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Published On: Mon, Jan 30th, 2017

Somaliland:Mobile money transfer transactions must be based on SL shilling

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Last week, the Silanyo administration issued a decree banning the use of Mobile money transfer services for less than $100 transactions, after local merchants demonstrated against the low value of Somaliland shilling. Despite the legal tender of Somaliland being the shilling, Zaad and e-Dahab transactions are based on the US dollar. Unless the government takes drastic action to regulate the cartels– telecommunication and money transfer industry– and to impose on them using the Somaliland shilling for all transactions within the country; Somaliland would become the first “cashless country” in the world. This prospect would dampen its desire to achieve diplomatic recognition and attract foreign investment.

Zaad of Telesom, the largest mobile provider in Somaliland and e-Dahab of Somtel, are the two main money transfer providers in the country. People use Zaad and e-Dahab to pay their daily transactions, bills, school fees, and bus rides. These services are fast and efficient and are a great tool to the Somaliland people, so long as the transactions are based on the Somaliland Shilling.

Close to 400,000 Telesom subscribers use Zaad service. Although Telesom says Zaad is free to use, there is a cost associated with using it. For instance, If the customer does not have minutes or data on the cell phone, he or she is not able to use the service. The least amount Zaad/e-Dahab charges is 25 cents. Even the item cost is less than 25 cents; you have to pay a quarter. For poor customers, who most Somalilanders are, using Zaad is taking a toll on their limited budget. Money, poor families could have been used for food, water, and other essential items.

Zaad service is a money making enterprise. In fact, it generates close to 40% of Telesom total revenue.

Zaad was first launched by Telesom Somaliland mobile network operator, where it is technically majority owned (70%) by Hormud Telecom, in 2009.The owner of Hormud is Nur Jimale, who was the former owner of now defunct al-Barakat communications and money transfer group .Hormud telecom, the biggest mobile network in Somalia designed the software of   Zaad, with help from Safaricom, Kenya’s largest mobile provider

But according to the CEO of Telesom, Abdikarim Mohamed Eid, the company is owned by 1,500 Somaliland investors. Telesom has never officially released or published their financial results over the past 15 years, or even last year, regarding its gross revenue, net profits and assets. Some shareholders are not aware of the performance of the company. So how can the Somaliland Treasury Department assess the tax required from Telesom, if it is not releasing any financial statement?

Similarly, Dahabshiil group jumped into Somaliland’s saturated mobile business, after launching Somtel with the e-Dahab service. However, Somtel subscriber wise lags behind Telesom. Although it’s a family held company, there’s no transparency and accountability. We don’t know anything about the group’s financial statement.

By contrast, Safaricom’s financial results ending May 2016 were published, and it is available online. And by glancing at that statement, you would see that Safaricom is not only the best run firm in Kenya but also it is east Africa’s leading revenue earner among publicly traded corporations. Its contribution to Kenya’s treasury revenue for the year of the report is Sh17.66 billion, or 10% of firms’ total revenue.

The Safaricom mobile money transfer service M-pesa is based on Kenyan shilling and not American dollar as it is in Somaliland.

Since both Telesom and Somtel are using our air space, people have the right to know how much tax these firms paid to the coffers of our treasury, since 2010. How much money each of them is paying for the mobile license to operate in Somaliland?

Somaliland could not develop when Telecommunications and money transfer executives are evading taxes by colluding with the corrupt Silanyo administration officials. For conservative estimates, close to $200 million of taxes are uncollected from this sector, for the last decade alone; money that could have been used for water, health, education, and funding for the relief efforts of the recurring droughts.

The Somaliland government must develop a tax collection system and the expertise for the Telecommunications and other industries. And, if those expertises are not available locally, why should we not seek help from abroad or even hire private firms to train tax collectors and auditors, to go after companies that are evading taxes.

Finally, Somaliland government must shut down completely the mobile money transfer services, unless the service providers Telesom and Somtel base all of their transaction on the legal tender of Somaliland: The shilling. The lame duck Silanyo must do the right thing: from focusing on the merchants of corruption to serving ordinary Somalilanders, who see their Shilling become obsolete, and suffering from lack of basic services, higher inflation , and recurring droughts.

The Alternative would be him to become another African leader who tolerated corruption and abject poverty to his own people, and denied them the opportunity to improve their lives, while the few greedy and rich became powerful enough to control our government.

Ali Mohamed

Lewis Center, Ohio

He can be reached @ aliadm18@gmail.com

Twitter: @Gobanimo2

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