Many Somalis rely on money sent from family in Britain, but the tap may be turned off
The irony is
that, just one month before Barclays’ announcement, Dahabshiil received
a ringing endorsement in the US. Seeking a solution to transparency
problems with Somali MTOs, a US Bankcorp spokesman said: “We are pleased
that we may have recently found a solution with one remitter –
Dahabshiil… We are currently in discussions with this remitter to ensure
all parties understand the terms and requirements necessary.”
Shamis Abokor was once Somalia’s hottest pop singer, belting out love songs in front of thousands of adoring fans.
Then she suffered a disastrous stoke and for the past 16 years she
has been confined to her tiny concrete home, cared for by relatives.
Today, aged 78, she is bedridden and semi-paralysed. She survives with
dignity thanks to her daughter in the UK, who sends her hundreds of
pounds every month via a Somali money transfer operator (MTO) called
Dahabshiil.
A few streets away in his tidy, windowless office,
Ahmed Aliubaxle is a symbol of why Somaliland, the self-declared
independent republic in the north-west, is so different from Mogadishu
and points south, still racked by civil war. His father emigrated to
Birmingham, made some money in property and sent it home, where Ahmed
used it to import used vehicles from Dubai and re-selling them. He is
now the boss of a major freight forwarding company, moving everything
from wheelchairs to construction equipment across the world.
But
Somaliland, like the rest of the country, has no banks, so he depends on
Dahabshiil for his firm’s growth. “Without Dahabshiil I would have no
way to get cars from Dubai or a generator from China,” he explains. “The
only way would be to fly to China with a suitcase full of dollars.”
Across
town, Alima Abdi’s little grocery shop is no more than a window in a
stone wall, but it helps feed her and her five children. It was set up
with the help of her sister who works in London, and still sends $200 a
month.
Ms Abokor, Mr Ahmed and Ms Abdi are just three of the
millions of Somalis who owe their survival to “the economy of
compassion” – the relatives abroad who send regular sums month after
month and year after year. The total remitted annually is believed to be
about $1.3bn (£830m), or half of Somalia’s national income, and dwarfs
international aid. At least 40 per cent of Somalis depend on these
payments: the true figure may be much higher, because the remittances
are often divided among numerous relatives. Somalis in the UK alone
remit some $500m a year.
With a federal government shakily holding
on to power in Mogadishu and violence significantly reduced, Somalia
and the EU co-host a conference of international donors in Brussels
today, intended to chart a new course to peace and prosperity.
But
on 30 September, those hopeful prospects will be thrown into jeopardy
when Barclays closes the accounts of 250 Somali MTOs, including
Dahabshiil, which is much the biggest of the lot.
Barclays
initially announced, in a letter to Dahabshiil and others dated 8 May,
that the accounts would be closed on 30 July. It wrote: “Acceptance and
eligibility criteria have been amended for customers in this sector,
which unfortunately means we will no longer be able to provide banking
services to businesses that fall outside of these.”
For everyone
involved in helping to haul Somalia back from the brink after its years
of civil war and famine, the disastrous implications were immediately
clear. Simon Levine of the Overseas Development Institute said: “The
famine of 2011 is largely over, so we’re back to the situation where one
in seven young children are so skinny that they are classified as
‘acutely malnourished’… If Barclays pull out of Somalia and there is no
way to send money, what happens when families whose kids are already
malnourished lose a quarter of their income? And what happens to the
economy, to jobs, to investment when a quarter of the money just
disappears? There is a risk that the consequences could be even worse
and much longer-lasting than the 2011 famine itself.”
 |
| Ahmed Aliubaxle, freight forwarder: 'Without Dahabshiil … the only way would be to fly to China with a suitcase full of dollars' |
For the international aid community, the severing of the remittance
pipeline threatens to spark a new Somali emergency. And the effect on
the agencies is even more direct than that, because in the absence of
banks, they depend on the MTOs to funnel aid money to their Somali
projects. The vast majority of them, including Oxfam, Care International
and World Vision, use Dahabshiil, as does the United Nations.
Founded
in 1970 in Burao, near Hargeisa, Dahabshiil’s head office is in
Whitechapel in east London, while in Somalia it has 268 agencies across
the country. Inside Somaliland, where its dominance is overwhelming, it
describes itself as a bank and fulfills all of a bank’s normal functions.
With
5,000 employees spread across 150 countries, this family-owned company
has become big and profitable enough to keep abreast of the
ever-changing regulations of the banking sector in Europe and the US.
During a 15-year relationship, Barclays has regularly acknowledged that
Dahabshiil is fully compliant with industry regulations.
As a UK
banking industry insider confirmed, it is US not British regulators that
are setting the pace in the crackdown, following the massive fines
imposed last year on HSBC ($1.9bn) and Standard Chartered ($330m) for
facilitating money-laundering. “The main pressure is from the US
regulator,” he said. “They are the ones on the hunt.”
The irony is
that, just one month before Barclays’ announcement, Dahabshiil received
a ringing endorsement in the US. Seeking a solution to transparency
problems with Somali MTOs, a US Bankcorp spokesman said: “We are pleased
that we may have recently found a solution with one remitter –
Dahabshiil… We are currently in discussions with this remitter to ensure
all parties understand the terms and requirements necessary.”
The
Barclays bombshell provoked a storm of protest and concern, and
Barclays responded by extending the deadline to 30 September. But it has
so far refused to contemplate a U-turn. Writing to Oxfam, Anthony
Jenkins, the Barclays chief executive, said: “There are a number of
serious concerns about the operation [of MTOs], with the sector at
particular risk of being used for the transmission of the proceeds of
crime, for money laundering, and for terrorist financing. This risk is
exacerbated by a lack of transparency on who the remitters and
end-receivers are in transactions.”
In Nairobi last week,
Abdirashid Duale, Dahabshiil’s chief executive, said: “It’s all to do
with fear. The banks are worried about Somalia because all they read is
bad news about piracy, Al-Shabaab [the militant Al-Qa’ida offshoot] and
so on – but they never go to Somalia to see for themselves. They fear
that some day, something might happen, and ever since 9/11 Somalia has
been harassed and stigmatised because of that fear. But the fact is that
all the 9/11 terrorists used Western banking institutions… We are not
asking any favours. If any company broke the law, they should face the
law.”
Mr Duale has drafted a set of proposals to address the
banks’ fears: improving the institutional capacity of the MTOs in
technology and compliance systems, setting up third-party monitoring and
certification inside Somalia, helping the Somali government to
introduce biometric scanning to remove uncertainty about the identity of
recipients, and setting up a fund which would effectively insure the
Western banks against financial penalties. He also agrees on the need
for greater collaboration between Somali MTOs. “We Somalis need to work
together, or we will die together,” he said.
But so far there is
no indication that Barclays will grant the MTOs a year of grace, as
Oxfam and others have demanded. So what solutions are open to Somalis
who want to maintain the lifeline to their families?
The obvious
answer is to go back to the old-fashioned, unregulated,
hole-in-the-corner hawala firms, which rely on the trust between members
of the same Somali clans. “Somalis will find a way,” said Ed Pomfret,
Oxfam’s campaigns and policy manager in Somalia. “We’re asking Somalis
to pack suitcases with cash and carry it to Mogadishu. For a government
dedicated to fighting money laundering, that doesn’t make any sense.”
Killing the patient to cure the disease...
$1.3bn
Total remitted to Somalia annually, about half of its national income
40
Percentage of Somalis relying on remittances
250
MTOs who will have their UK accounts closed
Source: independent.co.uk
