18 November 2013
A campaign to protect remittance flows to Somalia, supported by Dr Laura Hammond, Head of the Department of Development Studies at SOAS, University of London, has had major success in the UK courts. The largest Somali money firm, Dahabshiil, has been granted a temporary injunction to prevent Barclays from closing its accounts.
The international campaign launched following 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 several of those working in Somalia. A letter signed by over 100 academics and researchers was sent to the UK government and Barclays asking for a delay in the account closures. A similar statement was developed into a petition that was signed by over 104,000 people. It attracted the support of British-Somali Olympic champion Mo Farah.
Last year Dr Hammond led a survey, commissioned by the 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. This report has been cited widely as evidence of the important role that remittances play in ensuring basic livelihood security for Somalis.
The findings of the survey culminated in a report Family Ties: Remittances and Livelihoods Support in Puntland and Somaliland, which 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 that 73 per cent of respondents use the money to pay for basic food expenses, further highlighting the lifeline that 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.
The court decision enables Dahabshiil to continue operating normally until the full case is heard in court sometime in 2014. In the meantime, the UK Government has also committed itself to developing plans to review existing regulations concerning money transfer with a view towards protecting and making more transparent the flow of money between migrant communities and their countries of origin.
In an interview with The Guardian, Dr Hammond welcomed the government’s promise to focus on the issue: "There is a need to push ahead with efforts that have recently been announced by the government to review regulations and procedures for ensuring compliance to better safeguard the remittance corridor in the medium to long term.
"This crisis was brought about through a severe lack of trust, understanding, and information on the part of many involved in money transfer, and the review of procedures must stay on track in order to create a more transparent and accountable system."