Hormuud Telecom, the largest Somali telecommunications firm, was founded in 2002. It has since driven economic development through its innovative mobile money platform, EVC Plus. In the aftermath of civil war and ongoing political instability, Hormuud managed to create a mobile money infrastructure that has transformed Somalia into one of the world’s first cashless societies.
Hormuud was created with a small group of shareholders that has since grown to 12,000 shareholders from the Diaspora throughout the UK, US and Canada. It has become central to Somalia’s development and economic reconstruction. Keep in mind the civil war that ravaged the country, leaving only 16 per cent of the population with access to the formal banking infrastructure.
In sharp contrast, EVC Plus has a penetration rate of 83 per cent in the urban areas and are widening financial inclusion, especially to the most vulnerable and marginalised in society. Ahmed Mohamud Yuusuf is the captain of this ship as the CEO and Chairman of Hormuud. This telco is Somalia’s first private enterprise to be internationally ISO certified, and it is the country’s largest private-sector employer.
Hormuud is responsible for enabling such trust that the cash-out rate on their mobile money platforms is less than 5 per cent. As it is, a 2018 World Bank report showed that Somalia has “one of the most active mobile money markets in the world, outpacing most other countries in Africa.” So much so that it has even superseded the use of cash in the country of 14 million people.
In an editorial he wrote for Next Billion, Yuusuf gives context into the success of Hormuud saying “The country received no foreign direct investment between 1990 and 2013, and the monetary system broke down with the collapse of the Somali Central Bank.” He continued, “Yet it is out of this vortex of violence, corruption and economic turmoil that a business ecosystem like no other emerged. Thanks to mobile money, formal and informal marketplaces have flourished, as Somalis began doing business with one another.
Over time, Somalia has become the world’s first truly cashless economy.” Mobile money is quite something in this country because it does something very unique and unlike Kenya – “Mobile money is also decreasing the distance between communities, facilitating further commercial activities in Somalia.” In fact, when it comes to comparisons, Hormuud gives M-Pesa a proper marathon.
Does Hormuud mean anything in particular?
In the Somali language, Hormuud means “leader.” We are very proud of the fact that we’ve been the driving force behind a wave of Somali entrepreneurship.
Do you use your mobile money platform EVS Plus often? What do you like about it and what do you think could do with some improvement?
I, like the majority of Somalis, use EVC Plus almost every day! EVC Plus is an indigenous mobile money platform, developed entirely by Somali ICT engineers. In the absence of a formal currency due to prolonged conflict, EVC Plus became the primary payment of choice for more than two-thirds of all mobile users in Somalia. It has restored trust in our currency among Somalis who now have the means to do business. I think I like the freedom it has provided to millions of Somalis the most.
Tell us a little bit of your career history. How did you end up as CEO of the leading telecommunications in Somalia?
I come from humble beginnings. I was born in a rural area and my father tended to our camel herd. My mother died when I was six years old. My career began when I left boarding school. My first job was as a door-to-door salesperson. I then opened a shop. This was a very proud moment for me. The business grew rapidly, and I obtained an import/export license for further growth. This allowed me to return to university where I graduated from the faculty of linguistics at the Somali National University. When the Somali government collapsed in the 1990s, I had to relocate and adapt my business to survive the very difficult years of the Somali Civil War. Ultimately, this led me to establish Hormuud in 2002. This period also gave me the resilience and adaptability to grow the company into what it is today.
What, would you say, is the most critical part of your job as CEO?
Central to my job is keeping my customers connected and able to pay seamlessly.
How accurately would you say, is the media when it comes to portraying Somalia?
I’d say the biggest misconception is that Somalia is a war-torn country, continuously in a state of conflict. Hormuud and telecommunications firms in Somalia are some of the most innovative companies in Africa, contributing to a vibrant economy.
How do you run a successful, profitable telecommunications company in a volatile environment?
From our founding, Hormuud has had to navigate difficult circumstances. But we have remained focused on providing our customers with the best possible services no matter the challenges we faced. This has required innovation, resilience, entrepreneurialism – traits which have been crucial to our long-term success.
What has influenced the growth of mobile money in Somalia?
Necessity is the mother of innovation. Somalia found itself in an unprecedented position in the 1990s and 2000s because the civil war led to the collapse of formal banking infrastructure. During this time, the IMF found that 98 per cent of Somali shillings were counterfeit. This led to the need to innovate. Mobile money was born out of the need to find ways to complete transactions that did not rely on traditional banking. This unique context has led to 76 per cent of Somali mobile phone users relying on mobile money.
Mobile money penetration in Somalia is around 83 per cent, and at 72 per cent for (internally displaced persons) IDPs. What circumstances have made mobile connectivity stand out so strongly over the past two to five years?
Most Somalis do not use the formal banking infrastructure and have turned to mobile money to build businesses and make transactions in their daily lives. This is driving the economic development of the country. Another factor is the uptake of mobile money services by IDPs and the most vulnerable within Somalia. It allows them to access financial assistance and aid from international charitable organisations. For these groups, mobile money is a lifeline.
Somalia is ranked as having the cheapest data prices in Africa and 7th globally with 1GB of data costing $0.50. How have you managed to keep your data prices so affordable?
First, keeping data rates cheap is not difficult as telecommunications is a capital-intensive industry. We are also very committed to operating efficiently to ensure that our customers and clients are happy and remain with us for the long haul. We are proud of our success in reducing customer churn, which is prevalent within the industry.
Share some of the challenges you have faced when it comes to financial inclusion. What is connectivity like in Somalia and what are some of the steps the government is taking to ensure Last-Mile coverage?
Our connectivity is at almost 90 per cent. Achieving this has not been easy. However, we have diligently built a robust network across the country during our two decades of operations.
What have been some of the challenges you have faced in the telco industry when it comes to COVID-19?
The biggest impact has been the ARBU reduction due to job lay-offs and falling purchasing power among the middle class in Somalia. However, this has been offset by periods of remote servicing and e-top ups. Throughout this period our priority has been the safety of our teams and customers. To ensure this, we took appropriate steps to reduce the spread of COVID-19 within our outlets. This involved strict social distancing and hygiene measures.
Reports state that while EVC Plus has seen an increase in mobile money services from April 2020 to August 2020, the amounts sent are in fact, lower than average. Has this changed?
There are two explanations for these reductions. The first is the dwindling income of the working class. Secondly, people have become more economically conservative during this period of economic uncertainty and are saving more.
How do you manage communications at a time when information is a matter of life or death?
As a Somali business, we recognise the value of telecommunications to the region and at a time like this, disseminating accurate information is vital. During a crisis, innovation is required. This is why we put the infrastructure in place to allow our customers to receive accurate information. For example, when COVID-19 hit the country, we started ring-back tone awareness, which allowed millions of our customers to be aware of the risks associated with COVID-19. We also gave our customers access to credible sources, so the information they received was reliable and accurate. This has reduced the risks of COVID-19 disinformation.
What are the measures Somalia in general and Hormuud in particular, have in place when it comes to privacy and data protection?
We take the privacy and security of our customers’ data very seriously. Our fundamental approach is not to store any unnecessary data, which is clearly set out in our data protection policy. In addition, we always act in accordance with Somali Government regulations. Through this, we have established a high level of trust with our customers and clients.
The 2018 World Bank report states that almost three-quarters of the Somali population aged 16 and up use mobile money, transacting a total of $2.7 billion. How is Hormuud preparing for a younger up and coming generation of under 25s?
Our focus is on expanding our broadband connectivity in towns and villages across Somalia. Whilst we have already ensured 4G coverage in big urban centres, we want all Somali youth, no matter their location, to benefit from and enjoy the cheapest and most reliable mobile internet possible.
What would be the most frustrating, and the most rewarding parts of your job?
The most concerning part of my job is the huge reliance that many families have on our services. I am acutely aware that over 67 per cent of Somalis, especially the most vulnerable communities, use mobile money technology as a sole payment system. If mobile money no longer operated an entire population would be unable to buy food or pay for hospital treatments and education for their children. This is certainly something that keeps me awake at night. The most rewarding aspect is gaining the trust of the Somali people, which I view as a great honour. I then find delivering on this trust through the provision of great products and services extremely satisfying.
What is the greatest concern when it comes to your staff of 20,000 people?
The safety of our employees is always at the forefront of any decision we make as a company. We’re very aware of the risks that come with operating in a volatile environment and so have taken extensive steps and precautions to keep staff safe.
Tell us a little more about the Hormuud Salaam Foundation.
Hormuud Salaam Foundation was established at the same time as the company. In our philanthropic work, we focus on three major areas:
- Healthcare: When the government of Somalia declared COVID-19 a pandemic, the company rushed to rally behind those national efforts. For example, my company renovated 78 rooms comprising a total of 212 beds with state-of-the-art equipment, including a central oxygen system and medical equipment necessary to deal with COVID-19 patients.
- Education and economic development: our foundation runs a fully-fledged polytechnic school that enables our youth to develop technical skills. The foundation also conducts annual university scholarships for up to 120 students.
- Free microfinance schemes are also run by the foundation in conjunction with Salaam Somali Bank; the bank provides the funding for microfinance and the foundations selects the beneficiaries.
Could you shed insight into partnerships between Hormuud and the Somalia government when it comes to connectivity?
The government of Somalia is of course one of the biggest customers, with hundreds of institutions subscribing to our service.
What achievements are you most proud of/honoured to have been a part of as CEO?
- Connecting millions of Somali people with their loved ones and giving access to financial services for more than 3.5 million Somalis are my two biggest achievements.
- I am proud that our mobile money platform – the EVC Plus – and our free to use policy has allowed millions of poor and low-income communities to receive donations from their fellow Somalis and international aid and development organisation.
Are there any aspects of Hormuud’s infrastructure that you wish to expand and grow?
Of course, becoming more environmentally friendly is one of our top priorities. We know that tackling climate change is the fight that we all must play a role in. We are committed to playing our part by diversifying our energy mix and using renewable technologies. We are proud that over two-thirds of our masts now operate on solar energy. Like all responsible businesses, we will continue to drive these changes forward to ensure we do as much as possible to reduce our impact on the planet.
Another focus area is on providing high-speed internet for Somali households. In today’s world, such high-speed internet connectivity is fundamental for economic growth.
Is there a possibility of Hormuud ever being listed on the stock exchange?
There is currently no Somali stock exchange or regulations addressing this area. Of course, as these regulations develop, and the economy grows, we will reevaluate our position.
This article was first published in the December/January 2020/2021 edition of CIO Africa magazine.
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