Mobile Money Ecosystem in Somalia

ID, Fraud and KYC

Only slightly more than a third of Somalis own some means of identification. Non-urban populations are less likely than other populations to own some form of ID. Somaliland has the highest ID ownership rate.

Somalia’s current ID system is fragmented. Among the respondents who own an ID, only 61% own a formal ID.

An ID is often required to access financial services, such as sending and receiving money via hawala transfers, opening a bank account, performing mobile money over-the-counter transactions, and taking up a loan.

The scarcity of ID documents means that official Know-Your-Customer (KYC) policies are often sidestepped. An ID was not required to buy a SIM card, or open a mobile money account for a majority of subscribers.

The appetite for ID ownership is high. Services most likely to create demand for IDs are related to financial services, access to health and education and travel.

Among those who do not possess an ID and do not think having one would be useful, the vast majority, do not see what benefits it would bring, suggesting the need to educate the population about the benefits of a foundational ID system.

Barriers in obtaining an ID often relate to its relatively high price and difficulty to find someone to vouch for a person’s identity. Stringent SIM-card registration processes based on formal IDs may thus exclude many consumers who lack the documentation necessary for registering a SIM card.

A majority of Somalis think that it would be a positive change to enforce stronger KYC requirements, mainly because they think that it would increase the safety of the money stored on a mobile account and reduce fraud.

Almost half of mobile money subscribers have experienced fraud. Such experiences are most common among people with lower level of education, the illiterate, people of younger or older age, and those who are relatively more vulnerable.

ID ownership of total population
ID ownership among respondents by type of population
Type of ID owned
Services which often require an ID to be accessed (Percentage of respondents who declare an ID is 'always', 'most of the time' or 'often' required)
Documentation needed to register according to mobile money subscribers
Reasons why having an official ID would not be useful
Reasons why having an official ID would be useful
Appetite for ID ownership by socio-economic characteristics
Barriers that could be faced by respondents to obtain an ID
Reasons why requiring an ID for buying a SIM card or opening a mobile money account would be a positive change
Type of fraud experienced – individual risks associated with mobile money
Percentage of respondents who experienced fraud, by socio-economic characteristics