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Somalia reaps from digitalization despite challenges

Just like the industrial revolution, the privatization of the internet in the early 90s has led to a boom in all the sectors of the global economy.

Just like the industrial revolution, the privatization of the internet in the early 90s has led to a boom in all the sectors of the global economy.

Somalia got it is first internet connection in the late 1990s and early 2000s. However, the real mass rollout of internet adoption didn’t start until after 2015. Ever since the internet penetration rate has been growing at lightning speed.

Despite this growth, Somalia, just like many other African countries has a very limited digital infrastructure such as the Internet backbone, broadband services, and other critical digital infrastructure. For example, due to insecurity, there is no internet backbone connection between main cities, thus limiting the ability to provide high-speed internet to people living in different regions, especially those in the South and Central Somalia. Take Fiber Optic cables for example. They are the main internet backbone carriers upon which digital services are built on. The more a country expands its fiber-optic capacity, the more internet penetration and the cheaper it gets.

However, Somalia is notoriously expensive when it comes to laying fiber-optic infrastructure, especially in rural and sub-urban areas due to factors including, but not limited to, security threats, land ownership, shortage of professional labour, and limited financial options.

On the other hand, and against all odds, Somalia has ranked number one in Africa in terms of low Mobile Internet costs and number seven in the world. This phenomenal achievement has been largely attributed to the liberal private-led nature of Somali markets and economy. There are currently seven telecommunication companies serving a population of 15 million people. This means that competition is stiff and markets are very efficient with limited or no entry and exit buriers.

Improvements in digital infrastructure

Businesses in Somalia are leapfrogging in the local and international economy by leveraging on the digital infrastructure and the high penetration rates of Mobile Money. A few years back, Hormuud Telecom – the largest telecommunications operator and Mobile Money provider in Somalia launched its mobile money platform – EVC Plus API which enabled local traders and e-commerce vendors access to flexible payment platforms. Business and delivery service providers as well as the general population could also buy and sell with ease and transfer money without charges through their mobile phones.

This has created a whole new ecosystem and a business model that is led by young and vibrant businessmen and women. Innovations such as the EVC Plus APIs and the rollout of internet backbone services will spur the economic growth in Somalia and create more jobs and services to the public as Hormuud and other telcos introduce improved services with wide options of making and accepting payments.

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