Somalis face hard times as banks halt money transfers
A Kenyan Defence Force soldier walks past villagers to an aid distribution point in Burgabo, Southern Somalia on December 14, 2011. Humanitarian groups in Somalia have raised the red flag as foreign banks prepare to pull out of money transfer business as world seeks to paralyse Al-Shabaab operations. AFP
By GEORGE OMONDI (email the author)
Posted Tuesday, December 27 2011 at 00:00
Humanitarian groups in Somalia have raised the red flag as foreign banks prepare to pull out of money transfer business as world seeks to paralyse Al-Shabaab operations.
Franklin Bank — the last of the US financial institutions in the unregulated money transfer business (hawala) in Somalia — plans to suspend money wiring services this week, putting at stake billions of dollars remitted from abroad.
Last week, Oxfam Group and the American Refugee Committee said the decision would disrupt aid from family members and well-wishers abroad, affecting 250,000 Somalis in need of urgent life-saving assistance.
“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, adding that the Sh8 billion ($100 million) in worth of remittances from US that is received each year in Somalia will be affected.
Franklin took the decision two weeks ago to ditch hawala, an unregulated money transfer services, at the end of this month saying it violates US counterterrorism financing regulations crafted after the September 11, 2001 al-Qaida bombings (9/11).
“The US government should give assurances to the bank that there will be no legal ramifications of providing this service to Somalis in need,” Ms Scribner said. Under hawala which is widely practised in Islamic countries, a recipient simply claims money from a broker in home city on promise that the sender has deposited similar amount with another hawala broker abroad.
This way, currency worth billions of shillings is exchanged across borders without any documentation as the parties rely on trust embedded in Islamic law to conduct the business.
In war-torn Somalia where many residents do not have bank accounts, hawala services have thrived.
In Nairobi, the growing number of hawala merchants in Eastleigh estate is seen as the channel through which billions of shillings sent by Somalis living in the diaspora has found its way into Kenya’s real-estate segment.
Source http://www.businessdailyafrica.com/Somalis+face+hard+times+as+banks+halt+money+transfers/-/539552/1295274/-/n1xt4h/-/
By GEORGE OMONDI (email the author)
Posted Tuesday, December 27 2011 at 00:00
Humanitarian groups in Somalia have raised the red flag as foreign banks prepare to pull out of money transfer business as world seeks to paralyse Al-Shabaab operations.
Franklin Bank — the last of the US financial institutions in the unregulated money transfer business (hawala) in Somalia — plans to suspend money wiring services this week, putting at stake billions of dollars remitted from abroad.
Last week, Oxfam Group and the American Refugee Committee said the decision would disrupt aid from family members and well-wishers abroad, affecting 250,000 Somalis in need of urgent life-saving assistance.
“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, adding that the Sh8 billion ($100 million) in worth of remittances from US that is received each year in Somalia will be affected.
Franklin took the decision two weeks ago to ditch hawala, an unregulated money transfer services, at the end of this month saying it violates US counterterrorism financing regulations crafted after the September 11, 2001 al-Qaida bombings (9/11).
“The US government should give assurances to the bank that there will be no legal ramifications of providing this service to Somalis in need,” Ms Scribner said. Under hawala which is widely practised in Islamic countries, a recipient simply claims money from a broker in home city on promise that the sender has deposited similar amount with another hawala broker abroad.
This way, currency worth billions of shillings is exchanged across borders without any documentation as the parties rely on trust embedded in Islamic law to conduct the business.
In war-torn Somalia where many residents do not have bank accounts, hawala services have thrived.
In Nairobi, the growing number of hawala merchants in Eastleigh estate is seen as the channel through which billions of shillings sent by Somalis living in the diaspora has found its way into Kenya’s real-estate segment.
Source http://www.businessdailyafrica.com/Somalis+face+hard+times+as+banks+halt+money+transfers/-/539552/1295274/-/n1xt4h/-/
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