For years, Somalia has by and large suffered through droughts, famine, flooding, and sustained terrorist insurgencies that mostly harm peaceful citizens.
The insecurity situation, coupled with runaway corruption in the country has been the biggest gridlock for donors and relief agencies trying to reach millions of people facing hunger and starvation but a new digital platform by the country’s biggest telecommunication company is gradually changing that.
Founded in 2002, Mogadishu-based Hormuud Telecom has been operating amid these hurdles to advance a number of novel digital innovations in the country, with plans to roll out nationwide 4G coverage starting this year.
The firm has also been spearheading mobile money innovations and the adoption of cashless transactions in the country, a development that, for the first time, gave Somalis an opportunity to communicate and access a number of digital services in one platform, WAAFI.
Hormuud Telecom has also been engaging in a number of humanitarian services within the crisis-hit Horn of Africa country. For instance, at the height of the covid-19 pandemic, the telco partnered with the country’s government and humanitarian organizations, putting in place efforts to check the spread of the disease.
In 2019, it also offered non-governmental organizations in Somalia commission-free bulk cash transfers to vulnerable Somalis, amid floods in parts of the country.
Now, it has launched a humanitarian portal that allows agencies to send aid cash directly to distressed citizens in the country’s rural zones who make up part of the company’s more than 4 million mobile money subscribers.
To get a more detailed explanation about how the web-based platform works, Quartz spoke to Hormuud Telecom’s founder and CEO Ahmed Mohamud Yusuf.
What necessitated the creation of the humanitarian portal?
Hormuud was founded based on a simple goal: to empower fellow Somalis. We felt the deep desire of the diaspora to support their loved ones back home. We knew that if these people were given the right platform to provide support, then they would, such is the giving nature of our people.
Somalia has faced many challenges. Some are more well-known than others, but drought and famine have been a constant and looming threat. In 2011, failed rains led to a wave of starvation that led to a national tragedy. Some estimated 1 in 10 Somalis died.
Many vowed to never let this happen again. But in 2021 when the rains started to fail, we saw history repeating itself. The memories of what happened a decade earlier came flooding back. There and then, we decided to take action. This is when the Humanitarian Portal was born.
The portal provides a simple solution to a complicated problem. Taking advantage of Somalia’s existing infrastructure, it provides direct cash aid to the most vulnerable populations.
This life-changing technology is built on our EVC [Ethernet Virtual Circuits] Plus platform. This helps some of the largest non-profits in the world give the support that people need to them in an easy, efficient, and traceable way.
The portal fulfills the same basic, but vital mission that Hormuud has been built on. Empowering Somalis, with Somali-created solutions.
How is this portal influencing humanitarian work in Somalia?
Operating in Somalia is hard. In times of crisis, it becomes even harder. And for humanitarian organizations—that work so tirelessly to get traditional food aid to where it is needed—it can become almost impossible.
If you want to deliver food aid from Mogadishu to rural areas, you will have a big task on your hands. From delays due to poor roads to the ever-present risk of banditry as well as the tensions created between local communities about how the aid is eventually distributed, it is a long, costly, and inefficient process.
The Humanitarian Portal bypasses this with the click of a button. But most importantly for me, it puts cash directly in the pockets of those who need it the most, especially women, who have been traditionally left out of the economy.
What we are trying to do is about so much more than allowing people to tread water for a few days or weeks. We want to give families the power to spend their money how they see fit. Whether that be a mother buying food for her children, paying for school fees or investing in a new business venture. By doing this, you are giving people the opportunity to build the economy in their vision, to meet their needs.
Ultimately, we believe that this philosophy of support will lead to a long-term shift away from aid dependence to economic independence.
Somalis are entrepreneurs through necessity. Myself, and the other Hormuud founders, are some of those people. Over three-quarters of us run a business and those who receive support through the Portal will have the same desire that Hormuud does to help our country thrive.
This is a message that our partners in the humanitarian space understand, which is why we are so proud to call the world’s largest aid and humanitarian organizations as partners who use the Portal to distribute cash across Somalia.
So what benefits does the EVC Plus portal offer that outweigh what regional giants like Safaricom’s M-Pesa or MTN’s MoMo Pay offer?
EVC Plus and our Humanitarian Portal’s biggest asset is its popularity. Over three-quarters of Somalis use our mobile money services. Crucially, Hormuud’s technology does not discriminate. Whether you have the latest iPhone with 5G or have a traditional feature phone that cannot connect to the internet, you can still use our mobile money services free of charge.
This is absolutely vital for the humanitarian sector. Our geographical presence across the country gives them the ability to have an impact in communities that were previously out of reach. Changing lives where it matters most.
EVC Plus has also played a central role in driving standards ever higher in Somalia. We were the first mobile money platform to be accredited by the Central Bank of Somalia, meaning that our partners can count on the accuracy and reliability of our services.
Indeed, a former ambassador to Somalia once said that EVC Plus was so important to the country that they deemed it a public service, noting too the platform’s impact on women—the largest recipients of aid—and its contribution to economic improvement.
Traditional banking, which may be common elsewhere, is ineffective in Somalia due to structural barriers, high costs, and low bank account penetration (19%), making it impossible to reach the most vulnerable.
We want our business to be at the forefront of creating a nurturing environment that allows entrepreneurs to thrive and businesses to invest, giving an opportunity for all to trade and prosper, especially women.
For that to happen, Somalia needs to be a good place to conduct business. We need to create an attractive environment, and that’s what we’ve been working so tirelessly to achieve.
Our unwavering commitment to best practice was recognized by the GSMA—the global mobile network operator’s industry body—when they awarded us the prestigious Mobile Money Certification last year. This reflects our tireless decade-long commitment to world-class standards for safety and security, which Hormuud Telecom is built on.
Data privacy and cybersecurity are central to the functioning of Somalia’s digital economy. And given our importance to the digital world, we are driving standards in this area. That is why we are proud to announce that we were awarded the latest ISO certificate for data protection to protect financial information, just last month.
Our humanitarian portal, which uses EVC Plus technology, also won the Changing Lives Award at the Africa Tech Festival in Cape Town last year, for its role in providing humanitarian assistance during the food crisis.
We were the first Somali company to receive a GLOMO Award for our Waafi App as well. The app gives people the ability to access their bank accounts, conduct online transactions, send remittances and to make international and domestic calls.
Formalizing the Somali economy, step by step, is central to everything we do. We believe in our country and our people. Hormuud is putting its money where its mouth is, investing in the future of Somalia. With the power of digital growing stronger every day, the future is bright.
What challenges do you face given the challenging operating environment in Somalia?
Of course, setting up and running a successful business in Somalia comes with a unique set of challenges. It can be easy to forget, but Hormuud was founded just 20 years ago. Throughout that time we have faced countless challenges. Now we are proud to say that we have over 4 million customers.
We built the plane while flying, and as the Somali economy continues to formalize, new processes and regulations are falling into place, ensuring that the country is an excellent place to conduct business. We hope that many more will follow in our footsteps and continue to drive the economy forward.
Without a doubt, the challenges that Somalia faces will continue for some time. But we have one of the youngest, most tech-savvy populations. If we give them the right tools to succeed, including cheap data, reliable internet infrastructure and strong standards, we believe that this country has a lot more to offer to the region, and to the world.
What would you say is the future of mobile money in the east African region?
We all know the success story of mobile money in Somalia and east Africa. The trends are clear and the industry is expected to grow at break-neck speed for many years to come.
As the industry begins to mature, there are many more benefits that mobile money can bring to the region. Roughly one in four east Africans have access to the internet, as such, increasing penetration is key.
Yes, people can access mobile money without data, but when somebody transitions to a smartphone, they are able to access so many more transformational services that they did not previously, from WhatsApp chat to using social media to connect with new customers for a business.
This is why we are investing heavily in fiber optic infrastructure, to improve Somalia’s 4G network.
We are working tirelessly to ensure that Somalia has the power to become the digital gateway to the Horn of Africa. Our long coastline holds untold opportunities for a data-hungry Africa, one that will need coastal states to bring in further digital infrastructure.
As the integration of the region continues, with Somalia tipped to join the EAC, we see mobile money as playing a central role in connecting economies and driving trade and prosperity, all of which is underpinned by world-class digital infrastructure.