Mobile Phones Are Making Cash Obsolete in Africa
Africa is a world leader in the use of digital transactions, with Somalia standing out with its extensive use of mobile money despite rampant poverty, high illiteracy, and few traditional banks. In such countries, cash is quickly becoming obsolete. A 2012 survey found that the average customer in Somaliland made 34 monthly transactions on Telesom’s Zaad service, a higher rate than almost anywhere else. Somaliland resident Adan Abokor praises the advantages of digital transactions via Zaad over hard currency, noting “it’s immediate—there’s no waiting for it, no counting of cash.” More than 500,000 of Somaliland’s 3.5 million inhabitants are Telesom subscribers, and more than 50 percent of them use Zaad. Subscribers pay an occasional lump-sum payment to Telesom, and use the balance to pay merchants electronically. Purchases are made by dialing a three-digit number, entering a four-digit PIN, and then entering the retailer’s Zaad number and the payment amount. Both customer and merchant receive text messages to verify payment. Several factors have contributed to the emergence of mobile money in Somaliland, including loose telecom sector regulation and the innovation it has unintentionally fostered, a dollarized economy due to a weak local currency, and cultural quirks such as Somalis’ reliance on oral traditions.
From “How Mobile Phones Are Making Cash Obsolete in Africa”
Toronto Globe & Mail (Canada) (06/21/13) York, Geoffrey