By MARK KAPCHANGA
Somalilandsun – Having a simple meal in Somalia is a luxury. Poverty has inevitably increased since the early 1990s with 53 per cent of the population living on less than $1 (Sh85) a day.
As a result, millions of Somalis depend on handouts from their families abroad, termed hawala. The money transfers are the lifelines of the country’s economy.
According to United Kingdom’s Office of National Statistics, the British-Somalis send up to £150 million every year to their relatives back home. This far exceeds international aid.
But the crucial pipeline could be cut off following Barclays Bank’s announcement in June that it will stop facilitating hawala payments, citing abuse by terrorists and money launderers.
This sweeping decision is also likely to hurt Kenya, which has a large refugee population and a large portion of remittance is either channelled through Kenya or spent in the local economy.
Barclay’s fears came after the UK’s HSBC was fined $1.9 billion for unsuspectingly allowing money laundering to take place.
In the payment system, no money moves physically between locations — only telephone calls between dealers in different countries. Recipients are given a special code number to prove that money is due. Over time, transactions in opposite directions cancel each other out.
However, if an inequity occurs, cash is carried across countries. Trust, according to insiders, is the chief capital that the dealers have.
The cut will be a catastrophe to millions of people in Somalia, Kenya, Djibouti, Ethiopia, South Sudan and Uganda. The impact in Somalia could be calamitous, as it has neither ATMs nor banking infrastructure. Abdi Hussein says hawala is cheap and trusted.
The father of eight has been using the service since his arrival in Eastleigh in 2002. “I cannot afford official money remitting channels. The funds I am sent is usually delivered to my home,” said Hussein.
Read the full article Barclays closure of remittance accounts to cut lifeline for Somali refugees