Somali Islamists ban mobile money transfer

MOGADISHU — The hardline Shebab Islamists who control a large swathe of Somalia said Monday they were banning mobile money transfers in the regions under their control.
The government condemned the move, alleging that the Shebab slapped the ban in retaliation for a refusal by some mobile transfer companies to let the insurgent group use their services to fund their military activities.
"After confirming the risk of using the mobile money transfer service, Shebab Al-Mujahideen decided to ban the service from Somalia," the Al-Qaeda-inspired group said in a statement.
"The companies Telesom, Golis and Hormuud which developed the service in the country so far should stop it," the statement read, giving the three partner operators three months to comply.
The Shebab argue that the service, which is now offered in almost every region where people have access to mobile phones, allows Western interference in the economy through the mobile operators' foreign partners.
"We hope that Muslim communities in Somalia will liberate themselves from Western exploitation," the statement said.
Somalia's embattled transitional federal government accused the Shebab of seeking to undermine any form of progress made by the country's economy.
"The ban came when the firms refused their service to be used by Shebab for terrorist fund-raising," an information ministry statement said.
"The extremists are against innovation, entrepreneurship and economic development of the country. They contribute nothing to the local business but destruction, extortion, and political and economic isolation," the statement quoted Finance Minister Abdullahi Mohamed Ali as saying.
Observers argue that the Shebab fear mobile money transfer schemes will take business away from the traditional, non-mobile money transfer systems known as hawala, over which they can exercise more control.
Hawala transfer operators are believed to channel up to two billion dollars to Somalia in remittance money from the diaspora each year, accounting for almost half of the income of urban households.
Mobile money transfer was first developed by Telesom, the biggest telecommunication service provider in the breakaway state of Somaliland with the name Zaad Service two years ago and was then adopted by the partner companies operating in the rest of the country.
Golis Telecom, which describes itself as the biggest operator in the breakaway republic of Puntland, offers a money transfer service called Sahal.
Hormuud Telecom, one of the main communication companies in south and central Somalia, developed the service early this year with at least half of its customers already subscribing.
There is a ceiling of 700 dollars on a single mobile transfer but up to around 3,000 dollars can be transferred in one day.
The Shebab exercise little military influence in the northern states of Puntland and Somaliland but control most of southern and central Somalia, where Hormuud -- the country's largest mobile telecoms firm -- is active.
Officials at the telecommunications companies confirmed having received the statement but declined to comment.
Money transfers from a mobile were seen as convenient as it did away with the need to carry cash, always a security concern in lawless Somalia, where conventional banking is non-existent.
The ban on mobile money transfers follows the outlawing of activities such as watching films or listening to music on the radio.
In a country that has had no functioning state for 20 years, telecom firms have been thriving and form the backbone of the economy, often offering cheaper rates and more cutting-edge services than in other more developed countries. AFP