E-commerce spurs Somali economy

Mogadishu, Somalia – Abukar Abdulle Mohamed is a busy man. His three phones keep beeping away as he negotiates and shakes hands with a group of mainly middle-aged men.Fifty-four-year-old Mohamed is a livestock trader with over 30 years experience and has just sold his tenth goat of the day at Hawl Wadaag livestock market in Mogadishu. But he isn’t holding wads of cash in his hands to show for the day’s sales.The beeps from his phones aren’t for incoming calls or text messages. He receives the money from the sales through his phones, thanks to EVCplus (electronic virtual cash).EVCplus is a free electronic money transfer service introduced and operated by Somalia’s biggest telecom company, Hormuud.It is a fairly easy-to-use tool and works like an SMS service. Both sender and receiver first need to register with the company. After dialling #770# from their mobile phone handset and using a secret four digit pin password, customers can choose between seven options. Instant transactions can be made as long as there is enough money in the account of the buyer. All texts go through centrally controlled software that adds or deducts money immediately from your account depending on your activity. The service has transformed the lives of many. All the traders in the market say they prefer to be paid by EVCplus or in US dollars.“I don’t like customers paying me in cash. Not anymore. One dollar is equivalent to sh18,000,” said Mohamed. Because of the low value of the Somali currency, it’s impractical to conduct business transaction using the Somali shilling. He added, “I will need bags and a wheelbarrow to carry the money from the 10 goats I sold today.”Safety improvementsIn a country still recovering from more than two decades of civil war and awash with guns, traders also prefer EVCplus for safety reasons.“No one knows if you have money. I travel outside the city and the roads are not safe. It is easier to hide a sim card than a sack of money,” said Mohamed Iman Ali, another fellow trader at the market. “Even if you don’t take the sim card out and your phone is stolen the company blocks your EVCplus.”Even though most customers are now using EVCplus as a payment tool, the service was rolled out as an airtime recharge service. Before its introduction two years ago, customers used to recharge their airtime using scratch cards.With shops closing early every evening - mostly for safety reasons - customers had no place to buy scratch cards. So EVCplus took off. Customers no longer had to take the risk of leaving their homes at night to recharge their airtime. The service also has cut down on the company’s costs. Hormuud used to print the scratch cards abroad then ship them into the country. Despite Hormuud’s initial intention for EVCplus as an airtime top-up tool, resourceful Somalis started using it to make purchases and using it as a cash card.“It wasn’t meant for business transactions. We introduced it as a telecommunication tool,” said Abdirashid Ali Ainashe, the company’s public relations director. “Somalis are quick learners and very intelligent and took EVCplus a step further and started to use it to buy goods.” Since its introduction two years ago, 70 per cent of the more than 2.5 million Hormuud customers have opened an EVCplus account. Some customers, like Mohamed, have more than one account.But the service has its limitations. Customers can only have $300 in their account at any given time. This is a limit set by the company. For business individuals this is an unwelcome hassle.“We have two phones, each with EVCplus accounts set up. The $300 limit is a big problem for our business,” said Sharmake Abukar, a shop owner. This limitation is something Hormuud is very much aware of but says it’s not their fault. “EVCplus is not for doing business but just for charging your airtime. But business people can connect their EVCplus account with local bank accounts and transfer their money that way,” said Ainashe. Like many other sectors of the country’s economy, Somalia’s banking sector is in ruins. The few banks operating are usually based in the big cities and require cumbersome processes of verification for customers to register. To overcome this challenge most business people prefer to have more than one EVCplus account.“Opening a bank account can be difficult. It is easier for me to have more than one EVCplus account,” said Abukar from the counter of his shop in the Hodan district of Mogadishu.Safety concernsWith security still a big problem in most parts of the country Hormuud also says the $300 limit is for security reasons. But others think the service is not yet fully secure.“There is no limit to how many EVCplus accounts you can have. There is also no limit to how much money you can send or receive in a single day,” said Mohamed Maalim Hassan, a Mogadishu-based IT and finance consultant. “You can have as many accounts as you want. All you need to do is as soon as your account balance reaches $300, you either take the money out or forward the money to other accounts,” he added.The service is catching on fast and moving into other traditional everyday activities like paying their electricity bills and booking domestic flights.“I use EVCplus to pay my electricity and water bills. I even pay my maid using EVCplus. That way I have an electronic receipt and don’t need to collect paper receipts as proof of payment,” says Luula Ali.One group of business people not entirely happy with the introduction of EVCplus are Hawala owners (money transfer dealers). Before EVCplus Somalis used to send money to each other using local Hawalas, but that has almost completely stopped now. Hawalas also charge commission - most charge five per cent - for the service they offer. “I’m sure EVCplus is the start. Many exciting innovations are coming to Somalia. Let’s hope the peace holds,” said Hassan.

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E-commerce spurs Somali economy