Closure of Somali remittance firms hurts the poor

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Photo: flickr/ epSos .de

For more than two decades, on the first week of every month, I would find myself scrambling to send money to relatives in various cities, towns and village across the Somali territories and neighbouring countries. Despite my good intentions, I rarely succeeded in reaching my hawala (remittance firm) agent on time, though always mindful that too much delay could result in a family's eviction or student's suspension.

This month, May 1 fell on a Friday and I resolved to discharge my responsibility after work and enjoy a guilt-free weekend. I had planned the evening well and prioritized the month's beneficiaries: tuition for my nephew, income supplement for my half-sister and the semi-annual payment for my two sponsored boys in an orphanage in Garissa, Kenya.

Unfortunately, that plan never materialized. It appeared that my Kenya-based family would not be receiving their money because of the closure of Somali remittance firms in Kenya -- a policy response to Al-Shabaab's recent massacre at the Garissa University College. I contacted my hawala agent who confirmed the news.

Why Hawalas?

I have been sending remittances for nearly two decades now, yet I still marvel at the ease with which I send money to remote villages across Somalia that until recently lacked telephone service, let alone internet access. This is why western money-transfer companies cannot compete with the services that Somali hawalas provide. Not only are traditional firms' surcharges too costly, they also lack the trust factor and knowledge of the Somali kinship system that enables the transfer of money to transient peoples with neither government-issued identification nor fixed addresses.

It is the reason why more than a million diaspora Somalis rely on this efficient system to ensure the wellbeing of loved ones around the globe. It is a system that humanitarian aid agencies have increasingly come to rely on to reach vulnerable communities and pay the salaries of their field-based staff. And now the closure of 13 Somali remittance firms in Kenya will effectively block the channels for transferring vital, life-saving funds to those most in need.

It has not been easy supporting people for the past quarter century that Somalia has been embroiled in civil strife. But the feeling that settled over me as I pondered on the fate of my relatives was worse than any burden I had experienced as a dedicated provider. I thought of my bright, hard-working 16 year-old nephew, whose parents are both suffering from post-traumatic stress disorder and whom I had promised to support throughout his university education. But it was the fate of my niece's three disabled children, two of them quite severely, that filled me with despair. The family relies wholly on remittances from my siblings and I and our inability to send funds means no water, food, rent, medicines, let alone the ability to deal with frequent medical emergencies.

Hawalas: A pro-poor financial system

Hawala agents are unique individuals who represent infinitely more than just generic actors in money transfer companies. They become trusted friends and, at times, pro bono therapists. They learn the names of your numerous needy kin and their various locations. They offer advise on how to best distribute limited resources and maximize recipients. My agent, Abdul, often sends money for me in cases of emergency or when I am busy or traveling. That my money has always gotten to my relatives quickly, efficiently and at a low cost, is the primary reason for my loyalty to his business, and more broadly, to the hawala system.

At Abdul's office, the lines are longest on the first week of each month. In addition to the majority Somali patrons, there are Ugandans, Kenyans, Sudanese and the occasional Congolese. My affable polyglot agent serves them efficiently in a mishmash of Somali, Swahili, English and Arabic. In line are elderly women dispersing meagre pension funds to needier relations, fatigued young men and women sending a portion of paychecks to parents and siblings, a gentleman in a wheelchair supporting unfamiliar kin, a penny-pinching student here and a professional there. 

No matter our station in life, at this office we all feel privileged, experiencing the survivor's guilt, even if most toil daily to earn a minimum wage that can scarcely sustain a family, let alone several. We forgo pleasures so families, kin, orphans and unknown relations can live. We silently, and sometimes audibly, count our blessings.

My remittances cover basic living costs. Sometimes I dig into already limited savings to help an enterprising relative with a venture in the hope of ensuring long-term self-sufficiency. The result, when positive, can be immensely gratifying. My nephew, an enterprising young man, turned my gift of $2,500 plus an additional sum from other relations into a profitable business. He is now able to employ his two younger brothers while supporting his parents and other younger siblings. Without the seed money, his options would have been either a predictable, and possibly fatal, attempt to migrate to Europe, or falling into the clutches of the other nefarious elements, namely Al-Shabaab, piracy and other criminal gangs. There is always a negative outlet for desperate young men, and we, the remittance senders, strive to provide hopeful options.

Hawala Closures Only Hurts the Poor

The closure of the Somali hawalas is triggered by concerns about financing terrorist groups like Al-Shabaab. The reality is that neither Al-Shabaab nor the remittance companies will suffer greatly by these closures. Al-Shabaab will thrive on the reactive measures that bolster its twisted ideology while the remittance businesses can write off the losses. It is the poor and defenseless population that has to deal with the aftermath of these hasty policies and find alternative paths for survival.

Every system is susceptible to abuse but rarely are banks shuttered because criminals access them or social safety nets eliminated because of a few crooks in the system. Instead, the course of action is always to regulate, monitor and prosecute perpetrators. The hawalas, already heavily regulated since the beginning of the war on terror, is one of a few viable pro-poor financial systems that exist. Let us strive to develop effective mechanisms for strengthening them, but let us keep them open so they may serve the millions who do not have the luxury of banking options.

Photo: flickr/ epSos .de

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