December 31, 2011 - The welfare of hundreds of thousands of Somalis who
depend on financial assistance from the diaspora is at risk following a
decision by a US bank to close down accounts of Somali money transfer
companies in the state of Minnesota by 30 December, according to local
and international sources.
Somalis, both in Somalia and in the diaspora, have reacted with dismay
at the move by Sunrise Community Bank, arguing that money transfer
companies are a lifeline to millions of Somalis who depend on
remittances for their livelihoods.
"After suffering conflict and famine, cutting off the only lifeline left
for Somalis is tantamount to a death sentence for [many] Somalis," Ilmi
Gedi, head of Qaran money transfer company (one of the largest in
Somalia), told IRIN. "If the closure goes ahead, it will not only hit
those whose families used to get money but also drought- and
famine-displaced people supported by other Somalis."
Laura Hammond, a senior lecturer at the School of Oriental and African
Studies in London, said the problem was serious with regards to
Minneapolis (the largest city in Minnesota and home to an estimated
60,000-80,000 ethnic Somalis) but potentially not critical to
remittance-sending from the rest of the USA.
However, Hammond said, if other US banks follow suit and close their
doors to Somali money transfer companies, the situation would be very
"The diaspora is one of the main lifelines to [people in] the famine
areas and their support is more effective than that of most aid agencies
because they are able to deliver funds to precisely where they are
needed almost instantly," she said adding: "Aid agencies have technical
expertise, but when it comes to getting money to where it's needed
quickly they can't begin to compete with the diaspora.
"One of the cruel ironies of this famine is that the worst-affected
areas are also those most conflict-prone, so funding is vital to
precisely the areas that make banks nervous."
It is estimated that US$1.3-2 billion per year is remitted to Somalia
from around the world, Hammond said.
"In a `normal’ year, probably 10 percent of that goes towards
`collective contributions’ - relief and development. In an emergency
year, the amount of remittances goes up - by how much, we don't know -
both to individual recipients and to community-based relief for
internally displaced camps, feeding centres, etc," she said.
The impact of such a closure will be felt the most inside Somalia, where
the UN estimates four million are in need of assistance - three million
of them in southern Somalia, with 250,000 in famine affected areas at
risk of starvation.
Madino Ji'ale Farah, a 60-year-old grandmother and resident of
Mogadishu, told IRIN she and 13 members of her extended family were
living on the $200 a month that one of her children sends regularly.
"We have no other income except our monthly bill from my daughter. We
survive on this money and if it stops we have no other means," Farah
said. "We would be forced to either go to the camps [for refugees and
displaced people] or beg."
She said her daughter had warned her that she may not be able to send
money next month.
Abdisalam Abdinur, 55, a father of five, depends on the $200 his
21-year-old son sends from Minneapolis. "If it stops we will have
nothing else to live on."
Abdinur told IRIN stopping money transfers will make most Somalis depend
on food handouts. "We already have too many waiting for food handouts.
Why add to it? It is very cruel. Maybe they want us all to beg."
In a statement on 27 December, the Somali American Money Services
Association (SAMSA) said it was concerned by Sunrise Community Bank's
decision to close their accounts. It is estimated that in an average
year, over US$100 million is transferred to Somalia through SAMSA from
Aid workers worried
On 23 December, Oxfam America and the American Refugee Committee (ARC)
issued a statement decrying the move by Sunrise Bank.
"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 in
She called on the US government to give the bank assurances “that there
will be no legal ramifications of providing this service to Somalis in
Ken Menkhaus, Somalia expert and associate professor at Davidson
College, North Carolina, was quoted as saying: “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.”
SAMSA said money transfer operators were by far the main facilitators of
aid and development funds for Somalia. “In addition to the needy
Somalis, the Somali government, international NGOs, the UN and USAID [US
Agency for International Development] use remittance operators to
conduct their operations in Somalia.”
SAMSA said its members were fully compliant with all applicable state
and federal laws and regulations, including all relevant provisions of
the Bank Secrecy Act and the US Patriot Act.