Somalia’s mobile-money revolution has delivered one of the country’s most important private-sector successes. It has reduced the cost of transactions, expanded financial access and allowed commerce to function in areas where conventional banking remains scarce. But its very success has produced a national policy dilemma: when a private payment service becomes woven into daily economic life, a prolonged outage is no longer merely a corporate problem. It can become a financial-stability crisis. Somalia must therefore strengthen the Central Bank of Somalia (CBS) and reduce the economy’s reliance on any single payment platform before a major disruption exposes the system’s vulnerabilities.
The issue is an incomplete mandate, not an irrelevant institution. It would be wrong to say that the Central Bank of Somalia has no meaningful role. The CBS licenses and supervises financial institutions, has established mobile-money rules and has introduced the National Payment System, the Somali Payment Switch, the Somali Instant Payment System (SIPS) and the SOMQR standard. According to the Bank, SIPS enables real-time, 24-hour transfers between banks, mobile wallets and points of sale. Its website currently lists fifteen licensed commercial banks, six mobile-money service providers and two payment systems—significant institutional progress after decades of state collapse.
The more fundamental concern is that the CBS has not yet developed the full capabilities expected of a modern monetary authority. Somalia remains heavily dollarized. The national currency has not resumed its ordinary functions as a dependable unit of account, store of value and medium of exchange. Monetary-policy tools remain limited, supervisory capacity is still being built, and the country lacks a fully credible, financed and operational framework for emergency liquidity support and financial-institution resolution. In practical terms, a large share of the public’s money is created, held and transferred through private banks and mobile-money systems rather than through sovereign currency and central-bank settlement money.
That is not a case for reducing the CBS’s role; it is a case for completing its institutional transformation. A central bank that primarily licenses, monitors and coordinates cannot fully protect an economy in which private digital money performs functions traditionally associated with cash and banking. Somalia needs a monetary authority that can supervise systemic risk, protect settlement, manage crises and sustain public confidence—not simply regulate entry into the market.
Digital payments are both an achievement and a concentration risk. EVC Plus has become part of Somalia’s economic infrastructure. Families use mobile money to purchase food, pay school fees and rent, receive salaries and remittances, assist relatives and settle commercial obligations. Its speed, convenience and apparently low cost have helped offset the country’s limited branch-banking network and the Somali shilling’s weakness. EVC Plus and its employees deserve credit for building and maintaining a service on which millions depend.
That importance also makes concentration a matter of public policy. Public information routinely identifies EVC Plus as Somalia’s leading mobile-money platform, yet the CBS does not readily publish an authoritative, regularly updated series showing each provider’s market share by transaction value, volume and active users. The absence of that information is itself a supervisory weakness. Policymakers should not have to rely on company estimates; the CBS should release concentration measures, including market shares and the Herfindahl-Hirschman Index.
A dominant platform creates several linked risks. A prolonged technology failure, cyberattack, act of sabotage, telecommunications outage, internal-control breakdown, fraud incident, liquidity shortage or loss of public trust could leave households and companies unable to reach their funds. Network effects reinforce the position of the largest provider, placing competitors at a structural disadvantage. A single commercial ecosystem may also combine telecommunications, wallets, merchant acceptance and related financial services, making a breakdown more difficult to contain and an orderly resolution more complicated.
The expression “too big to fail” should be applied with precision. It does not suggest that Somalia’s payment providers are failing, nor does it mean commercial success should be punished. Rather, it describes a situation in which the consequences of an interruption could become so serious that the government would feel obliged to intervene, despite having no agreed legal, financial or operational mechanism for doing so. Such an implicit expectation creates moral hazard: the public absorbs part of the potential loss while private firms retain control and information.
The hidden vulnerability behind digital balances. A mobile-wallet balance is only as secure as the legal and financial structure behind it. Customers must know that each unit of electronic value is supported by safe, liquid assets; that their money is separated from the provider’s own funds; that creditors of the provider cannot seize it; and that it can be redeemed promptly at par. Independent reconciliation of the electronic ledger with safeguarded funds is therefore not a technical footnote. It is the basis of confidence in the system.
Somalia’s mobile-money regulations provide an important foundation, but providers with systemic importance need stronger requirements than ordinary firms. The CBS should verify safeguarding arrangements daily, receive automated supervisory information, require independent external assurance and publish aggregate compliance findings. Customer funds should be spread across sound settlement banks under legally enforceable trust or safeguarding arrangements. Placing the backing assets primarily in one affiliated bank would merely transfer concentration risk from the wallet sector into the banking system.
Why the lack of a lender of last resort matters. In a conventional monetary system, a solvent bank facing a temporary liquidity shock can seek emergency funding from the central bank against acceptable collateral, usually at a penalty rate. This lender-of-last-resort role can stop a short-lived cash shortage from becoming a wider bank run. It is not intended to rescue insolvent shareholders; when properly designed, it provides temporary liquidity under strict conditions, close supervision and safeguards against loss.
Somalia faces an unusually complex situation because its financial system is largely dollarized. The CBS cannot create United States dollars, while its usable foreign-exchange reserves and high-quality collateral framework are limited. An unlimited guarantee would therefore be neither credible nor affordable. Mobile-money providers are also not conventional banks. Fully safeguarded customer balances should not normally require central-bank credit because the assets backing them ought to be liquid and accessible already. If a deficit results from losses, fraud or insolvency, liquidity assistance cannot resolve the underlying problem; resolution and loss allocation are necessary.
The answer is not an impossible promise of a blanket rescue. Somalia should instead establish a limited, rules-based emergency liquidity facility for solvent, licensed banks that are critical to settlement and the safeguarding of customer money. The facility should be pre-funded in dollars through a combination of CBS reserves, government fiscal support authorized by law, risk-based industry contributions and, if negotiated, contingent assistance from international partners. Borrowers should provide suitable collateral, accept enhanced supervision, pay a penalty rate and meet a defined repayment schedule. Support should be available only where the institution is solvent. Shareholders and managers must remain exposed to the consequences of failure.
A practical reform program. 1. Designate systemically important payment providers. The CBS should establish objective thresholds covering transaction value, transaction volume, active users, merchant reach, substitutability and interconnectedness. Providers that cross those thresholds should meet enhanced requirements for capital, governance, cybersecurity, outsourcing, incident reporting and recovery planning. Designations should be based on evidence and function, not aimed at any named company.
2. Make interoperability universal in practice. SIPS and SOMQR should serve as neutral public infrastructure through which every licensed bank and wallet can exchange funds instantly and at transparent prices. Participation rules should bar discriminatory access, preferential routing and closed-loop exclusivity. Customers should be able to transfer money between providers without maintaining multiple wallets, while merchants should be able to accept interoperable payments through a common standard. The CBS should publish data on availability, failed transactions, pricing and dispute-resolution performance.
3. Insulate customer money from corporate risk. The legal framework should make safeguarded funds bankruptcy-remote, prohibit their use for lending or group financing, require daily one-to-one reconciliation and mandate diversification among approved banks or safe liquid instruments. Related-party exposures should be tightly restricted. For systemically important providers, the authorities should consider an independent custodian or trustee structure.
4. Demand operational resilience, not paper compliance. Critical providers should maintain geographically separate data centers, test offline and degraded-service procedures, use redundant telecommunications links, enforce strong identity and access controls, monitor security continuously and rehearse recovery plans. The CBS should define maximum tolerable outage periods and conduct sector-wide exercises involving cyberattacks, corrupted data, power failures, telecommunications disruption, agent-liquidity stress and mass redemptions. Material incidents should be reported immediately, followed by public explanations proportionate to their impact.
5. Create recovery and resolution powers. Every systemic provider and settlement bank should prepare a recovery plan. Authorities need the legal ability to transfer critical operations, preserve customer access, replace management, impose a temporary stay when necessary, separate viable services from failed entities and wind down non-critical activities. Resolution plans must identify the location of customer data, source code, keys, contracts and safeguarded funds. Continuity should not depend on one management team or technology environment.
6. Protect competition without dismantling successful services. Competition policy should address exclusivity agreements, discriminatory access to USSD channels, merchant lock-in, the bundling of telecommunications with financial services and obstacles to switching. Data portability and proportionate open application programming interfaces could encourage innovation, provided consent, privacy and cybersecurity protections are in place. Structural separation should be a last resort, considered only if functional regulation, interoperability and conduct remedies fail.
7. Reinforce the CBS itself. The Bank needs operational independence, reliable funding, specialist personnel and modern supervisory technology. It should maintain dedicated payments-oversight and operational-resilience functions, publish an annual financial-stability report, disclose concentration data and explain the framework for emergency intervention. Its supervisory reach must extend beyond the licensed legal entity to material outsourcing arrangements, telecommunications dependencies, cloud services, agents and related companies.
A sequenced path forward. During the first twelve months, the CBS should complete a system-wide map of concentration and dependencies, designate critical providers, introduce automated daily safeguarding reports, publish service and market-share data, require recovery plans and conduct a national payment-disruption simulation. It should also ensure that every licensed provider connects effectively to SIPS and SOMQR under fair technical and pricing conditions.
Over the next two years, Parliament and the Government should pass a comprehensive framework covering payment systems, resolution and the financial safety net. They should operationalize a pre-funded resolution mechanism, establish the limited dollar-liquidity facility, strengthen legal protections for customer funds and develop credible cross-border and correspondent arrangements for emergency access to dollars. The work should be coordinated with telecommunications regulators, competition authorities, the Ministry of Finance and international development partners.
The aim is not to replace EVC Plus with a government-run platform or to weaken a Somali company that has delivered substantial value. It is to ensure that no household’s savings, merchant’s livelihood or national payment flow depends on the uninterrupted operation of one private system. Public policy should protect innovation while eliminating the single point of failure.
Conclusion. Somalia has progressed from institutional collapse to becoming one of Africa’s most mobile-money-dependent economies. That achievement now calls for a second generation of reform: moving from private convenience to public resilience, from provider-specific networks to genuine interoperability, and from basic licensing to systemic supervision and credible crisis management.
The Central Bank of Somalia is not redundant—it is unfinished. Its most urgent task is to ensure that private digital money remains redeemable, transferable and accessible under severe stress. EVC Plus’s success should be recognized, but no company, however capable, should bear the burden of functioning as Somalia’s de facto national payment infrastructure without strong public safeguards, competitive alternatives and an orderly failure regime. Those protections must be built before the system is tested—not after it stops working.______________Selected public sources• Central Bank of Somalia, National Payment System: https://centralbank.gov.so/nps/• Central Bank of Somalia, Governor’s Statement and institutional reform priorities: https://centralbank.gov.so/governors-statement/• Central Bank of Somalia, SOMQR Code Standard: https://centralbank.gov.so/somqr/• Central Bank of Somalia, Publications and annual reports: https://centralbank.gov.so/publications/• Central Bank of Somalia, licensed financial institutions and current institutional information: https://centralbank.gov.so/• International Monetary Fund, Somalia country reports and program documentations: https://www.imf.org/en/Countries/SOM• World Bank, Somalia economic and financial-sector publications: https://www.worldbank.org/en/country/somalia• Bank for International Settlements / IOSCO, Principles for Financial Market Infrastructures: https://www.bis.org/cpmi/publ/d101a.htm• Financial Stability Board, Key Attributes of Effective Resolution Regimes for Financial Institutions.
About the author. Guleid Osman has more than twenty years of professional experience in banking, financial-sector regulation, AML/CFT compliance, payment systems and economic regulation. He is a former HSBC employee, former Chief Executive Officer of the Somali Bankers Association and former Banking Expert at Somalia’s Financial Reporting Center. He holds an undergraduate degree in Economics and a postgraduate qualification in Banking and Finance, and is a PhD candidate in Leadership and Sustainable Economic Development.
The views expressed in this article are personal.
