Urgent action needed before major US remittance lifeline is cut to Somalia

Thousands of Somalis – many in need of urgent lifesaving assistance – face a potential cut-off of aid from abroad from family members as a US bank plans to close money-wiring services later this month, the humanitarian non-profits Oxfam America and the American Refugee Committee said today.

A local American bank announced last week it will be necessary for it to cease its financial wiring services with “hawala” money transfer companies to Somalia because the risk of violating US counterterrorism financing regulations is too high. The bank is a major lifeline for Somalis and one of very few still offering this service.  In the midst of the current famine, where more than 250,000 Somalis are on the brink of starvation, US-based Somali Diaspora face being left without any means to help their families survive through the current crisis.

Oxfam urges the US government, the bank and hawala merchants, whose networks disperse funds from the Diaspora to families in Somalia, to work together to find a cooperative solution that will not disrupt or delay the transfer of assistance from the Diaspora to Somalia.

“It is estimated that $100 million in remittances goes to Somalia from the US every year.  This is the worst time for this service to stop.  Any gaps with remittance flows in the middle of the famine could be disastrous,” Shannon Scribner, Oxfam America’s Humanitarian Policy Manager, said. “The U.S. government should give assurances to the bank that there will be no legal ramifications of providing this service to Somalis in need.”

“The 2011 famine in Somalia would have been far worse had it not been for the extraordinary mobilization of remittances sent by the Somali Diaspora to both their extended families and to local charities -- and all those remittances were sent through the hawala system,” Ken Menkhaus, Somalia expert and associate professor at Davidson College, said.

Over the long term the US government, US banks and hawalas should establish safe and legal mechanisms to ensure there are no further obstructions, doing due diligence to make sure money is received by families. “Through remittances, American Somalis provide a lifeline to hundreds of thousands of people,” said Daniel Wordsworth, President of American Refugee Committee. “With famine and drought already impacting families throughout Somalia, the cessation of bank transfers will be devastating on a national scale.”

Oxfam’s partners providing lifesaving services in Somalia have already expressed concerns about the potential hold-up in US cash remittances into communities they are serving, where many are dependent on this source of money.

"My brother in USA used to send me US$100 at the end of every month. He doubled the cash for us after we got into this harsh drought and food prices started to increase dramatically five months ago. He called me a week ago and said he will be sending the last cash as the hawala might stop working.  My family is relying 100 percent on that cash and if it stops, we have no option but to move to Dadaab refugee camps in Kenya", Habiba Abdi Ali, a mother of six children in Badhaadhe, Lower Juba, said.

American Refugee Committee currently provides aid on the ground in Mogadishu and is concerned that further financial pressure may force additional Somalis from their homes in search of assistance.

“Private institutions and actors trying to provide a safe and legal lifeline to help the people in Somalia should not have to forego the only means to do so for fear of prosecution,” Scribner said.

“The United States and the broader international community must prioritize the long term development of Somalia and the humanitarian agenda over the short term political agenda.  Direct foreign investment in Somalia is very low and international aid efforts on their own are not enough. At a time when millions are in great need, it is critical that the flow of aid, including from the Diaspora, be protected and increased.” she added.

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