UK banks cut funds to Somalia

2013-06-24 22:12
Barclays (Picture: AFP)

Barclays (Picture: AFP)

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

Mogadishu - Somali money transfer businesses asked the British government to stop Barclays bank from closing their accounts in Britain, a move Somali officials and bankers said threatens remittances.

Diaspora remittances are Somalia's biggest foreign currency earner and many of its 10 million people rely on the $1.2bn or so sent to the nation every year.

A Somali official said on Monday cutting that "lifeline" could hurt fragile efforts to stabilise a nation battling an Islamist insurgency. Somalia analysts said it could encourage the use of illegal and untraceable routes if other channels were blocked.

Barclays said in a statement it was stopping offering banking services to some Somali transfer firms due to fears funds might end up in the hands of "terrorists" in a nation that is slowly emerging from two decades of civil conflict.

"It is recognised that some money service businesses don't have the proper checks in place to spot criminal activity and could therefore unwittingly be facilitating money laundering and terrorist financing," it said without naming the firms.

Somali Central Bank Governor Abdusalam Omer told Reuters in Nairobi that Somalis in Britain sent an estimated $500m a year in remittances, a vital stream of funds now threatened.

"It's a lifeline. Probably one quarter of Somalia's GDP is from remittances," he said. "There are about 2 million people who receive some support from the diaspora and that goes into buying food, shelter, medicine, schooling."

In Mogadishu, where commercial banking disappeared in the early 1990s after the fall of dictator Mohamed Siad Barre, firms such as Dahabshiil fill the gap offering money transfer services used by Somalis and international agencies sending cash.

Wrong signal

Dahabshiil, one of Somalia's best known firms with agents in Britain and offices in Dubai and other African states, said it had been told its Barclays account would be closed.

Dahabshiil Chief Executive Abdirashid Duale told Reuters that stopping remittances "sends the wrong signal about the recovery that the country needs." He called for the US and British authorities to step in to help reverse the decision.

More than 100 Somalia-focused researchers and aid workers on Monday also signed a letter urging Britain to work with Barclays to find a way to work with Dahabshiil and other firms.

"This [cut in service] will only encourage people to send funds through illegal, unsafe, and untraceable channels, thereby potentially making the problem of support to proscribed parties much more serious," said the letter.

The Somali Money Services Association (SOMSA) said 12 of its 17 Britain-based members had lost accounts with major banks in Britain, such as Barclays and London-based HSBC.

HSBC said it was pulling out from offering services to money transfer firms globally, adding this policy began last year.

"We shall not survive if Britain stops the money flowing," said Anab Mire Hussein, a mother of nine with a snack kiosk in Mogadishu. "I live on monthly cash from my son in London."

Read more on:    barclays  |  hsbc  |  somalia  |  east africa

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
1 comment
Comments have been closed for this article.

Inside News24

 
/News

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.