There’s lots of news out of Africa to cover, as usual, but one particular piece by the BBC about a money-transfer company which is introducing a debit card to Somaliland, caught my eye. Dahabshiil, a firm with a long history in the horn of Africa, has dreams of creating a cashless society there.
Anyone who lives or has spent a serious amount of time in sub-Saharan Africa, most likely understands what functioning in a cash-driven society entails. For example, there are countries like Tanzania, whose largest monetary denomination is a 10,000 shillingi note, roughly equivalent to about $7.50 US. In Tanzania, many everyday transactions are made in small change, and any major purchases often require large amounts of cash. While there are banks and ATMs in the largest cities, customers must often contend with long lines and machines that are subject to power failures. If you happen to carry a VISA, American Express or other ‘universal credit card,’ you may find few places where you can actually use it, other than high-end hotels, tourist enclaves, and pricey retail outlets.
A child in Harare holds Zimbabwean dollar notes acquired by begging on the streets. In 2008, when this photo was taken, the county’s rate of annual inflation was over 100,000%. (Associated Press)
Then there are countries like Ethiopia, which lack ATM machines altogether, and whose largest denomination, the 100 birr note, is roughly equivalent to $8 US. Not to mention places like Zimbabwe, where rampant inflation has necessitated the use of the black market, with US dollars and South African rands being traded against quickly depreciating Zimbabwe dollars.
So what would a ‘cashless’ society in Africa look like? Would it be possible to create one, with such a dependence on small change and currency, and with such a lack of infrastructure like banks, ATM machines, and businesses which can process card transactions? Would any new attempts to unveil a system of debit and credit cards simply create a similar situation to that of Tanzania: where some people can access cash at a small number of ATMs, but where there are few outlets equipped to actually use credit?
Dahabshiil, Somalia’s largest money transfer company, is currently rolling out an electronic cash system in Hargeisa, the capital of Somaliland. A press release from the website notes,
The General Manager of Dahabshiil Money Transfer, Abdirashid Mohamed Saed said the computer generated Internet based system will allow their customers to obtain debit cards to withdraw funds from Automated Teller Machines.
The ATMs will be placed in secure places such as hotels and business centers. Customers will be able to purchase items with their debit cards.
“We started this project in Hargeisa (Somaliland) because of the stability and the good internet connections but we’ll spread it to other safer areas of the country,” Saed told VOA Somali Service.
It will be the first time in the history that e-cash card system is launched in Somalia.
Dahabshiil made their mark in the private money transfer business in Somalia. Relatives and friends of Somalis who live abroad, use the service to send money home. The BBC observes that some estimates place the transactions at as much as $1 billion.
I’m personally thrilled to see a debit card system being offered in Somaliland. I hope that the user fees are fair and reasonable, and that many people will have access to this service, not just elites. While the prospect of ATMs placed at hotels and business centers for security reasons makes sense, this restricted access, will likely keep services out of the hands of many people who could benefit from the machines, and who don’t have the extra money or confidence to travel to a wealthy enclave to access cash. Just a thought. Also, as long as access to ATMs and credit processing machines is limited, it will be difficult for Somalis to truly benefit from these cards in a substantial way. But as with any new technology, it will takes time for it to infiltrate society. Hopefully, Dahabshiil will be able to promote access to debit and credit cards as well as places equipped to process them.
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What do you think?