Remittances and markets in Somalia
Each year, Somali migrants around the world send approximately $1.3bn to Somalia in an expression of solidarity, faith, patriotism, and generosity. These flows represent a significant share of Somalia’s economy and help to reduce Somalia’s reliance on assistance from foreign governments and international organizations.
Continued support from the Somali diaspora is essential for Somalia to successfully emerge from its protracted humanitarian emergency and political crisis and build the foundations for its long-term development.
This briefing paper investigates the obstacles facing the free and secure flow of remittances from the United States to Somalia. Banks in the US perceive Somalia as a risky destination for money transfers. Many banks have closed money transfer operator (MTO) accounts, disrupting remittances from the US to Somalia. Further bank account closures could result in a remittance cutoff, which could endanger Somali lives and interrupt economic development in the country.
If all the stakeholders—the Somali authorities, the US government, US banks, and Somali-American MTOs—make a concerted effort, they can prevent these disruptions and greatly enhance the security of the remittance system. This paper offers recommendations to achieve these goals.
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