Remittances account for an estimated fifth of household income in Somalia
LONDON (AlertNet) – Remittances from Somalia’s diaspora account for about a fifth of household income in the war-torn country.
But insecurity due to two decades of conflict and strict U.S. laws designed to prevent funds reaching U.S.-designated terrorist groups have made it harder for many to send money home.
AlertNet spoke to Abdirashid Duale, CEO of Dahabshiil, one of the biggest money transfer businesses in the Horn of Africa, about the importance of remittances and how money reaches rural communities. The Somali company, which in 2009 launched Somaliland’s first debit card, gives over 5 percent of its annual income to development and humanitarian work.
Q: A U.S. bank recently said it would end its remittances service to Somalia over fears it would risk violating U.S. regulatory and anti-terrorism financing laws. How has this type of legislation affected remittances to Somalia?
A: … remittances are a lifeline to many people in Somalia. The current situation with the bank in the U.S. therefore poses a life threatening risk to the lives of not only these Somalis but all migrant communities that rely on remittances to sustain their livelihoods. Negotiations with these banks are still ongoing and we would appreciate any help that can be extended, including through the media, to convince them to reopen business with money transfer companies … all our agents are fully compliant with U.S. and international regulations.
Q: How do your services manage to operate in Somalia despite the insecurity?
A: Remittances have become invaluable to Somalis. Dahabshiil is the leading money transfer company in the region and has become highly regarded and trusted among Somalis of all walks (of life). This has meant the company can often count on the community to promote security and to protect it from incidences of crime. Dahabshiil operates solely as a business, and is impartial to politics and uninvolved in conflicts. We strive at all times to keep our customers and staff safe, and take the necessary steps – depending on the specific situation – to ensure their safety and wellbeing.
Q: How do people in rural areas of Somalia pick up money transfers, for example if they lack identification cards?
A: The use of mobile phones has facilitated the delivery of remittances to rural people. If a recipient does not have his or her own number, the sender will sometimes provide us with the number of a friend or relative so that we can leave messages for that recipient to come to the nearest Dahabshiil agent. In most cases, the sender will track down the recipient themselves and send them word to go to one of our offices. From time to time, we still use traditional methods of identification such as clan and sub-clan identification, or requesting a guarantor such as an elder or a business person.
Q: How can your services help people affected by the humanitarian crisis in East Africa?
A: The crisis elicited a large global response. There were fundraisings and individual contributions to communities hit by the crisis. Remittances into the East African region increased sharply during the worst months. Dahabshiil facilitated the transfer of most of these funds and ensured quick and reliable delivery. Dahabshiil also provides money transfer and other financial services to humanitarian and international development organisations including the United Nations, Save the Children, Oxfam and CARE International. These services are essential to these organisations to continue the flow of much needed aid and assistance to our communities. The United Nations describes Dahabshiil’s services as “the only safe and efficient option to transfer funds to projects”. In addition to the drought and food crisis, insecurity was rampant in the south-central region of Somalia and conditions were not favorable for NGOs distributing food and other forms of aid. We therefore partnered with leading INGOs to deliver cash instead of food.
Q: In what ways do different NGOs use your service and where?
A: We work with over 95 percent of local and international NGOs in the Somali region, transferring funds and ensuring the delivery of aid in the shortest time possible. We also offer payroll services to NGOs, depositing salaries into individual staff accounts. We extend credit facilities to some NGOs with whom we have a long standing relationship ... We have partnered with NGOs in certain development programmes, such as the cash for food project where we distribute cash instead of food to carefully selected needy groups in south-central Somalia ... Many international and local humanitarian organisations have been in touch with us about collaborating in the delivery of financial products that can alleviate poverty and sustain livelihoods. These include UN agencies, Oxfam, IFAD, and some US NGOs. The products include expanded microfinance services beyond micro-remittances, such as micro-credit.
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