The banks have closed a cash lifeline worth more than foreign aid

Money laundering and terrorism curbs have severed vital remittance channels which account for more than all foreign aid

The World Today Updated 4 January 2021 Published 1 April 2015 3 minute READ

Laura Hammond

Reader in Development Studies, SOAS, University of London

For the million Somalis living overseas, trips to the local money transfer operator are a monthly obligation. They bring cash or a debit card together with proof of identity, provide their relative’s name, phone number and address and pay a small service charge, usually no more than five per cent. The agent looks up their transmission history, confirms their contact details and takes the money. Five minutes later, their relative in Somalia gets a phone call or text message saying they have money waiting to be collected.

This routine, repeated each day in every Somali community around the world, means the Somali economy receives an estimated $1.3 billion to $2 billion a year. This is roughly equivalent to all the aid, foreign investment, and income earned from exports each year combined. Some 40 per cent of Somali households receive such remittances and three quarters of these share what they receive with poorer relatives in the country.

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