Somalia’s largely unbanked population could still aid the growth of small and medium enterprises (SMEs) in the country, if they join mobile money service.
A new study on Somalia’s business environment says use of mobile money services could plug the hole of financial inclusion, and dodges most of the barriers in Somalia, because it aids transactions, boosts traders’ access to credit and enables seamless transactions, even for people with no bank accounts. And the result is that the flow of the money can boost traders’ access to finances by up to 13 times.
The study: “Assessing the Effects of Mobile Money Service on Small and Medium Sized Enterprises,” forms a paper published in the American Journal of Industrial and Business Management, a product of a joint study by SIMAD University in Somalia and Hormuud Telecom, Somalia’s largest telco.
Although researchers analysed data on services offered by Hormuud, it was based on the general use of mobile money services in day-to-day operations by traders.
The authors — Abdinur Ali Mohamed and Mohamed Ibrahim Nor — say they approached 138 targeted managers or owners of small and medium enterprises across Somalia’s southern and central regions where Hormuud operates in Somalia, receiving responses from 131 of them.
They say they found that every expansion of one percent in mobile money services in Somalia provides a 13 percent increase in access to finances from banks. And every increase in access to finances led to about a tenth in the growth of businesses.
Source: The East African
