The world’s first cashless country just might be in Africa

Somaliland is officially an autonomous region of Somalia with a population of just 3.5 million, mainly Muslim. In practice, though, it is an unrecognized, self-declared state. The territory, previously a British protectorate, united with the former Italian Somaliland in 1960 to form Somalia. The region declared independence from Somalia in 1991, after massacres carried out by the regime of Siad Barre. Tens of thousands were killed and entire towns were destroyed.

The government of Somaliland is now in active diplomatic discussions with neighbouring countries and the African Union, trying to get international support in its secessionist aspirations and recognition of its independence. No country in the world today recognizes Somaliland and of course this means, among other things, there is a total lack of outside investment. Despite this, it has a dynamic private sector, although poverty and unemployment are still widespread. It is a land rich in history and has important archeological treasures. It has its own president, parliament and constitution, army and police force.

Somaliland even has its own central bank that prints its own currency, the Somaliland shilling. The highest banknote in Somaliland, however, is the 5,000 shilling note, which is worth less than a dollar. This makes transactions incredibly impractical. Khat, a flowering plant and an amphetamine-like stimulant is used almost as currency in many places.

Zaad, a mobile money-transfer service offered by Telesom, the largest network operator in the territory, may prove to be the solution to the cumbersome shilling system. As in many other countries of Africa, the mobile sector is thriving here, with about 40% of the population having a phone.


About 306,000 Somalilanders today use Zaad. In a place with no ATMs and where credit cards are considered ridiculous, Zaad has been widely adopted by shops, market stalls, restaurants and hotels, despite it being considered un-Islamic by some radical groups. Telesom, the phone company, even pays its employees via Zaad.

Normally only payments of up to $500 at a time are allowed, $2,000 for merchants. The system is still not perfect, because it evades taxation, something the government wants to correct, but the inventiveness and dynamism of the private sector approach has provided the market with an appropriate means of exchange. So the world’s first cashless country may not be Sweden, the Netherlands or South Korea, after all, it may actually be Somaliland.


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