prefer to use Somaliland shillings is well
known. A vendor of camel milk, cow milk and ghee at the Ali

Overcoming scepticism 33
 Maaweel Market in the Xera-Awr area of Hargeysa, for example,
pays farmers in cash even though she herself uses mobile phone
payments. On a daily basis, her transactions follow a pattern:
she receives several jerry cans of milk every morning by truck,
each provided by a different farmer and identified with a number.
The volume of each jerry can is calculated in cups. The vendor
charges SlSh 4,000 per cup and collects payment for them on her
mobile wallet. At the end of a working day, she keeps a quarter
of the earnings for herself, gives another quarter to the driver of
the truck who delivered the morning’s produce, and pays out the
rest in Somaliland shillings cash, which she distributes among her
suppliers. She does this by tucking the Somaliland shilling notes
in their respective jerry cans.
Similarly, shop owners use both the US Dollar and Somaliland
shilling along main roads, accepting dollars from travellers and
truck drivers and shillings from local villagers and pastoral-
ists. Pastoralists and farmers owe their greater familiarity with
Somaliland shillings to unreliable access to hard currency due to
the absence of remittances in some rural areas or their lack of a
connection to other sources of US Dollars. Differences emerge
when looking at the popular use of US Dollars and Somaliland
shillings, firstly between urban and rural dwellers and secondly,
between people dealing with US Dollars, such as businessmen
operating on a transnational scale, NGO and international orga-
nization workers, and civil servants paid in Somaliland shillings
by the state. These differences have political implications.

34 Following Mobile Money in Somaliland

5. Challenges and convergences

As Zaad grew in popularity, Telesom entered the political arena. 34 Interview, 5 March
2014; Telesom introduced
Its financial opacity, in particular, became the subject of discussion
the possibility of
in Somaliland’s House of Representatives. Perhaps because of the transferring and storing
composition of its shareholders, the House’s failure to approve Somaliland shillings with
Zaad in 2015.
banking or telecommunications regulations has left Telesom
beyond the reach of the Bank of Somaliland—the body in charge
of regulating financial institutions. According to the governor of
the Bank of Somaliland, Abdi Diriir Abdi,

Telesom is outside our reach: we don’t know how much money

it makes and how to levy taxes [on it]. It is Zaad system that
causes inflation and offends the dignity of our legal tender.
In Kenya or Tanzania, mobile money companies use the local
currency. Why is it different here?34

Somalilanders recognize that the influence of Telesom on the

local economy is unregulated, airing concerns over their exposure
to the risk of losing their deposits with either Zaad and Salaam
if their parent company fails. Al-Barakaat’s collapse is often
brought up in this context. The state’s inability to monitor Zaad is
perceived as a sign of institutional weakness, a feeling accentuated
by the fact Zaad is traded not in Somaliland’s official currency but
in US Dollars. Somalilanders recognize that, by making access to
hard currency easier, Zaad helps guard against domestic financial
volatility.
Would the state lose face if, because of Telesom’s growing
influence, it began to accept domestic payments directly in US
Dollars?
At the end of 2013, the Central Bank launched a campaign to
strengthen people’s trust in the national currency. Large sign-
boards were raised in several corners of Hargeysa to warn against
US Dollar bills that had been tampered with, and to promote the
use of the Somaliland shilling. This campaign adopted nationalist
rhetoric, with the governor of the Central Bank, Abdi Diriir Abdi,

Challenges and convergences 35

 35 A senior civil servant declaring in an interview, ‘using the national currency is a form of
described the information
respect towards the country.’
as confidential. The Central
Bank does not usually The governor said he wanted to push back against the dollar-
disclose data on its hard ization of the Somaliland economy, even if meant enforcing the
currency reserves. The
state requires US Dollars use of the Somaliland shilling. For as long as people prefer to
for passenger fees at use US Dollars, however, the Central Bank has, however, no real
Hargeysa airport and for
power to enforce this.
mooring fees in Berbera,
and regularly purchases Targeting Zaad, many think, plays into the hands of the
US Dollars from money other local heavyweight, Dahabshiil, which, by law, operates in
vendors to regulate
inflation. Somaliland shillings. The director of a construction company
that takes on state contracts said the state would, however, issue
him invoices in US Dollars, the Central Bank converting them to
Somaliland shillings with Dahabshiil.35 This practice is questioned
by the many who stress the need for a clearer, more uniform
monetary policy.

Zaad and inflation

A common perception held by civil servants interviewed for this
report is that Zaad fuels inflation. This perception is related to
the view that Telesom is antagonistic to the Central Bank and
in general to the Somaliland state. There are no econometric
studies linking Zaad to inflation. ‘Zaad props up prices,’ said Wali
Dauud Egal, Director of Planning at the Ministry of Finance, who
contends that it is civil servants, paid in Somaliland shillings, who
feel the inflationary effects of Zaad’s use of the US Dollar most
of all. The Ministry of National Planning and Development says
the cost of living in Somaliland has increased dramatically in the
past five years. Other factors, such as a crackdown on smuggling
across the border in Ethiopia, may have also had an inflationary
effect. But it is true that civil servants, even if they earn extra
money from remittances or from running businesses on the
side, do suffer the most from inflation. The state is the country’s
biggest employer. It has about 50,000 people on its payroll, as
well as many thousands of military personnel—the exact number
is not usually made public. Most civil servants use Zaad but they
are the first to complain about Telesom’s clout and to call for
stricter oversight of it. Other Somalilanders with large inflows
of hard currency from overseas, such as businesspeople and the

36 Following Mobile Money in Somaliland

employees of international organizations, have managed to diver-
sify their financial practices. They see the Central Bank’s limited
control of Telesom as a sign of weakness but say the government
needs to a develop framework for the entire sector—a sector
growing at the point where telecommunication and finance meet.

Convergences
The distribution—and popularity—of Zaad has profoundly
reshaped Somaliland’s financial landscape, forcing key players in
the strategic sectors of telecommunications and money transfer
not only to protect their market niche but to occupy new ones
too. Back in 2008, MTO Dahabshiil, became a major shareholder
in the communications company, Somtel. In response to govern-
ment and Central Bank pressure, it also launched a mobile money
service, E-Dahab, for Somtel users. The system is designed to aid
mobile money transfer internally and externally, and allows opera-
tions in both US Dollars and Somaliland shillings.
Unlike Dahabshiil, though, Telesom is pursuing a strategy
aimed at forging business partnerships with both established and
fledgling MTOs. Two companies—Tawakal and WorldRemit—have
allowed their systems to operate with Zaad. Tawakal is an MTO
operating across Somalia and is partly owned by Ali Ahmed Nur
Jim’ale, Telesom’s main shareholder. WorldRemit was founded
in London (in 2010) by Ismail Ahmed, a Somali-born remittance
specialist and former compliance advisor to the United Nations.
Its online platform allows remittances to be sent from fifty coun-
tries and received in 117, including Somaliland. It offers bank
deposit and cash pick-up options, instant transfers to mobile
money wallets, and mobile airtime top-ups. It partnered with Tele-
som’s Zaad to put money directly into mobile wallets, enabling
payments to be made straight from a bank account, debit or credit
card of a person initiating a transfer to its intended recipient. As
such, this service acts as a more direct link between Somaliland’s
mobile money circuits and a wider, global financial infrastructure.

Challenges and convergences 37

 6. Conclusions

This paper seeks to shed light on the integration of mobile money

into Somaliland’s range of existing financial institutions. By taking
stock of the practices that have emerged from its widespread use
along with other monetary circuits, this paper has discussed how
people make sense of the changes Zaad is bringing to their use of
money. The findings suggest that Zaad’s popularity results from
a number of different factors—some related to Telesom’s busi-
ness model and outreach strategy, others pointing to the specific
context in which this service has been implemented.
By enabling the transfer and storage of hard currency in
Somaliland, Zaad meets a widespread demand to help people
cope with a volatile economic situation—a situation that the state
seems inadequate to tackle. As well as facilitating the circulation
of US Dollars inside the country, it increases flexibility and coor-
dination among economic actors and makes direct payment easier.
The emergence of Telesom as a financial institution beyond the
reach of the Central Bank has also tested the limits of Somalil-
and’s state machinery. Competition between Zaad and Dahabshiil
is exposing Somaliland’s inability to both rein in and levy taxes
on a sector that is not just a business but one that forms the
country’s dominant financial infrastructure. Many businesspeople
concerned by the unchecked influence of Telesom and Dahabshiil
over Somaliland’s economy emphasize the need for a clear regu-
latory framework. The money transfer systems are increasingly
perceived, however, as independent monetary institutions.
Repeated mentions of ‘Zaad money’ as if it were an alterna-
tive currency—used both instead of and in conjunction with, the
Somaliland shilling and US Dollar—imply that it is popularly seen
as a competitor, or that Telesom is competing with state financial
institutions for legitimacy. Each, though, has a different func-
tion as a currency. While Zaad money acts as a point of transfer
between businesses and customers, particularly in urban areas,

38 Following Mobile Money in Somaliland

Somaliland shillings are a projection of the state on daily relations
and small transactions, particularly in rural areas.
The limited amount of trust people have in the country’s local
currency is also compounded by their pursuit of a hard currency.
In addition, the amount of attention being paid to mobile phone-
driven financial inclusion runs the risk of obscuring the complex
political and economic dynamics. They also reflect the anxieties
that originate from an unfinished process of state-building in
Somaliland. Zaad’s success in ‘banking the unbanked’ is yet to be
properly verified, and many Somalilanders believe that financial
inclusion will be achieved only when international banking insti-
tutions have established a presence in the country. In a case of
business paving the way to political change, could Somaliland’s
recognition by global financial services such as Visa and Mastercard
pave the way to its recognition by the United Nations? This view is
popular among members of the returning diaspora and is gradually
permeating the broader business community. It conveys an aware-
ness that transnational mobility is a precondition for business
success. Abdikarim, the manager of a travel agency, put it this way.

They say that we Somalis travel so much because of our nomadic

tradition, which is possibly true. But nowadays everybody needs
to stay on the move if he wants to make a living. So probably it’s
not we who are adapting to the world. Probably it’s the world
which is going the Somali way.

This report has focused on practices and perceptions. Further

research will be required to measure the change in spending
and saving at business and household level. Applying a financial
diaries methodology could be beneficial to quantify the impact of
Zaad on household portfolios. Further hard data on the uptake
of Zaad in Somaliland would also contribute to a more thorough
picture of the link between mobile money and the improvements
it has made in the financial capabilities of both entrepreneurs and
households in Africa.

Conclusions 39
 Glossary of acronyms, words and
phrases

aiuto (Italian) help

ATM Automated Teller Machine
ayuuto (Somali) see hagbed
barakaat (Arabic) blessings
BGC Al-Barakaat Group of Companies
geed (Somali) trees
GSMA Groupe Spéciale Mobile Association
hagbed (Somali) traditional Somali rotating saving and
credit association
hawala (Arabic) transfer
ID Identity card
khat mildly narcotic plant widely consumed in
Somaliland
lariba (Arabic) interest-free
MMU Mobile Money for the Unbanked, a GSMA unit
MNO Mobile Network Operator
MTO Money Transfer Operator
P2B People-to-business
pesa (Kiswahili) money
shaloongo (Somali) see hagbed
shirkaad/shirkooyin (Somali) public company (s./pl.)
ShSl Somaliland shillings
USD US Dollars
USSD Unstructured Supplementary Service Data, a
mobile telephone protocol to communicate with
the service provider’s computers
zaad (Somali) word traditionally used by pastoralists for
a group of items essential for travel; (Arabic) to
grow or to prosper
zakat (Arabic) alms for beggars

40 Following Mobile Money in Somaliland

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42 Following Mobile Money in Somaliland

 Bosaaso N
D JI B OU TI e n
d Laasqorey
Djibouti A
o f a i n s
Saylac u n t
G u l f Maydh M o
Xiis l i s Hadaaftimo Badhan
G o
Ceerigaabo
Lughaya
Buraan

AWDAL Berbera SANAAG

Buula Xaawa
SAAXIL
Baki
Sheekh Ceel Afweyn
Mandheera
Boorame
WOQOOYI GALBEED Gar’adag
Gabiley
Burco Taleex
Hargeysa
H Xuddun
Tog Wajaale Oodweyne
S o m a l i l a n d
Caynabo SOOL
Internationa
International Tukaraq
boundary TOGDHEER
boundary
Disputed bo dary Laascaanood Garoowe
Widhwidh
SOOL Region
National ca
capitall Buuhoodle
Capital S OMA L IA
Chief town
Other town or village
Road ETHI OP I A © Rift Valley Institute 2015
Boundaries are approximate
ate 0 km 100 Boundaries and names shown do not imply
www.riftvalley.net
endorsement by the RVI or any other body
MAPgrafix 2015

Map 2. Somaliland
Selected RVI publications
The Economics of Elections in Hosts and Guests: A historical
Somaliland: The financing of interpretation of land conflicts
political parties and candidates in southern and central Somalia
Examining the 2005 parliamentary This Rift Valley Forum research
and 2012 local council elections, paper argues that a historical
this paper concludes that conceiving approach offers an illuminating way
of elections solely as exercises in of understanding land disputes in
democratic representation, ignores a southern and central Somalia.
broader social and economic reality.

Between Somaliland and Federalism in the history

Puntland: Marginalization, of South Sudanese political
militarization and conflicting thought
political visions This research paper discusses
An analysis of the political evolution South Sudanese attitudes
of Somaliland and Puntland, their towards federalism, and the way
competing political visions and it was presented from Sudan’s
those living in between the two independence to today.
polities.

The National Army and Armed My Mother Will Not Come to

Groups in the Eastern Congo: Juba: South Sudanese debate
Untangling the Gordian knot of the making of the constitution
insecurity Debates at Juba University on
An analysis of armed mobilization, the new constitution, examining
the FARDC, and efforts in demobi- challenges, reasons for delay, and
lization and army reform. Aussi en questions of public participation in
français. constitution-making.

The Sudan Handbook Les Banyamulenge: Insurrection

A guide to Sudan and South Sudan et exclusion dans les
and the historical processes that montagnes du Sud-Kivu
shaped them, written by leading Ce rapport examine les Banyamu-
specialists and edited by John Ryle, lenge, communauté Tutsi congolaise
Justin Willis, Suliman Baldo and Jok se trouvant au coeur des multiples
Madut Jok. conflits dans l’est de la RDC. Also
available in English.

‫حينما تصير احلدود االدارية الداخلية حدود ًا دول ّية‬

‫ على‬،‫ الشمالي واجلنوبي‬،‫اني‬
ْ ‫ركز النقاش الدائر حول السو َد‬
ً‫ ويفحص التقرير موضوعا‬.‫مسالة أين مير خط احلدود بينهما‬
‫ األثــر احملتمل للحدود اجلديدة على سكان االراضــي‬:‫آخر هو‬
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When Boundaries Become Borders is also available in
English.

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‘This study provides an interesting and unusual insight into the state-
building process in Somaliland. Taking Zaad—our everyday companion
here in Somaliland—Iazzolino explores the intricate nature of private and
public sector relations. Vividly mapping the landscape of the mobile money
transfer system, he identifies the importance of trust as its foundation,
and the role that banking, financial institutions and technology have
played in the making of Somaliland. This report is a recommended reading
for policy makers and academics alike.’
—Abdi Zenebe, Institute of Peace and Conflict Studies (IPCS),
University of Hargeysa, Somaliland

Zaad, Somaliland’s first mobile money platform, was launched in 2009

and has rapidly become a feature of a financial landscape hitherto
dominated by Somali remittance companies. This report charts the
distribution of mobile money across the financial landscape of Somaliland.
It examines the way the Zaad service is reshaping livelihoods and
business practices, as well as implications of its popularity for the
relationship between state and non-state actors, and the effect this might
have on Somaliland’s political and financial institutions. It argues that the
narrative of the role that mobile systems can have in supporting financial
inclusion runs the risk of obscuring complex political and economic
dynamics, especially in the context of Somaliland’s state-building process.
The study suggests that the popularity of Zaad is in part due to the
specific context in which it operates as well as the business model and
outreach strategy of its parent company Telesom. Fundamentally, in the
absence of international banks, Zaad meets a widespread demand to help
people cope with a volatile economic situation.