Courts, clans and companies: Mobile money and dispute resolution in Somaliland

Nicole Stremlau and Ridwan Osman


Mobile money has thrived in Somaliland, providing access to storing money in e-wallets and the ability to pay for goods and services in a largely cashless economy. Its widespread adoption raises a number of social and legal questions, particularly around handling disputes. How are these disputes resolved, by which entities and according to which laws or regulations? Why are mobile money users so trusting of both the companies and technologies that they leave significant sums of money in e-wallets? This article explores how traditional mechanisms and existing networks of trust have been intregral in fostering an environment where mobile money can thrive. It recommends greater consideration of these traditional mechanisms when looking at issues of governance.

The research focuses on Somaliland’s dominant mobile money service, Zaad. It is based on extensive interviews with key individuals at mobile money companies, religious leaders, government officials, judges and elders that mediate cases of dispute, and informants and business owners involved in disputes. Zaad users in two major cities, Hargeysa and Borama, were interviewed for a more nuanced understanding of the level and patterns of trust that they have in the service.

Trust is a central aspect of facilitating social, political and financial interactions in Somali culture. Xeer law is customary law grounded in the region’s nomadic pastoralist tradition and based on agreements between clans. The emergence of Zaad is a response to the critical need for banking services in Somaliland but also reflects the unique and complex politics of the region; a result of market competition, brand reinvention following accusations of supporting terrorism following 9/11, and the trust-based social networks present in the region.

Results from the survey suggest that its widespread use has fostered particular confidence; the more people use a particular platform the more those within their network feel the pressure to use it, too. Many respondents see Zaad as a secure way to transfer cash in the context of volatile security, and perceive it to be more secure than carrying cash. However, users generally showed less trust in using the service to save money due to a lack of digital records and privacy concerns.

Three main disputes tend to arise: fraud or theft; mistaken transfers; and disagreements on payments between parties. A wider variety of actors are involved in dispute resolution: Zaad management who need to maintain a good business reputation; traditional elders who play an active role in mediating and resolving certain conflicts that result from Zaad transactions; and also state courts and the police who deal with disputes that elders are reluctant to take on – those which involve serial offenders and people with poor reputation.

The report recommends that when considering the need for governance and oversight, looking at how mobile money and telecoms industry are already regulated is likely to be both practical and more effective. This will involve looking beyond formal state structures and regulations. The enabling grounding and framework for an innovation such as Zaad has relied on much older traditions and social structures, such as xeer law.


Stremlau, N., & Osman, R. (2015). Courts, clans and companies: Mobile money and dispute resolution in Somaliland. Stability: International Journal of Security & Development, 4(1), 1–15.