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The Role of Mobile Money in Somalia’s Remittance System
Abstract
Mobile money is rapidly transforming various sectors and economies worldwide. Somalia is one country that has been transformed by the emergence of mobile money. In 2017, the World Bank estimated that 73% of the Somali population over the age of 16 use mobile money services. Additionally, mobile money is the primary access point to financial services in the country. At the same time, Somalia relies heavily on the remittances to pay for children’s education, social services and provides an investment funds for small businesses. The United Nations estimates that close to 40% of families in the country are dependent on the $1.4 billion remittances per year. Accordingly, remittances companies account for a large segment of the financial sector in Somalia. And yet, both the remittance and mobile money systems function in spite of a lack of a traditional financial system. Mobile money and the underlying technology is at the heart of the supports the daily existence of millions of Somalis. How this system functions and its role as the economic backbone of the country is little understood. Thus, the aim this paper is to analyze the crucial role served by mobile money in the delivery of the billions of remittance dollars into the country. This study is guided by the main question: What role does mobile money and the Somali diaspora in the Greater Toronto Area, through the remittance system, play in Somalia’s remittance system?
... This is the case of illegal migrants, who do not have adequate identification and are not authorized to use the banking system to send money home (Ibid.). However, hawala operators exchange information using common means of communication, such as e-mails, facsimiles, phones, mobile phones (Elmi and Ngwenyama, 2019), and apps (e.g., WhatsApp, Telegram, Viber) (Bodetti, 2016). However, if digital processes do not work, companies and remitters swiftly return to the manual ones, as in the case of West Bengal in 2018 (Press Trust of India, 2018). ...
Este documento tiene como objetivo investigar el debate sobre los Sistemas Informales de Transferencia de Valor (IVTS), en particular el de hawala, un sistema de transferencia de dinero basado en la confianza. Analizando el debate sobre la hawala y utilizando fuentes primarias y secundarias, este documento demuestra cómo hawala sufre formas de coerción, particularmente después de los ataques del 11 de septiembre en EE. UU. Pero también, expertos y académicos que se ocupan de derechos humanos, del mercado de remesas e inclusión financiera abogan por un desarrollo justo y sostenible del sistema del hawala. El artículo ofrece una breve descripción de las posibilidades y los principales desafíos que ofrece la aplicación de tecnologías basadas en blockchain y los problemas sociales, institucionales y tecnológicos que surgen de ella. En particular, el artículo reflexiona sobre el debate contemporáneo sobre el sistema hawala para explicar, por qué en este momento, la categoría del continuum no puede considerarse adecuada para describir la relación entre hawala y las tecnologías blockchain.
... Modern ICTs have protected people's social relationships if they are far away from their relatives and friends. It has made it much easier for migrants to transfer money back to their relatives in resource-deprived regions, which is very important for poverty reduction and wellbeing enhancement on a global scale ( Yujuico, 2009 ;Elmi and Ngwenyama, 2019 ). ICTs have allowed peasants, many of whom were previously stuck in poverty, to receive better prices for their agricultural production, since they didn't have to physically travel to markets to find out what the prices would be. ...
One of the strengths of a capability account of wellbeing is that it allows us to theoretically and empirically analyze at a quite practical level why certain things matter to people - such as their housing, their jobs, and their friendships. A capability account of wellbeing is also very well suited to understand the importance of place for wellbeing. Some dimensions of wellbeing are constitutively place-related, such as “feeling at home”. Other dimensions of wellbeing are affected by what the places and locations in which we live mean to us. Taken together, we call them “place-based capabilities”. Using a capability account of wellbeing allows us to use social scientific research to investigate the role of social, economic, demographic, political, ecological and technological processes on wellbeing. This paper illustrates this by investigating the role of recent technologies in enabling and expanding capabilities. On the one hand, technological change has dramatically expanded those capabilities. On the other hand, the use of those technologies has unintended consequences for other capabilities. The conceptual as well as empirical relationships between (place-based) capabilities and technology is therefore a complex one.
This research was conducted to investigate the relationship between mobile money and effective inflation control. The objectives of this research were to determine the relationship between mobile money and inflation control in Somaliland, to find out whether demand and supply of mobile money helps inflation control in Somaliland and to determine the relationship between exchange rate control and inflation control in Somaliland. The study used the quantity theory of money and the modern monetary theory in explaining the behavior of inflation control. The empirical review was guided by the objectives of the study. The target population of the study was comprise of 220 respondent that were sub divided into 120 exchange traders that operate in Hargeisa foreign exchange market and 100 Zaad staffs including Zaad managers. A sample of 119 respondents was selected from the population using stratified random sampling technique. Data was be analyzed by aid of Statistical Package for Social Science (SPSS) version 20 and was presented by tables. Findings on mobile money transfer (Zaad) and effective inflation control reveal that mobile money service (Zaad) can be a tool for inflation control that helps central banks to control inflation. Recommendation on the mobile money transfer and effective inflation control, governments should use mobile money transfer as inflation control with carefully designed policies and procedures in order to keep customer satisfaction.
This study examines 83 IS qualitative studies in leading IS journals for the following purposes: (a) identifying the extent to which IS qualitative studies employ best practices of justifying sample size; (b) identifying optimal ranges of interviews for various types of qualitative research; and (c) identifying the extent to which cultural factors (such as journal of publication, number of authors, world region) impact sample size of interviews. Little or no rigor for justifying sample size was shown for virtually all of the IS studies in this dataset. Furthermore, the number of interviews conducted for qualitative studies is correlated with cultural factors, implying the subjective nature of sample size in qualitative IS studies. Recommendations are provided for minimally acceptable practices of justifying sample size of interviews in qualitative IS studies.
Literature on remittances tends to focus on receiving countries and perhaps because of this bias much is made of the potential for remittances to be used for development purposes. This paper, based on anthropological research conducted among the Somali community of Lewiston, Maine, examines remittances from the perspective of the senders. While Somali refugees and migrants feel great pressure to send money to their relatives living in and around Somalia, as well as elsewhere in the diaspora, they are constrained by their low incomes and competing demands from family members who may not have a realistic understanding of their ability to provide assistance. Despite these difficulties, Somalis continue to remit, often at enormous and unsustainable cost to themselves, because of the social capital that they derive from being able to play a meaningful role in the support of their families, clans, communities and nation. I argue that understanding the motivations for engaging in economically risky activities is essential to helping both to relieve the burden on senders, and to maximizing the developmental impact of remittances on households and communities in areas of origin.
This paper examines the usefulness of the diffusion of innovation research in developing theoretical accounts of the adoption of complex and networked IT solutions. We contrast six conjectures underlying DOl research with field data obtained from the study of the diffusion of EDI. Our analysis shows that DOl based analyses miss some important facets in the diffusion of complex technologies. We suggest that complex IT solutions should be understood as socially constructed and learning intensive artifacts, which can be adopted for varying reasons within volatile diffusion arenas. Therefore DOl researchers should carefully recognize the complex, networked, and learning intensive features of technology; understand the role of institutional regimes, focus on process features (including histories) and key players in the diffusion arena, develop multi-layered theories that factor out mappings between different layers and locales, use multiple perspectives including political models, institutional models and theories of team behavior, and apply varying time scales while crafting accounts of what happened and why. In general the paper calls for a need to develop DOl theories at the site by using multiple levels of analysis.
PIP
Diffusion is the process by which an innovation is communicated through certain channels over time among members of a social system. The diffusion of innovations is a communication theory which has laid the groundwork for behavior change models across the social sciences, representing a widely applicable perspective. The diffusion of innovations paradigm began with the 1943 publication of the results of an hybrid seed corn study conducted by Bryce Ryan and Neal C. Gross, rural sociologists at Iowa State University. The diffusion paradigm spread among midwestern rural sociological researchers in the 1950s and 1960s, and then to a larger, interdisciplinary field of diffusion scholars. By the late 1960s, rural sociologists lost interest in diffusion studies, not because it was ineffective scientifically, but because of lack of support for such study as a consequence of farm overproduction and because most of the interesting research questions were thought to be answered. Since 1943, more than 4000 research publications have appeared and diffusion research became a widely practiced variety of scholarly study in sociology and other social sciences. This paper describes some of the history of rural sociological research on the diffusion of agricultural innovations with the goal of understanding how the research tradition emerged and to determine how it influenced the larger body of diffusion research conducted later by scholars in other disciplinary specialties. The authors describe how diffusion of innovations research followed and deviated from the Kuhnian concept of paradigm development.
How innovators are using technology to take on the world of finance
Final revisions received) The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the World Development Report 2011 team, the World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
Remittances explores policy options for enhancing the poverty alleviation impact of remittance money in recipient countries, and addressees concerns about increasing migration and inequality. It looks at new technologies that allow remittance service providers to reduce direct transaction costs and open new channels, enhancing convenience for remitters and improving levels of transparency and accountability for regulators and policy makers. Importantly, it also establishes a baseline for further research and collaborative effort, showing the areas where the international financial institutions, particularly the World Bank, can add value to enhance the positive impact of remittance flows and minimize less welcome effects. Edited by Samuel Munzele Maimbo, who has already published authoritative articles on this subject, and Dilip Ratha, who first revealed the global significance of remittances, this book is intended for remittance service providers, as well as policy makers and researchers interested in financial sector, migration and development issues.
: Since 9/11 investigations into the al-Qaeda financial network have led to several notable successes in the United Slates and Europe. Much of this achievement in the United States has resulted from strengthening the financial investigatory powers of domestic law enforcement agencies and coordinating them through the Treasury Department's new Foreign Terrorist Asset Tracking Center. In other countries, the Paris-based Financial Action Task Force, for example, is helping to coordinate the tracking of terrorist funds through the global banking system and cracking down on countries that fail to improve transparency and regulation. Financial investigators tracking al-Qaeda assets rely heavily on data and paper trails from commercial banks and financial regulators in pursuing and investigating leads. Unfortunately, these efforts have achieved little success to date in reaching the core of the al-Qaeda financial network. The problem is that many of the organization's funding mechanisms -- like its cells -- are small and inconspicuous, often using a traditional Muslim method of money exchange called "hawala." In essence, hawala is a transfer or remittance from one party to another, without use of a formal financial institution such as a bank or money exchange and is, in this sense, an "informal" transaction. There are several other common aspects to hawala. First, in most cases, hawala transactions go across international lines, such as with worker remittances to their home countries. Second, hawala usually involves more than one currency, although, again, this is not absolutely required. Third, a hawala transaction usually entails principals and intermediaries. To accommodate requests of the principals, the intermediaries usually take financial positions. Later, much as in the case of conventional banking practices, these transactions will be cleared among the units to balance their books.
This paper moves beyond commonly invoked macro-political explanations of the causes of mobility in the shadows of conflict, seeking ways of developing a micro-sociological analysis of outmigration from Mogadishu during a particular episode of the city's history. In 2007-2008, some two thirds of Mogadishu's population abandoned the city, in the wake of violence between the Ethiopian-backed Transitional Federal Government and the Islamic Courts. Qualitative research with people from Mogadishu seeking refuge elsewhere explores how particular interactions between people, their resources, and their structural contexts produced migration. Their accounts point to the multi-layered, multi-causal nature of the forces behind migration, including how the policies of developed states shape conflict, daily life and mobility in the Horn of Africa.
In this paper I argue that the informal hawala money-transfer networks, which were made to take much of the blame for terrorist financing in the wake of the September 11 attacks, are not 'underground' banking systems but are connected to Western banking in a myriad of ways. I argue that negative stereotyping of hawala in press and policy discourses has implicitly constructed Western banking as the normal and legitimate space of international finance and has deflected calls for regulation of Western investment banking. I discuss how hawala is connected to the financial exclusion of migrant workers in the West. In the war on terrorist finance, discourses of hawala have led to the underestimation of the complexity of cutting off terrorist funding, while criminalising remittance networks.
This article defines and discusses one of these qualitative methods--the case research strat- egy. Suggestions are provided for researchers who wish to undertake research employing this approach. Criteria for the evaluation of case research are established and several characteristics useful for categorizing the studies are identified. A sample of papers drawn from information systems journals is reviewed. The paper concludes with examples of research areas that are particularly well- suited to investigation using the case research approach.
In a qualitative framework, research based on interviews often seeks to penetrate social life beyond appearance and manifest meanings. This requires the researcher to be immersed in the research field, to establish continuing, fruitful relationships with respondents and through theoretical contemplation to address the research problem in depth. Therefore a small number of cases (less than 20, say) will facilitate the researcher’s close association with the respondents, and enhance the validity of fine-grained, in-depth inquiry in naturalistic settings. Epistemologically prior to these considerations, however, is the explanatory status of such research. From a realist standpoint, here concept formation through induction and analysis aims to clarify the nature of some specific situations in the social world, to discover what features there are in them and to account, however partially, for those features being as they are. Since such a research project scrutinizes the dynamic qualities of a situation (rather than elucidating the proportionate relationships among its constituents), the issue of sample size - as well as representativeness - has little bearing on the project’s basic logic. This article presents this argument in detail, with an example drawn from a study of persons with a past history of cancer diagnosis and treatment.
Getting an innovation adopted is difficult; a common problem is increasing the rate of its diffusion. Diffusion is the communication of an innovation through certain channels over time among members of a social system. It is a communication whose messages are concerned with new ideas; it is a process where participants create and share information to achieve a mutual understanding. Initial chapters of the book discuss the history of diffusion research, some major criticisms of diffusion research, and the meta-research procedures used in the book. This text is the third edition of this well-respected work. The first edition was published in 1962, and the fifth edition in 2003. The book's theoretical framework relies on the concepts of information and uncertainty. Uncertainty is the degree to which alternatives are perceived with respect to an event and the relative probabilities of these alternatives; uncertainty implies a lack of predictability and motivates an individual to seek information. A technological innovation embodies information, thus reducing uncertainty. Information affects uncertainty in a situation where a choice exists among alternatives; information about a technological innovation can be software information or innovation-evaluation information. An innovation is an idea, practice, or object that is perceived as new by an individual or an other unit of adoption; innovation presents an individual or organization with a new alternative(s) or new means of solving problems. Whether new alternatives are superior is not precisely known by problem solvers. Thus people seek new information. Information about new ideas is exchanged through a process of convergence involving interpersonal networks. Thus, diffusion of innovations is a social process that communicates perceived information about a new idea; it produces an alteration in the structure and function of a social system, producing social consequences. Diffusion has four elements: (1) an innovation that is perceived as new, (2) communication channels, (3) time, and (4) a social system (members jointly solving to accomplish a common goal). Diffusion systems can be centralized or decentralized. The innovation-development process has five steps passing from recognition of a need, through R&D, commercialization, diffusions and adoption, to consequences. Time enters the diffusion process in three ways: (1) innovation-decision process, (2) innovativeness, and (3) rate of the innovation's adoption. The innovation-decision process is an information-seeking and information-processing activity that motivates an individual to reduce uncertainty about the (dis)advantages of the innovation. There are five steps in the process: (1) knowledge for an adoption/rejection/implementation decision; (2) persuasion to form an attitude, (3) decision, (4) implementation, and (5) confirmation (reinforcement or rejection). Innovations can also be re-invented (changed or modified) by the user. The innovation-decision period is the time required to pass through the innovation-decision process. Rates of adoption of an innovation depend on (and can be predicted by) how its characteristics are perceived in terms of relative advantage, compatibility, complexity, trialability, and observability. The diffusion effect is the increasing, cumulative pressure from interpersonal networks to adopt (or reject) an innovation. Overadoption is an innovation's adoption when experts suggest its rejection. Diffusion networks convey innovation-evaluation information to decrease uncertainty about an idea's use. The heart of the diffusion process is the modeling and imitation by potential adopters of their network partners who have adopted already. Change agents influence innovation decisions in a direction deemed desirable. Opinion leadership is the degree individuals influence others' attitudes
In the wake of September 11, authorities have increasingly focused on an age-old method of banking and money transfer known
as “hawala.” In this system, a local hawala dealer in one country (or area) takes money from a customer and (for a nominal
commission) has an associate in another country (or area) give an equal amount of money to the recipient. This type of underground
banking system remains resilient due to several key characteristics. These are: the system's simplicity, its inclusiveness
(enabling it to function without any type of external support), and most importantly, its considerable prominence within,
and adherence upon specific cultural and religious spheres. This article provides an overview of hawala banking, together
with the historical and cultural milieu that gave rise to, and continues to foster it. It suggests that while Islam addresses
the issue of debt transfer through the Islamic concept of hawala, the system is widely practiced through many parts of the
world by both Muslim and non-Muslims alike. Therefore, to refer to the practice as wholly “Islamic” is erroneous. This study
also demonstrates that the initiatives taken towards regulation and/or elimination of hawala are ill suited to deal with the
operation of this particular system. This failure particularly reflects the lack of appreciation, on the part of authorities
and policy-makers, for the broader social and cultural context in which hawala opearates. A more insightful understanding
of the system will address such issues as competing legal paradigms, the local appeal of the system, as well as the likely
negative consequences of current regulatory efforts. Thus, any attempts at regulating hawala should ensue with great cultural
and religious sensitivity, and should address some of the larger issues that continue to uphold the system, such as the existence
of inadequate economic infrastrcture in such nations as Afghanistan and Somalia.
Cell phone usage has grown phenomenally in Africa, and particularly in South Africa where initial growth forecasts have been greatly exceeded. This technology therefore provides opportunities for services such as banking to reach critical mass. All major retail banks in South Africa provide cell phone banking, but very few customers actually use it. This study examines the factors that influence the adoption of cell phone banking in South Africa, as a means of understanding how to possibly increase the rate of adoption. A framework developed in Singapore identifying factors influencing the adoption of Internet banking was used as a basis, and amended to assess cell phone banking. Factors identified as influences included relative advantage, trialability, and consumer banking needs, with perceived risk having a major negative influence.
Incl. bibliographical references, index, list of abbreviations, chapters are preceded by an abstract
The hypothesis that "ideas often flow from radio and print to opinion leaders and from these to the less active sections of the population" has been tested in several successive studies. Each study has attempted a different solution to the problem of how to take account of interpersonal relations in the traditional design of survey research. As a result, the original hypothesis is largely corroborated and considerably refined.
A former staff member of the Bureau of Applied Social Research at Columbia University, the author is now on leave from his post as assistant professor of sociology at the University of Chicago and is currently guest lecturer in sociology at the Hebrew University in Jerusalem.
This article examines the evolution and the institutional foundation of the century-old Islamic hawala financing system. Analysis of the functional principles of this system will show that it is a highly efficient, extremely robust institutional arrangement for overcoming the risks of opportunism among the transaction partners. It is an institution that was developed against the backdrop of a lack of formal legal systems. Thus, hawala can be seen as club-like arrangements, which are able to provide the transaction parties with an institutional framework to assure enforcement of contracts without relying on any national law. Today, therefore, it is able to expand outside and independently of existing laws and regulations. It is able to move large amounts of money without recourse of the formal banking system and even without retaining any bookkeeping notes. Instead, it is based on the trust of the participating parties and its social and religious embeddedness within the Islamic community.
Refugee Studies Centre, Oxford University; Norwegian Institute of International Affairs (NUPI)
- A Lindley
- A Haslie
Always moving, always sharing mobile money practices in Somaliland. Bill & Melinda Gates Foundation
- D Studio
Keeping the Lifeline Open Remittances and Markets in Somalia
- M Orozco
- J Yansura
What would you do if an overseas bank cut off the financial lifeline to your family? The Guardian
- A Gutale
Hanging by a thread: The ongoing threat to Somalia’s remittance lifeline
- Oxfam
UK Somali Remittances Survey. Department for International Development London
- M A Hassan
- C Chalmers
Innovative inclusion: how telesom ZAAD brought mobile money to Somaliland
- C Pénicaud
- F Mcgrath
Remittances: an overview
- S M Maimbo
- D Ratha
- SM Maimbo
Feasibility study on financial services in Somalia
- A Omer
A report on the Somali remittance sector in Canada. Nathanson Centre for the Study of Organized Crime and Corruption
- B M Hamza
Attitude of Somali customers towards mobile banking services: the case of Zaad and Sahal services
- O Sayid
- A Echchabi
The failed state and failed state-building: how can a move away from the failed state discourse inform development in Somalia
- M Byrne
Migrant remittances in Africa: an overview
- S Mohapatra
- D Ratha
Analysis of Somaliland mobile money service on effective inflation control: case of Hargeisa Foreign exchange market in Somaliland
- H A R Guleid
- O I Tirimba
- HAR Guleid