Adeso, the Global Center on Cooperative Security and Oxfam, released Hanging by a Thread: The Ongoing Threat to Somalia’s Remittance Lifeline, which details how bank account closures impact many Somalians who depend on remittances from friends and family abroad in order to fulfill basic survival needs and invest in small businesses. Remittances are handled by Money Transfer Operations (MTOs) who rely on banks to transfer the funds to Somalia.
Due to the poor financial regulation, the presence of terrorist-listed groups in Somalia and a strict regulatory environment, several principle banks have closed their accounts with MTOs that serve Somalia, essentially, curtailing the flow of remittances sent by family members to help Somalians overseas. In response to public pressure and collective campaigns, the U.S. government has taken modest steps to help the Somali remittance system, but it is “startlingly unprepared to manage the potential fallout” of account closures.
This report notes that failure to uphold the remittance system could result in black market and illegal money transfer systems that would increase the lack of accountability for transfer operators. It suggests practical steps that governments and actors within the international community should take to sustain the Somali money transfer system as well as the long-term solutions required to establish viable financial institutions within Somalia.