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SOAS scholar helps launch campaign to protect remittance accounts in Somalia

28 June 2013

Dr Laura Hammond, a senior lecturer in Development Studies at SOAS, University of London has helped to launch an international campaign to protect remittance flows to Somalia and the wider Horn of Africa Region.

This follows news of Barclays’ announcement in May that it would be closing the accounts of up to 250 companies worldwide involved in money transfer services, including those working in Somalia. 

According to experts, this is likely to have a particularly severe impact on 40 per cent of the Somalis population who depend on money transferred from abroad for their basic living expenses: food, education, and health care.

In a joint effort involving members of the Somali community, the Somali Money Services Association, journalists and other academics, Dr Hammond decided to help mount a public campaign after talks with the Somali community who were concerned about the decision.

Last year, the scholar led a survey, commissioned by Food Security and Nutrition Analysis Unit (FSNAU) for Somalia - a project managed by the Food and Agriculture Organization (FAO) of the United Nations - of 718 households in Somalia to examine the impact of remittances on livelihoods.

Her findings culminated in a report, also commissioned by FSNAU and the FAO, including contribution and analysis from FSNAU staff involved in the field work.

The report, Family Ties: Remittances and Livelihoods Support in Puntland and Somaliland, revealed that remittances reach all parts of Somali society, including urban and rural areas and all wealth groups. Of those surveyed 42 per cent were receiving remittances, 80 per cent of whom received support from only one relative.

The top-ranked uses of remittances were, in order of importance, food purchases, non-food expenses (including house rent), school fees and medical expenses. The report found 73 per cent of respondents use the money to pay for food expenses, further highlighting the lifeline remittances provide.

Based on the findings, Dr Hammond’s team estimated the value of remittances to Somalia to be a minimum of US$1.2 billion per year. The significance of this sum can be seen when compared to other sources of funding. According to the World Bank, international aid flows averaged $834 million per year between 2007 and 2011, foreign direct investment was estimated at $102 million in 2011 and exports were $516 million in 2010.

Dr Hammond wrote a letter asking the UK government to intervene in the matter. In just 48 hours over a weekend, 105 academics, researchers, and aid practitioners had signed a letter to campaign against closing these accounts. The letter was sent to Mark Simmonds, MP, Foreign Office Minister for Africa, in advance of a cross-Whitehall meeting on June 24. By the end of that week, an e-petition echoing the request had gathered more than 850 signatures.*  

The letter urged the UK Government to assist the Somali Money Service Businesses (MSBs) in finding alternative banking partners, request that Barclays extends its termination deadline for at least six months and convene a series of multi-stakeholder discussions, beyond Whitehall, that will work on developing the enhanced due diligence that the banks seem to require for this sub-sector of MSBs.

Dr Hammond commented: “The timing of Barclays' decision could not have been worse. It comes on the heels of a major conference co-hosted by the UK government and the new government of Somalia in which more than 200 million pounds was committed to help rebuild Somalia.

“A large portion of those funds will need to go through Somali money transfer organisations. Somalia has an internationally recognised government for the first time in two decades, its counterinsurgency operation is rendering the al Shabaab militant extremists weaker than they have been for years, and piracy is at an all time low.

“Just when Somalia is getting back on its feet with significant UK support, a UK-based bank is pulling the carpet out from under it. Even more importantly, without the services of these money transfer organisations, Somalis living in the diaspora throughout the UK and Europe will not be able to send desperately needed support home to their relatives. This will have immediate and severe humanitarian implications."

The campaign has also involved reaching out to the media and to MPs from constituencies that have large Somali populations. Following this campaign, Barclays has confirmed that it would be granting a one-month extension to some of the remittance companies, including the largest one, Dahabshiil.

In response, Dr Hammond said: “While this is obviously welcome, we consider it to be insufficient - it will not allow enough time for the companies to review their compliance and to find alternative banking partners, and crucially Barclays has not indicated where it considers the companies' compliance to be lacking, so we are continuing in our advocacy.”

To view the full report on Family Ties: Remittances and Livelihoods Support in Puntland and Somaliland visit www.fsnau.org.

For details on the campaign visit the website.