Barclays ban will cost Somalia vital aid

London, Aug 3, 2013 (SDN) —A Move by Barclays to close the remittance accounts of Somali cash transfer businesses has sparked fears that it will wipe out nearly £800,000 of funds. According to newly published research, the money is vital to many Somalis who depend on remittances as well as the wider economy of the East African country. Due to fears of money laundering, Barclays closed around 100 UK accounts with an estimated £790,000 held by Somali cash transfer businesses on July 11. But Dr Laura Hammond, a senior lecturer in development studies at the School of Oriental and African Studies (SOAS) has produced a report showing that the changes will have a devastating effect on the Somali community both in the UK and abroad.

Statistics show that close to £1million is remitted annually to the East African country on which about 42 per cent of its citizens depend. The report, called Family Ties: Remittances and Livelihoods Support in Puntland and Somaliland showed that the funds from remittance were used mostly for food, rent, school fees and medical expenses.

SUPPORT

Despite international aid to Somalia averaging £551 million annually between 2007 and 2011, remittance provides vital support to families for purchasing essential products and services.

Dr Hammond said: “The timing of Barclays’ decision could not have been worse. It comes on the heels of a major conference co-hosted by the UK government and the new government of Somalia in which more than £200m was committed to help rebuild Somalia.

“A large portion of those funds will need to go through Somali money transfer organisations. Somalia has an internationally recognised government for the first time in two decades, its counterinsurgency operation is rendering the al Shabaab militant extremists weaker than they have been for years, and piracy is at an all time low.”

FEAR

Critics fear the move by Barclays will drive the cash transfer business underground where there is less regulation and increase the risk of fraud.

“Just when Somalia is getting back on its feet with significant UK support, a UK-based bank is pulling the carpet out from under it” Dr Hammond said. “Even more importantly, without the services of these money transfer organisations, Somalis living in the diaspora throughout the UK and Europe will not be able to send desperately needed support home to their relatives.”

Source: Voice-online.co.uk