Regulatory Spotlight
Central Bank of Somalia Mobile Mooney Regulations (2019): A step change in approach
Rebuilding Somalia is every Somali’s business
In 2018, I published the outcome of my review into the risks and benefits of the Electronic Mobile Money Transfer (E-MMT) system in Somalia. My review highlighted how, in the absence of a credible regulatory framework, E-MMT providers were becoming systemically important and the attendant material risks to Somalia’s economy and financial system. The second part of my publication set out the potential regulatory approaches that needed to be considered as part of an overall package of reforms to help mitigate these risks and safeguard the safety of the country’s financial system.
The E-MMT system continues to be a critical financial service infrastructure on which many millions of Somalis rely on a daily basis. This is why it remains an important policy objective to make sure these critical services are within an appropriate regulatory perimeter and subject to credible supervisory controls.
Sometime after my initial publication, the World Bank’s Somalia Economic Update (2018) broadly came to a similar conclusion. There is now a wider recognition of the importance and risks of this sector to the overall stability of Somalia’s financial system.
As a consequence, mobile money regulatory reform is now formally included in the International Monetary Fund’s Staff Monitored Programme IV (SMP IV) Structural Benchmarks2 for Somalia. SMP IV, which runs until July 2020, outlines the reform commitments that Somali policymakers must complete on the path to debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative. The Central Bank of Somalia’s Mobile Money Regulations 2019 (CBS MMR 2019) is the first phase of this key SMP IV benchmark regulatory reform, which would need to be followed by full regulatory implementation by the end of February 2020.
This publication summarises the regulatory implications for firms that are currently providing, or planning to provide, electronic mobile money service, and the required CBS organisational readiness work to make this happen. The publication looks at the key elements of the MMR 2019 and the significant improvement in control, capabilities and risk management that mobile money service providers need to demonstrate to comply with the new regulations.
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