In Somaliland, what’s the text message everyone waits for?

Imagine tightening your belt so you can set aside a few extra dollars for your kin threatened by famine and conflict, while knowing in the back of your mind that a bank can shut down the transfer service at a moment’s notice.

October 4th, 2012 | by Guest Blogger

In August, Oxfam America’s Scott Paul traveled to Somaliland to research a money transfer system that helps support countless families in the region. A senior humanitarian policy advisor, Paul discusses how remittances provide a lifeline to Somalilanders and people all across the Somali region. 

This is the second in a series of three blogs on the topic.

People wait in crowded lines to receive money transfers in Somaliland. Photo by Scott Paul

On my first day in Somaliland, I traveled to the operations center of Dahabshiil. In case I didn’t drive the point home strongly enough yesterday, Dahabshiil is a significant presence in Somaliland. The operations center now occupies two older buildings, but it’s scheduled to relocate to a new building, which, when completed, will be the biggest in all of Somaliland.

I asked Abdirashid Duale, Dahabshiil’s chief executive officer, what most threatened the free flow of remittances from the US to Somalia. Without hesitation, he replied, “Banks, banks, banks.”
Traditional Islamic money service businesses like Dahabshiil have agents to collect and distribute money transfers, but they can’t actually send money from the US to Somalia themselves – they need banks to do that. But US law requires banks to devote a ton of resources to monitoring the transactions and to subject themselves to additional government scrutiny.

As a result, only a few small banks still work with the Somali money transfer companies. And those banks could decide at any moment to discontinue service – even if the companies go above and beyond their legal obligations.

Many Somali-Americans are scared and frustrated, and I can understand why. Imagine tightening your belt so you can set aside a few extra dollars for your kin threatened by famine and conflict, while knowing in the back of your mind that a bank can shut down the transfer service at a moment’s notice.

It’s no wonder the Somali-American community in the Twin Cities in Minnesota has organized town hall meetings, protests, and boycotts this year in order to force banks and government officials to find a way to keep remittances flowing.

All of this trouble is not necessarily the fault of the banks, though. US law asks them to monitor and regulate systems they may not fully understand and which are widely believed in the industry, rightly or wrongly, to be insecure and risky. For my part, I didn’t fully understand them either. So I decided to see for myself how Somalis receive money from abroad – and how Somali money transfer companies guard against money laundering and fraud.

My good friend Kate, always up for an adventure, agreed to send me $60 from Minneapolis . She presented her driver’s license and phone number, together with my passport number and Somaliland cell phone number, and paid $63 (including $3 commission). Fifteen minutes later and nearly 8,000 miles away, I received a text message on my cell phone: “You have a message from Dahabshiil.”

To millions of Somali families, messages from money transfer companies like this one means the support they need to survive has finally arrived. To me, it meant a window into a poorly understood facet of Somali life was beginning to open.