Op-Ed: The Digital Banking Revolution in Africa – Somalia’s Transformative Journey


In recent years, Africa has witnessed a rapid advancement in digital banking, reshaping the continent’s financial landscape. Somalia is a remarkable example, where East Africa’s Salaam Bank, in collaboration with Paymentology, has launched a co-branded tokenised tap-to-pay digital companion card and a physical card for its Waafi mobile money app users. 

This innovative move, a first for the Horn of Africa, signifies a pivotal moment in Somalia’s financial sector, introducing digital and contactless payments through Salaam Bank’s digital-first initiative. It is also a welcome sign that things are moving in the right direction. 

Challenges of Traditional Banking in Africa

Africa’s banking landscape has long been plagued by challenges inherent in traditional banking systems. Limited infrastructure, high operational costs, and restricted accessibility have hindered financial inclusion and economic growth. However, technological advancements and innovative solutions are now transforming this landscape, offering unparalleled accessibility, efficiency, and affordability.

Somalia’s Ambitious Banking Journey

Somalia’s journey towards building a robust banking sector has been ambitious and bold but fraught with obstacles, particularly following prolonged periods of conflict and instability. Unsurprisingly, traditional banking has faced numerous setbacks, including limited access in rural areas, high costs, and trust issues.

Yet, despite these hurdles, Somalia is witnessing a significant transformation with the emergence of digital solutions that can deliver financial services to more people, including those who have been traditionally unbanked.

The Rise of Mobile Money and Fintech

The proliferation of mobile money and fintech is a sign of major progress, driven by a number of factors, such as the country’s growing population and rapid urbanisation. Somalia, with a median age of 18, is one of the youngest nations globally, making it ripe for digital adoption. Technology is enhancing convenience and accessibility, reducing the costs associated with traditional banking, and facilitating a broader reach of financial services. According to a Central Bank of Somalia (CBS) policy brief, the country records approximately 650 million mobile money transactions worth $8 billion annually, with over 70 percent of adult Somalis using mobile money services regularly.

Government Initiatives Driving Transformation

Another key to the nation’s digital transformation success is the government’s focus on building democracy, infrastructure, and economic stability. Helping to drive these goals forward is Somalia’s Vision 2030, an ambitious national policy that outlines a comprehensive strategy for digital transformation, with a strong emphasis on financial inclusion. Significant investments in telecoms infrastructure are expanding coverage to rural areas, enhancing connectivity, and facilitating digital transactions. Implementation of digital ID systems is also streamlining Know Your Customer (KYC) processes, making it easier for individuals to access financial services.

Impact on Society and Economy

The stimulation of local economies through increased financial activities and improved financial literacy is having a profound impact on society by increasing access to financial services for underbanked populations, empowering women and marginalised groups. This improved literacy leads to more informed decision-making, fostering a culture of saving and investment that supports long-term economic growth.

This economic vibrancy is critical for Somalia’s development and stability. According to the IMF, Somalia’s GDP growth is projected to reach 3.2% in 2024, partially driven by the digital economy.

Inspiration for other African Countries

Somalia’s model of digital banking offers valuable inspiration for other African nations. The scalability of Somalia’s approach suggests that similar contexts across the continent can replicate these successes. However, customisation is essential to address the unique challenges faced by different countries.

To foster a supportive environment for digital banking, policymakers should encourage public-private partnerships, enhance regulatory frameworks, and invest in infrastructure. Collaboration between government and private sector entities can drive innovation and infrastructure development. Continuous investment in telecom and digital infrastructure is necessary to ensure widespread accessibility.

Moreover, regional cooperation among African nations can facilitate the sharing of best practices and the development of interoperable systems. This cooperation can lead to a more integrated and efficient financial ecosystem across the continent, driving further economic growth and development.

The Path Forward

Somalia’s digital banking journey is a testament to the transformative power of technology in overcoming historical economic challenges. By fostering financial inclusion and driving economic growth, Somalia is setting an example for the rest of Africa. As digital banking continues to evolve, other African nations can draw inspiration from Somalia’s success, adapting and implementing strategies to create a more inclusive and prosperous financial future for all. 


Kirsten Wortmann Paymentology

By Kirsten Wortmann, Regional Director for Africa, Paymentology 

Kirsten Wortmann is a Regional Director at Paymentology with extensive experience in business development and sales of digital solutions across Africa. Prior to their current role, Kirsten held various positions at Mastercard, where Kirsten focused on digital partnerships and new business development in the Sub-Saharan Africa region. With a background in technology consulting and project management, Kirsten has a strong foundation in the IT industry, having worked in different roles at companies such as Accenture and Entelect Solutions. Kirsten holds a MBA from the University of Cape Town and a BSc Eng in Electronic Engineering from the University of KwaZulu-Natal.

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