Devices & Platforms

Smartphone financing scheme supports low-income Somalis

Smartphone financing is back in the news again – this time via a smartphone credit scheme launched across parts of Somalia.

Service provider Hormuud Telecom, said to be the largest telecommunication company and largest private-sector employer in the country, and Get-Phone, a local device financing firm, have introduced the initiative to make handsets more affordable for low-income users. 

At the moment, according to the ITWeb Africa news service, an estimated 70% of the Somali population has 4G coverage. However, smartphones and data remain expensive relative to incomes. The programme aims to address this affordability gap. 

Local press reports say that customers can acquire a smartphone with an upfront deposit of US$19 and daily repayments starting at US$0.60. The daily fee includes device instalment plus a bundled package of 1GB of data and 40 minutes of voice calls.

Current estimates suggest that the average Somali customer spends US$0.50 per day on data and calls alone; the new programme therefore allows them to add a smartphone to that daily budget for an additional 10 cents after the upfront deposit is made.

The programme uses Hormuud’s EVC Plus mobile money platform to facilitate repayments. Eligibility is determined through a proprietary credit-scoring system based on SIM-usage patterns, allowing those without formal bank accounts to participate.

The first phase of the programme will see 10,000 devices rolled out by June, with a further 100,000 planned by the end of the year. 

The initiative is set to scale through expansion into Puntland, a state in in the northeast, and Somaliland in the northwest.

This is not just about affordability. Smartphones connect people to the digital economy, with all that can mean for household revenue. Analysis from the World Bank and GSMA shows that access to mobile broadband can increase household consumption by up to 8% and reduce extreme poverty by as much as 7%, while a 10% increase in broadband penetration can increase GDP by up to 1.4% in developing economies.

Nor is this the only recent example. We reported in April that Nigerian finance firm Credit Direct had signed an MoU with Chinese handset maker Vivo Nigeria to make the company’s smartphones more affordable.

Similar initiatives were reported last year in Ethiopia and Kenya.



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