Cashless society improves community resilience in Somaliland

Somaliland is a place of contrasts: most people don’t have a toilet or a water tap; they have to boil water (which they have to buy) before consuming it; yet most have a mobile phone, even in the most remote locations.

In camps and settlements, homes vary from igloo-shaped huts with cloth covering to shacks made from corrugated iron. In cities the mix is similar but with the odd brick house and larger home surrounded by high walls and lookout posts for armed security guards.

Amid the homesteads you will find the odd solar PV panel, a little bigger than a book, which recharges mobiles and, if lucky, provides some basic lighting. Occasionally, there is even the odd TV satellite dish. But the ubiquity of the mobile phone stands out, and it has become a lifeline in more ways than one.

In the village of Jir Jir, a few tiny shops selling agricultural products and basic foodstuffs, soft drinks and sweets line the single street. Shopkeeper Roble Barkad demonstrates how easy and quick going cashless is.

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A purchaser indicates what he wants to buy, texts an identifier and the agreed amount (US dollars or Somali shillings) followed by a hashtag. He accepts the payment, which is confirmed by text. Almost half of 350 households located nearby benefit from cash support via electronic transfer.

Business is good. He has a small freezer (a rare sight), a mobile charging service using a car battery, while LED bulbs light up the premises and shelves are dominated by sachets of vegetable oil and bottles of Coca-Cola.

The broader benefits are spelled out by Alessandro Bini, director of Somali Cash Consortium. It is supported by development organisations, with Concern Worldwide acting as lead. The system, which is free to use, emerged following the 2017 drought and a European Union wish to provide what is called "a safety net". It ensures people survive in the short term by way of unconditional support, while also having sufficient funds for longer-term needs.

Bini describes it as “a social protection system”, usable for education, health and disability payments – some $18 million was disbursed by the consortium in 2018.

“It overcomes security risks and efficiently delivers aid to those who need it most with families sharing a mobile phone,” he says.

In effect, sim cards are used as a type of bank account. Known places such as markets or village shops are equipped to receive payment by mobile phone, and sometimes to dispense cash. People have what might regarded as a primitive existence, yet it is a practically cashless society – with a highly efficient system that could be deployed in any European country.

Bini says the consortium hopes the system, which is an excellent way to directly support communities where there is no banking, will be taken over by the government to support long-term development rather than just short-term humanitarian aid.