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Supporting the ICT sector in Somalia

Rachel Firestone's picture
 
Photo: Cilmi Waare/Radio Mogadishu

Somalia’s ICT sector – particularly mobile communications – is already one of the brightest spots in its economy. It could soon reach a tipping point where market competition, equitable distribution and demand-driven efficiency can grow exponentially and transform operating environments for both government and individual citizens.
 
Despite, or perhaps because of, the lack of a public sector presence in a 20-year civil war, private, unlicensed mobile companies, using satellite for international communications, have emerged to meet the high demand for communications, especially with the large Somali diaspora. In terms of mobile penetration rates, Somalia is a leader in the region, with higher rates and lower prices than neighboring Djibouti and Ethiopia, which both enjoy higher levels of stability but retain state-owned monopolies.
 
However, the current lack of a legal framework for both the ICT and financial sectors is a source of risk potentially cramping the Somali economy. Critical areas – including remittances, mobile banking and mobile-money services and mobile services – are influenced and, in some cases, controlled by large companies. The market structure is still evolving, with de facto consolidation around larger companies, resulting from mergers and alliances. Although consolidation can bring some consumer benefits and help in achieving economies of scale, the future licensing framework will need to take into account competition policy considerations and enforce interconnection.
 
An important opportunity for the passing of regulation for the ICT sector, in the form of Somalia’s Communications Act, is now at hand.