Somalia Central Bank Introduces QR Code Standard to Boost Cashless Transactions
The Central Bank of Somalia has launched a Quick Response Code standard to provide secure payment services as it moves towards a cashless economy. By launching this code, Somalia follows in the footsteps of Kenya, which launched a QR Code standard in May 2023.
The launch of a QR code standard is the latest sign that Somalia intends to rebuild its financial services infrastructure, hindered by years of conflict.
In 2021, the CBS launched a national payments system to drive interoperability among the 13 lenders in the country. In March 2023, the CBS also announced the adoption of International Bank Account Numbers (IBAN) by all banks in the country, reducing operational risks for banks.
Speaking at an event marking the launch of the QR code standard, the Governor of the CBS, Abdirahman Mohamed Abdullahi, encouraged guests to continue building solutions that digitise payment systems in the country as it looks to rebuild following years of conflict.
After war broke out in 1991, financial institutions in the country collapsed, and depositors lost their money. But since the war came to an end, the government has made attempts to drive the growth of the financial services sector, beginning with the relaunch of the CBS.
In 2017, less than 10% of Somalis held accounts in formal financial institutions, and only 2.8% had savings at a formal financial institution. Mobile network operators, however, provide some respite through mobile money services, which account for two-thirds of payments made in the country.
But given the low levels of Internet and smartphone penetration in the country, a QR code standard may not do much to drive digital payments. Still, this proves the government’s willingness to spur digital payments in Somalia.