Connect with us

Hi, what are you looking for?

Capital Business
Capital Business
A branch of Barclays bank in central London on February 12, 2013/AFP

World

Somalis warn ‘dire’ impact of British bank transfer cut

A branch of Barclays bank in central London on February 12, 2013/AFP

A branch of Barclays bank in central London on February 12, 2013/AFP

NAIROBI, Jun 24 – Somalia’s money transfer businesses appealed on Monday for the last major British bank they work with not to close its accounts, warning this would cut lifeline services for the war-torn nation.

With their country ravaged by decades of conflict and without a formal banking system, many diaspora Somalis depend on money transfer services to send millions of dollars annually to support family in the impoverished country.

The Somali Money Services Association (SOMSA), an umbrella group of transfer services, has said that Barclays bank is to close the accounts of its members next month.

International banks have been tightening rules in a bid to cut money laundering and funding of groups accused of terrorism.

However, SOMSA said closures would “have dire consequences in Somalia, where no alternatives to the money service businesses exist”, warning it could push transfer “underground into the hands of unlicensed, unregulated and illegal” providers.

Barclays is the last major British bank providing such services, SOMSA said, noting that aid agencies also use the service to send cash to support some of the world’s poorest people.

“The key issue is the damage to flows of cash to the vulnerable Somali people, who depend on remittances for their livelihood; and the likely threat of this action to economic and political stability in fragile parts of the Somali region,” SOMSA added.

Somalis send money back home via the transfer shops known as hawala, which can accept deposits abroad and immediately credit recipients in Somalia.

However, the hawala system need larger banks to help balance the books with larger transfers.

Of SOMSA’s 17 members, 12 have already had their accounts closed, with the remaining five facing “imminent” shutdown. Dahabshiil, the largest of all the transfer services, will have its Barclays account shut on July 10.

Advertisement. Scroll to continue reading.

Over a hundred Somali and international academics and researchers have signed a letter criticising the closures.

“What is at stake is a lifeline that provides essential support to an estimated 40 percent of the population of Somalia,” the letter read, noting that the services are key for some 1.5 million Somalis abroad to send cash to family still in the country.

“We understand that in recent years there has been a concern about funds going to support individuals and groups who have been designated as terrorists,” the academics’ letter read, organised by Laura Hammond of London’s School of Oriental and African Studies.

“We think that the best way to work to avoid this is to promote responsible, transparent, and accountable systems… rather than by closing down the channels by which funds are sent.”

Similar bank cuts in the US state of Minnesota in 2011 left the large Somali community there struggling to send money to support their families, but new deals were worked out to resume transfers earlier this year.

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...