Somalia in need of short term remittance solutions - CNBC Africa

Somalia in need of short term remittance solutions

East Africa

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Somalia's unbanked rely on remittance companies to transfer their money. PHOTO: Getty Images

“We think that the UK government has some really good long-term solutions to the problem – trying to create some safe corridors. What we don’t have is short-term solutions, these will take a year, two, three years to fix and that’s what we’re worried about. What happens in the meantime to the vulnerable people who depend on remittance,” Adeso executive director Degan Ali told CNBC Africa.

“We’re advocating for the millions of Somalis who rely on remittances and Dahabshiil being one of the largest providers of remittances to Somalia, and the last one that remains with an account with Barclays.”    

A high court over-ruled Barclays Bank's decision to close the account of money transfer agent Dahabshiil, over fears that remittance companies may fund terrorists.


“I don’t think any banking institution, whether it’s a Somali bank or large multinational bank, is 100 per cent risk free from issues. Somalia is the only country that doesn’t have a formal financial institution. This unbanked population doesn’t have any banks to trade with, to send their investment money as well as to receive remittances,” Ali explained.

The High Court’s ruling means that customers will be able to continue transferring money and Ali added that one must also take into account the state of Somalia at the moment.

“If you close the money transfer operators, there will be nothing left in Somalia and that would be very devastating. Keep in mind this is a country that has just come out of a famine so this is a very precarious situation in terms of food security, it’s a populations that’s just barely surviving and to now cut off this lifeline, that would be just catastrophic,” she said.

“We have a moral obligation to find a safe, risk-reduced way of helping the Somali transfer operator’s to meet international standards. It all depends on what happens when the trial begins. It’s a short-term injunction and the trial is expected to begin in March 2014.”