News / Africa

Somalis Worry Remittances at Risk as Cutoff Deadline Passes

A Somali man collects his money at a Dahabshiil money transfer office in southern Mogadishu, May 8, 2013.A Somali man collects his money at a Dahabshiil money transfer office in southern Mogadishu, May 8, 2013.
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A Somali man collects his money at a Dahabshiil money transfer office in southern Mogadishu, May 8, 2013.
A Somali man collects his money at a Dahabshiil money transfer office in southern Mogadishu, May 8, 2013.
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Gabe Joselow
— British bank Barclays had set a Wednesday deadline for suspending business with wire transfer services operating in Somalia, threatening a major source of money for citizens in the country. The bank gave extensions to many of the companies, but Somali residents worry about what they will do if and when their financial lifelines are cut.
 
Money transfer in Somalia is big business. The United Nations estimates the country receives $1.2 billion each year through remittances sent from overseas, which is helping the country rebuild from decades of civil war.
 
But last month, Barclays said it would terminate the accounts of wire transfer companies operating in Somalia, out of concern that some of the money could be diverted to fund terrorism.
 
July 10 was initially set as the deadline for the cutoff to take effect, but Barclays granted extensions, giving companies time to find alternative banks.
 
A representative of one of the biggest firms, Dahabshiil in Mogadishu, said business carried on as usual Wednesday.

Vital lifeline
 
But citizens, like Abdulahi Ali, a father of seven with family in Britain, remain concerned about an impending shutdown.
 
“The remittances we get through Dahabshiil are helpful for us,” he said, “especially during Ramadan. We are sad to hear that it will be affected by the closure.”
 
Many of the money transfers coming to Somalia go through the alternative hawala brokerage system, which adheres to Islamic banking codes, but does not always maintain extensive records of transactions like some of the bigger wire services.
 
In announcing its decision last month, Barclays said some money service businesses do not have “proper checks in place” and that they could “therefore unwittingly be facilitating money laundering and terrorist financing.”
 
Banks in the United States have also stopped money transfers to Somalia, out of concern they would be in violation of U.S. law against financing terrorism, the main target in Somalia being the al-Qaida-linked group al-Shabab.
 
But Isse Gurey, another Mogadishu resident with relatives in Britain, said the decision to restrict transfers will hurt families instead.
 
"This is really tough for us,” he said, “since we need the money from our family members for our livelihoods and for all our needs. Dahabshiil represents our lifeline and we want the decision to close the accounts reversed.”
 
Aid organizations are calling for an alternative to a shutdown, as many of the non-governmental organizations working in Somalia, as well as the United Nations, rely on money transfers through companies like Dahabshiil to pay local staff.

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