MasterCard Inc. has formed an alliance with a Somalian bank to issue debit cards in the last African market aside from nations under sanctions where it wasnt present.
These are the first domestically issued debt cards in Somalia, Daniel Monehin, MasterCards division president for sub-Saharan Africa, said Tuesday in a phone interview before the World Economic Forum on Africa in Cape Town.
MasterCards Somalian partner, Premier Bank Ltd., is professionally run and we have been in negotiations with them for some time, he said. The East African lender meets all of the standards set on anti-money laundering and know your customer rules, he said.
Somalia has been mired in decades of conflict since civil war in 1991, and the government continues to battle al-Qaeda- linked Al-Shabaab insurgents intent on establishing a strict form of Islamic law and a pirate scourge. The turmoil has restricted development of its banking system, and the country installed the first automated teller machines in the capital, Mogadishu, only last year.
We have only been only recovering from civil war in the last three years or so, Abdirahman Yusuf Ali Aynte, Somalias minister of planning and international cooperation, said by phone from Cape Town on Wednesday. The introduction of a formal banking system and the arrival of companies like MasterCard can encourage international investors to come into Somalia in a big way and contribute to the revival of the economy, he said.
Most Somalian immigrants use an informal banking system to remit about $1.5 billion a year back home. The system, which also transmits funds for local businesses, is unreliable and difficult to regulate.
With the new debit cards, people can transfer money wherever they are to their relatives and friends in a traceable, safe manner, Aynte said. It addresses a long-standing concern that governments like the U.S. and U.K. have had with our informal banking sector, where they always had doubts whether all the money was going to right people.
Premier Bank is one of only four Somalian lenders that has a swift code. The system provides identification for lenders internationally and enables money transfers. The banks ATMs will be able to accept MasterCards for cash withdrawals and the lender will issue 5,000 MasterCard debit cards this year, followed by prepaid cards, and point of sale machines.
MasterCard, which is based in Purchase, New York, is in talks with other banks in Somalia to expand the network, according to Monehin.
Africa is one of the fastest-growing regions for MasterCard, and we see that continuing for the medium to long term, he said. Were beginning to have deep levels of engagement with governments, banks and telcos. Africa is ready for development and for moving to electronic payments because its safe, smart and can be used to collect government payments.