By Guleid Osman
Sunday September 20, 2026
Somalia's digital payments success is one of the country's most significant private-sector achievements. It has lowered transaction costs, widened access, and enabled commerce in places where conventional banking infrastructure remains limited. Yet that same success has created a public-policy challenge, a service can become so deeply embedded in everyday economic life that its interruption ceases to be a private operational matter and becomes a national financial stability event. Somalia must therefore strengthen the Central Bank of Somalia (CBS) and reduce dependence on any single payment platform before a crisis tests the system.
The problem is underdeveloped function, not legal redundancy
It would be inaccurate to describe the Central Bank of Somalia as having no function. The Bank licenses and supervises financial institutions, has introduced mobile-money regulation, and has launched the National Payment System, the Somali Payment Switch, the Somali Instant Payment System (SIPS), and the SOMQR standard. The Bank states that SIPS supports real-time, twenty-four-hour transfers among banks, mobile wallets, and points of sale. Its website currently reports fifteen licensed commercial banks, six mobile-money service providers, and two payment systems material institutional gains after decades of state collapse.
The deeper problem is that Somalia's central bank does not yet exercise the full range of functions expected of an effective monetary authority. The economy remains highly dollarized; the national currency has not regained its normal role as a reliable unit of account, store of value, and medium of exchange; monetary-policy instruments remain narrow; supervisory capacity is still developing; and the authorities do not yet have a fully credible, funded, and operational framework for emergency liquidity assistance and financial-institution resolution. In practice, much of the public's money is created, stored, and transferred through private banking and mobile-money infrastructure rather than through sovereign currency and central-bank settlement money.
This is not an argument for diminishing the CBS, it is an argument for completing its transformation. A central bank that mainly licenses, observes, and coordinates cannot adequately protect an economy in which private digital money performs functions once associated with cash and the banking system. Somalia needs a central bank capable not only of regulating market entry, but of supervising systemic risk, safeguarding settlement, managing crises, and maintaining public confidence.
Digital Payments - achievement and a concentration risk
EVC Plus has become part of Somalia's economic infrastructure. Households use mobile money to buy food, pay school fees and rent, receive salaries and remittances, support relatives, and settle business transactions. Its speed, convenience, and low apparent cost have helped compensate for a weak physical banking network and the poor condition of the Somali shilling. EVC Plus and its employees deserve recognition for building and sustaining a service that millions rely upon.
Precisely because the platform is so useful, its systemic importance must be recognized. Public information consistently describes EVC Plus as Somalia's leading mobile-money platform, but an authoritative, regularly published CBS market-share series by provider, value, volume, and active users is not readily available. This data gap is itself a supervisory concern. The CBS should publish concentration indicators, including market shares and the Herfindahl-Hirschman Index, rather than leaving policymakers to rely on company estimates.
Dominance creates several interconnected risks. Prolonged technology failure, cyberattack, sabotage, telecommunications outage, internal-control breakdown, fraud event, liquidity shortfall, or loss of public confidence could prevent households and businesses from accessing their funds. Because merchants and users cluster around the platform with the largest network, competitors face a structural disadvantage. Concentration can also combine telecommunications, wallet services, merchant acceptance, and affiliated financial services within a single commercial ecosystem, making failure harder to isolate and orderly resolution more difficult.
The phrase "too big to fail" should be used carefully. It does not mean Somalia payment service providers are failing, nor does it justify penalizing commercial success. It means that the social and economic consequences of disruption could become severe enough that the government would feel compelled to intervene, even without a pre-agreed legal, financial, or operational mechanism for doing so. That implicit expectation creates moral hazard; society bears part of the downside while control and information remain private.
The hidden weakness behind digital balances
A mobile wallet balance is only as sound as the legal and financial arrangements supporting it. Customers need certainty that every unit of electronic value is backed by safe, liquid assets; that customer funds are segregated from the provider's own assets; that those funds cannot be seized by the provider's creditors; and that balances can be redeemed promptly at par. independent reconciliation between the electronic ledger and the safeguarded funds is therefore not a technical detail it is the foundation of trust.
Somalia's mobile-money regulations provide an essential starting point, but systemic providers require a higher standard than ordinary firms. The CBS should verify safeguarding daily, receive automated supervisory data, require independent external assurance, and disclose aggregate compliance results. Customer funds should be diversified across sound settlement banks under legally enforceable trust or safeguarding arrangements. Concentrating the backing assets in a single affiliated bank would simply relocate the same concentration risk from the wallet to the banking system.
Why the absence of a lender of last resort matters
In a conventional monetary system, a solvent bank facing a temporary liquidity shock may obtain emergency liquidity from the central bank against acceptable collateral and at a penalty rate. This lender-of-last-resort function can prevent a short-term cash shortage from becoming a contagious run. It is not a bailout of insolvent shareholders; properly designed, it is temporary liquidity support subject to strict conditions, supervision, and loss protection.
Somalia's position is unusually difficult because the system is largely dollarized. The CBS cannot create United States dollars, and its usable foreign reserves and high-quality collateral framework are limited. An unlimited guarantee would therefore be neither credible nor affordable. Mobile-money providers also differ from banks. Fully safeguarded customer balances should not require central-bank credit in the ordinary course, because the backing assets should already be liquid and available. Where a shortfall is caused by losses, fraud, or insolvency, liquidity support cannot cure the problem resolution and loss allocation are required instead.
The correct response is not to promise an impossible blanket rescue, but to build a limited, rule-based emergency liquidity facility for solvent licensed banks that are critical to settlement and the safeguarding of customer funds. This facility should be pre-funded in dollars through a combination of CBS reserves, government fiscal backing approved by law, risk-based industry contributions, and if negotiated contingent support from international partners. Access should require good collateral, enhanced supervision, a penalty price, a clear repayment period, and a determination that the institution is solvent. Shareholders and managers must not be shielded from the consequences of failure.
A practical reform program
1. Designate systemically important payment providers. The CBS should adopt objective thresholds based on transaction value, transaction volume, active users, merchant reach, substitutability, and interconnectedness. Providers exceeding these thresholds should face enhanced capital, governance, cyber-resilience, outsourcing, incident-reporting, and recovery-planning requirements. Designation should be functional and evidence-based, not directed at any single company by name.
2. Make interoperability universal in practice. SIPS and SOMQR should become the neutral public rails through which all licensed banks and wallets exchange funds instantly and at transparent prices. Participation rules should prevent discriminatory access, preferential routing, and closed-loop exclusivity. Customers should be able to send money across providers without opening multiple wallets, and merchants should accept interoperable payments through a common standard. The CBS should publish service availability, failed-transaction rates, pricing, and dispute-resolution performance.
3. Separate customer money from corporate risk. The legal framework should establish bankruptcy remoteness for safeguarded funds, prohibit their use for lending or group financing, require daily one-to-one reconciliation, and mandate diversification across approved banks or safe liquid instruments. Related-party exposures should be strictly limited, and an independent custodian or trustee structure should be considered for systemically important providers.
4. Require operational resilience rather than paper compliance. Critical providers should operate geographically separate data centers, test offline and degraded-mode procedures, redundant telecommunications links, strong identity and access controls, continuous security monitoring, and rehearsed recovery plans. The CBS should set maximum tolerable outage periods and require sector-wide simulations covering cyberattack, data corruption, power failure, telecom disruption, agent-liquidity stress, and mass redemption. Material incidents should be reported immediately and followed by public explanations proportionate to their impact.
5. Establish recovery and resolution powers. Every systemic provider and settlement bank should prepare a recovery plan. The authorities should have legal powers to transfer critical operations, preserve customer access, replace management, impose a temporary stay where necessary, separate viable services from failed entities, and wind down non-critical operations. A resolution plan must identify where customer data, source code, keys, contracts, and safeguarded funds are held, so continuity does not depend on any single management team or technology environment.
6. Protect competition without dismantling success. Competition policy should address exclusivity agreements, discriminatory access to USSD channels, merchant lock-in, tying of telecom and financial services, and barriers to switching. Data portability and proportionate open application programming interfaces can enable innovation, subject to consent, privacy, and cybersecurity safeguards. Structural separation should remain a last-resort measure, used only if functional regulation, interoperability, and conduct remedies prove inadequate.
7. Strengthen the CBS itself. The Bank requires operational independence, stable funding, specialist staff, and modern supervisory technology. It should maintain dedicated payments oversight and operational-resilience function, issue an annual financial-stability report, disclose market-concentration data, and publish the framework governing emergency intervention. Its supervisory perimeter must cover material outsourcing, telecom dependencies, cloud services, agents, and related companies, not merely the licensed legal entity.
A sequenced path forward
In the first twelve months, the CBS should complete a system-wide concentration and dependency map; designate critical providers; begin automated daily safeguarding reports; publish service and market-share statistics; require recovery plans; and conduct a national payment-disruption simulation. It should also require all licensed providers to connect effectively to SIPS and SOMQR under fair technical and pricing rules.
Over the following two years, Parliament and the Government should enact a comprehensive payment-system, resolution, and financial-safety-net framework; operationalise a pre-funded resolution mechanism; establish the limited dollar-liquidity facility; strengthen legal protection for customer funds; and build credible cross-border and correspondent arrangements for emergency dollar access. These reforms should be coordinated with telecommunications regulation, competition authorities, the Ministry of Finance, and international development partners.
The objective is not to replace EVC Plus with a government platform, nor to weaken a Somali company that has delivered genuine value. The objective is to ensure that no household's money, no merchant's livelihood, and no national payment flow depend on the uninterrupted operation of a single private system. Public policy should preserve innovation while removing the single point of failure.
Conclusion
Somalia has moved from institutional collapse to one of Africa's most mobile-money-dependent economies. That achievement now requires a second generation of reform: 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 responsibility is to ensure that private digital money remains redeemable, transferable, and available even under severe stress. EVC Plus's success should be respected, but no company, however capable, should carry the burden of being Somalia's de facto national payment infrastructure without strong public safeguards, competitive alternatives, and an orderly failure framework. The time to build those protections is before the system is tested, not after it has stopped working.
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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.
