At the Margins of a Hot War, Somalis Are ‘Hanging on by a Thread’

Credit: Oxfam/Petterik Weggers

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After twin suicide bombings at a popular Mogadishu hotel last week that killed 25 and wounded 40, news reporters were seen swarming through the city, spotlighting the victims, the assassins, the motives and the official response.

This left actor Barkhad Abdi, who played opposite Tom Hanks in the movie Captain Phillip and was making his first visit to Somalia since age seven, unlikely to have the usual paparazzi following his every move.

Yet Abdi, a Goodwill Ambassador for Adeso, a Kenya-based development charity, was there to bring attention to the plight of ordinary Somalis, facing life without a lifeline since the shutdown of money transfers that have been key in rebuilding Somali lives.

The money – over a quarter of a billion dollars from the U.S. alone – comes from families in the diaspora, the charity Oxfam America reports.

“The small amounts of money that members of the Somali diaspora send their loved ones comprise Somalia’s most important source of revenue,” wrote OxfamAmerica on its website. “Remittances to Somalia represent between 25 and 45 percent of its economy and are greater than humanitarian aid, development aid, and foreign direct investment combined.

“Remittances empower women and help give young men alternatives to fighting in armed groups. The money is the country’s lifeline.”

Because Somalia lacks a formal banking system, small companies were established, run by money transfer operators who could safely and legally deliver money to relatives and friends in Somalia. These companies used bank accounts to wire the money but most of those banks have shut down including the California-based Merchants Bank just last month.

According to the banks, around one percent of money transfer firms could not be properly investigated and pass due diligence checks by the federal currency control office. Yet this decision ignored the 99 percent of money transfer businesses which have been operating in this sector for decades.

Most money wired to Somalia originates in the U.S.

The move by Merchants Bank to pull the plug on the money transfer network could force law-abiding U.S.-based Somalis to choose between three options, according to Professor Laura Hammond of the UK School of Oriental and African Studies.

“They can stop sending money to their relatives living in the Horn of Africa. They can try to find alternative legal channels, but as a result are likely to be charged much higher transfer rates, reducing the amount of money their relatives receive. Or they can use unregulated and illegal ways to send money.”

Opinion writer George Monbiot put it more strongly. The U.S. Office of the Comptroller of the Currency, which triggered the bank closings, is, he charged: “The world’s most powerful terrorist recruiting sergeant… Its decision to cause a humanitarian catastrophe in one of the poorest, most troubled places on Earth could resonate around the world for decades.

“During the 2011 famine in Somalia, British Somalis saved hundreds of thousands of lives by remitting money … reaching family members before aid agencies could mobilise,” he wrote in The Guardian newspaper.

“Government aid agencies then used the same informal banking system – the hawala – to send money to 1.5 million people, saving hundreds of thousands more. Today, roughly 3 million of Somalia’s 7 million people are short of food. Shut off the funds and the results are likely to be terrible.

“Money transfers from abroad also pay for schooling, housing, business start-ups and all the means by which a country can lift itself out of dependency and chaos,” he continued. “Yes, banking has its uses, as well as its abuses. Compare this pointless destruction with the US government’s continued licensing of HSBC.”

Alternative, if more expensive, means of sending money legally, for instance through Western Union, are possible for some but not for people sending money to smaller towns and rural areas in Somalia and other parts of the Horn, where Western Union and smaller companies that still send remittances do not have a presence.

Instead, according to Oxfam, a large proportion of the 200 million dollars sent from the U.S. to Somalia each year will be forced underground. People will send money the way they did before Somali money transfer companies were formed: in cash, stashed in bags and pockets, or in other ways that will be impossible to track.

Meanwhile, as Abdi made a tour of his country of birth to see the impact of the diaspora dollars, he came in for a shock.

“Based on what you hear on the news, I expected to see a shattered country,” Abdi recalled from his visit. “But what I saw instead was a place full of resilience, entrepreneurship and hope.”

Accompanied by his sponsor, the Nairobi-based Adeso service agency, he said he met with young men who were learning how to become electricians to take part of the rebuilding of their country, and with women who were using newly acquired skills to come together and open successful businesses.

“When I was in Somalia I didn’t just see conflict, drought, and hunger,” Abdi said. “I saw people building a better future for themselves. And part of the reason why they’ve been able to do so is because of the remittances they receive from overseas. Let’s not threaten that lifeline and risk reversing all the gains that are being made.”

Hawala is one of Africa’s great success stories, wrote Monbiot. “But it can’t work unless banks in donor nations are permitted to transfer funds to Somalia.”

The report, “Hanging on by a Thread,” by Oxfam, Adeso and the Global Center on Cooperative Security, can be found on the Oxfam website.

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