Mobile money in Somalia : why mobile payment services in foreign currency replaces the Somali shilling as local currency? Study on EVC-plus in South and Central Somalia
Omar, Mohamed Ali (2021)
2021
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2021112822260
https://urn.fi/URN:NBN:fi:amk-2021112822260
Tiivistelmä
After the Somali government fell in 1991, the central bank of Somalia became unstable. As a result, the local currency lost value, which led to inflation and increased counterfeit crimes. Mobile payment, mainly the EVC-plus service, has since taken root in the country. In this research, a study was done to investigate how the EVC-plus service in the United States dollar has replaced the Somali shilling in south and central Somalia. The research intended to meet three objectives; determining the factors that influence the use of the EVC-plus service; exploring the extent to which the service has replaced the Somali shilling; and investigating challenges hindering the central bank from improving the use of the local currency.
A mixed-methods research design combining both the qualitative and quantitative techniques was used. The quantitative study used questionnaires with 19 closed-ended questions to collect study data from 117 participants who use the EVC-plus service. In the qualitative survey, emails consisting of 7 open-ended questions targeting three bank managers were used. Finally, results analysis was done, where the quantitative study showed the following: high reliance on the EVC-plus service; high usage of international currencies; limited circulation of the Somali shilling; Somalia's central bank inability to strengthen the use of the local currency due to lack of monetary policy and transmission mechanism; and insecurity to being the top causes why the EVC-plus service in a foreign currency is more popular than the use of the Somali Shilling as a payment method and why it accounts for 80% of daily transactions. Also, the qualitative study identified the lack of monetary policies and transmission mechanisms, counterfeit Somali shillings, mobile money services in foreign currency, weak economy monitoring, and huge remittances from abroad as the primary reasons hindering the Somalia central bank from strengthening the Somali shilling.
Recommendations, including developing a mobile money platform for the Somali shilling, were made to enhance the use and value of the Somali shilling.
A mixed-methods research design combining both the qualitative and quantitative techniques was used. The quantitative study used questionnaires with 19 closed-ended questions to collect study data from 117 participants who use the EVC-plus service. In the qualitative survey, emails consisting of 7 open-ended questions targeting three bank managers were used. Finally, results analysis was done, where the quantitative study showed the following: high reliance on the EVC-plus service; high usage of international currencies; limited circulation of the Somali shilling; Somalia's central bank inability to strengthen the use of the local currency due to lack of monetary policy and transmission mechanism; and insecurity to being the top causes why the EVC-plus service in a foreign currency is more popular than the use of the Somali Shilling as a payment method and why it accounts for 80% of daily transactions. Also, the qualitative study identified the lack of monetary policies and transmission mechanisms, counterfeit Somali shillings, mobile money services in foreign currency, weak economy monitoring, and huge remittances from abroad as the primary reasons hindering the Somalia central bank from strengthening the Somali shilling.
Recommendations, including developing a mobile money platform for the Somali shilling, were made to enhance the use and value of the Somali shilling.