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Each year, Somali migrants around the world send approximately $1.3 billion home to family and friends in Somalia. An estimated 40 percent of the population in Somalia depend on these remittances. This lifeline is currently under threat, but we are campaigning to keep it open.
Oxfam has been working on the fragility of the remittances system between Somali communities abroad and people in Somalia. During the 2011 food crisis an American bank closed down the bank accounts of companies providing services allowing US Somalis to send money home. After a few months, accounts were re-opened, but it was clear that the system as a whole needed changes. Oxfam America and African Development Solutions (Adeso) undertook some research into solutions for the issue which estimated that the lifeline represents at least $1.3 billion annually.At least 40 percent of the population of Somalia are dependent on remittances. Photo: Geno Teofilo/Oxfam
Around the time the research was published, Barclays Bank in the UK announced that due to counter terrorism and anti money laundering regulations, it too was closing bank accounts to companies providing remittance services for Somalis in the UK.
We are concerned about the potential impact of this in Somalia where 870,000 people still need food aid and around 2 million more are in crisis. It’s estimated at least 40 percent of the population are dependent on remittances for food, clothing, health and education.
As there is no formal banking system in Somalia, the money remittance system is the only way to get funds directly from the diaspora to families in the country.
What we did
Oxfam in Somalia has been working closely with Oxfam teams in the UK and the USA as well as with Adeso to try and persuade the UK and US governments, the banks, and the Somali money transfer operators (MTOs) to come together to find a solution to this issue. As well as the research, Oxfam and Adeso have:
- held several round tables in the USA on the issue,
- produced a joint briefing paper on the UK situation, signed onto by 13 agencies,
- organized an event with Rift Valley Institute attended by over 300 people in Nairobi,
- gathered feedback from Somalis in Somalia on the potential impact,
- gained a large amount of media coverage, advocated with key UK government departments,
- briefed for a debate in the UK Parliament,
- met with banks and the Somali companies involved,
- held a panel event in London on the issue for Somali Week festival,
- supported an excellent Somali led campaign which had over 100,000 signatures to their petition within a week,
- worked with the petitioners to organize a stunt to promote the hand in of the petition.
The impacts of our campaigning
The result of this intensive work, along with great campaigning efforts from others, is some success. Our campaigning has contributed to the UK Government recognizing this is an issue that needs to be addressed.
Two UK Government statements after a recent roundtable on the issue said that the they would be setting up a “safe corridor” to allow this money to continue to flow; are planning to invest in rebuilding a banking sector in Somalia with training and capacity building; will clarify the regulations for banks and transfer companies; will form a task force to drive forward work on this issue.
As Oxfam we welcome this UK government action. These are all things we were pushing hard for and provide medium to long term solutions to the problem which are important to place the flow of remittances back to Somalia on a sustainable footing.
I pay tribute to the Somali community in the UK, MPs such as Rushanara Ali, and media who have worked so hard to keep this on the agenda along with Oxfam and Adeso supporters.
Yesrterday the High Court in London handed down a temporary injunction preventing Barclays bank from closing the account of Dahabshiil the largest remitter until a court case on competition is heard. However, this is a temporary measure only and we remain concerned about how things will play out in the short term.
Some smaller companies will be able to continue legally sending money through to Somalia, but the system is extremely fragile. We need the UK Government initiatives implemented as soon as possible. We are asking the right people to come together to fix this system.