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Somalia:Hormuud telecom TAAJ service - EVC-Plus +Terrorist

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Thursday October 24, 2019 - 04:38:08 in Latest News by Super Admin
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    Somalia:Hormuud telecom TAAJ service - EVC-Plus +Terrorist

    'Mobile money is easy to send and receive money from anywhere in the world; here Hormuud included TAAJ service, TAAJ service is really under EVC-Plus and you can receive money from abroad directly on your phone; some of my friends are receiving

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'Mobile money is easy to send and receive money from anywhere in the world; here Hormuud included TAAJ service, TAAJ service is really under EVC-Plus and you can receive money from abroad directly on your phone; some of my friends are receiving money from Saudi Arabia through their phones by Taaj Hawala.' (Tahlil, South Central)

The possibility to receive international remittances directly on mobile money accounts is convenient as it does not require users to cash-out from the hawalas and deposit the funds into the mobile money accounts. 

‘Here nobody asks for any ID when you want to open an account, because you can open your mobile money account in your telephone without going to the mobile money company. So not having an ID does not prevent you from opening an account.’ (Dini, South Central) 

Mystery visits confirmed that the lack of ID documents prevents people from gaining access to banking services*, but not to mobile money services. Mobile money agents in Puntland and South-Central confirmed that an ID is not needed to open an account. In Somaliland however, agents explained that they started asking systematically for an ID. 

Risks of the current system: 

Risk for the customers - lack of customer protection: Customers have no guarantees that their e-money can always be redeemed for cash. Personal data is not systemically registered for each mobile money account (especially in South Central), and in case of dispute, arbitrary seizing of their assets, technical problem, cyber-attack or system collapse, they are not protected by a formal service provider-user agreement. 

Risk of terrorism financing through mobile money: Al-Shabaab can finance its terrorist activities due to the lack of regulation on mobile money transfers. 

Risk of money laundering through mobile money: Money launderers can use mobile money, as they can multiply mobile money accounts without giving their identity. Oversight authorities cannot monitor financial transactions. 

Risk of fraud by MNOs: The lack of monitoring of mobile money services gives a chance for fraud activities, such as the issuance of electronic money by MNOs without having its equivalent in real cash. 

Tax evasion: The government does not collect direct revenues on mobile money transactions and currently does not have the information required to do so given oversight authorities cannot monitor financial transactions. 

Risk of further depreciation of the local currency: The current mobile money system and its dollarization can further contribute to the depreciation of the local currency. 

Risk of inflation: Uncontrolled use of e-money could lead to an increase in its supply and potentially result in inflation. 

Risk that the international remittances market be eventually closed to Somali mobile money companies due to the absence of appropriate Know-Your-Customers (KYC) processes if the international regulations for MTOs become more stringent. 

Only a quarter of the money received through mobile money is cashed out immediately. This creates a large float of cash for the MNOs, which given the lack of regulation, can be used for various uses (e.g. for other investments) with minimum repercussion. 



Is mobile money responsible for the devaluation of the Shilling and inflation? 


Yes 

‘The main disadvantage of mobile money is that mobile money substituted and devalued the Somali Shilling. Everybody uses mobile money widely and this has weakened the Somali Shilling for the last decade.’ (Fartun, South Central) 

‘Government should fix the exchange rate because it’s going up and down, and the exchange rate is now made by operators who do what they want.’ (Maryan, Puntland) 

No 

‘Since the Somali Shilling remains in trouble, and often many businessmen and politicians make false Somali Shillings, mobile money in dollars makes it possible for the fluctuation exchange to remain in a middle mode.’ (Dini, South Central) 

‘Mobile money are overall good services. But there are some technical issues that would need to be fixed for us to really enjoy the service.’ (Mahad, Somaliland) 

‘Sometimes it happens that the network is out of service for several days, and people who are depending on the mobile money services are not able to use them. For instance the antenna of Hormuud in our area might be out of service during a number of days because Al-Shabaabs are in Jilib district where the antenna tower is located. So they switch off and all areas in Jilib district remain out of network.’ (Abdirashid, South Central) 

‘Sometimes you may send to a wrong person and the process of recalling money can take two days and you need this money for emergency supplies. The wrong receiver may even withdraw the money and switch off the phone.’ (Hamze, South Central) 

‘The system is risky. [...] This is a fear we keep in our hearts.’ (Sahan, South Central) ‘We just trust without condition for the sake of Allah and if the money that we have in our mobiles disappears or the network doesn’t work anymore, we don’t have any document and guarantee to prove that we put money in our account or mobiles.’ (Ali, Somaliland) 



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