the seizures of the assets of a Somali shopkeeper here in seattle has
generated a lot of reaction. will Gambian money transfer services be
next? Ylva
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Forwarded message ---------- Date: Wed, 14 Nov 2001 17:02:37 -0800
From: charlotte utting <[log in to unmask]>
Reply-To: [log in to unmask]
To: [log in to unmask]
Subject: [WASAN] FW: Somalia: Remittances and US Action
----------
From: "Africa Action" <[log in to unmask]>
Reply-To: [log in to unmask]
Date: Tue, 13 Nov 2001 22:12:29 -0500
To: [log in to unmask]
Subject: Somalia: Remittances and US Action
Somalia: Remittances and US Action
Date distributed (ymd): 011113
Document reposted by APIC
Africa Policy Electronic Distribution List: an information
service provided by AFRICA ACTION (incorporating the Africa
Policy Information Center, The Africa Fund, and the American
Committee on Africa). Find more information for action for
Africa at http://www.africapolicy.org
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: East Africa
Issue Areas: +US policy focus+ +economy/development+
+peace/security+
SUMMARY CONTENTS:
This posting contains two reports from the UN Integrated Regional
Information Networks (IRIN) on the impact of the closure of the Al-
Barakaat money exchange service in the U.S., Canada, Dubai, and
other countries. It also contains brief excerpts from a report
for the ILO, with background on Al-Barakaat and other major
remittance companies, or hawilaad.
+++++++++++++++++end profile++++++++++++++++++++++++++++++
Africa Action background note:
Judging the accuracy of U.S. government information about Al-
Barakaat is not possible without data that have not been made
available to the public. However, there can be no doubt of the
blows to the company itself, and to Somali businesses and families
holding accounts with Al-Barakaat.
U.S. officials made no effort to cushion the blow for ordinary
Somalis, or to express any concern for this "collateral damage"
from their action. Indeed, speaking to a New York Times reporter
about the issues, an unnamed "senior Treasury official" suggested
that Somalis could just use "more traditional wire-transfer
services, such as Western Union" (New York Times, November 9,
2001). [A call to Western Union from Africa Action resulted in one
local agent asking us to confirm that "Somalia" was indeed a
country. Western Union provides no services for wire-transfer to
Somalia.]
The potential for positive U.S. engagement with Somalis toward
building stability in that war-torn country, and therefore barriers
against international terrorism, will only be made more difficult
by this latest US action.
---------------------------------------------------------------
"Disaster" Beckons As US Cuts Lifeline
UN Integrated Regional Information Networks
November 8, 2001
IRIN-CEA Tel: +254 2 622147 Fax: +254 2 622129 Email:
[log in to unmask] http://www.irinnews.org
[This Item is Delivered to the "Africa-English" Service of the UN's
IRIN humanitarian information unit, but may not necessarily reflect
the views of the United Nations. If you re-print, copy, archive or
re-post this item, please retain this credit and disclaimer.
Reposting by commercial sites requires written IRIN permission.]
Somali communities both in Somalia and throughout the diaspora have
reacted angrily to the decision by the US government on Wednesday
to close down and seize the assets of a leading Somali-owned money
transfer company, accusing the US of acting with anti-Islamic bias
and putting at risk the welfare of tens of thousands of Somalis.
On Wednesday, US authorities ordered the immediate closure of the
Al-Barakat money transfer company and the seizure of its assets
worldwide, accusing it of transferring funds on behalf of the chief
terror suspect, Osama bin Laden, and his Al-Qaeda (Al-Qa'idah)
network. In doing so, the US government claimed on Wednesday that
Al-Barakat had been formed for the specific purpose of aiding
terrorists. "By shutting these networks down, we disrupt the
murderers' work," said US President George Bush.
However, Al-Barakat's founder and chairman, Ahmad Ali Jimale, told
IRIN from his office in Dubai that he had absolutely no links with
Bin Laden or Al-Qaeda, insisting that his business was clean, and
had been established for the benefit of the Somali people, not of
Bin Laden. "These accusations are nothing but lies," said Jimale.
"If the US authorities undertake a thorough investigation... they
will find that we have nothing to do with any illegal activities."
Jimale said he formed Al-Barakat, which now operates in 40
countries worldwide, following the outbreak of civil war in Somalia
in 1991 and the collapse of the country's banking system, as a
means of helping Somalis who had fled the country as refugees to
transfer much-needed funds to relatives back home. To date, the
hawalad transfer system, as the informal banking network is known,
remains the only way of transferring funds to Somalia.
Yasin Khalif, a manager of Amal, another Somali-run hawalad company
so far unaffected by the closures, told IRIN such transfers were
the only means of income for between 70 and 80 percent of the
Somali population. It is estimated that in an average year, a
staggering US $200 million to $500 million is transferred to
Somalia through the hawalad system. By contrast, just $60 million
was injected into the Somali economy last year through
international humanitarian aid.
"Shutting down the hawalad is tantamount to condemning hundreds of
thousand of Somalis to a slow death," said Khalif, adding that
since a ban on Somali livestock exports was imposed by the Gulf
states last year because of an outbreak of Rift Valley Fever,
"hawalad is the only significant economy in the whole of Somalia".
Michel Del Buono, an economist and Somalia specialist, believes
that Al-Barakat has established itself as one of the cornerstones
of the Somali economy during its decade in business. He said he
believed that its closure would spell dire humanitarian
consequences for a country already in the grip of severe food
shortages. "If we talk about the collateral damage of this
decision, this is equivalent to killing civilians," he said. "It
could spell disaster for Somalia."
Although there were three or four other hawalad companies still
operating in Somalia, none of them had the reach of Barakat, said
Del Buono, speculating that "if they [the US] stop Barakat, it's
only a matter of time before they move on the others".
According to US media reports, The US authorities on Wednesday
refused to disclose evidence which they say implicates Al-Barakat
in terrorism, claiming that such evidence is classified, but said
they believed that Jimale was an associate of Bin Laden's and
allege that Barakat's network had moved tens of millions of dollars
a year into Al-Qaeda.
In total, 62 individuals and organisations with ties to Barakat and
a Swiss-based money transfer company, which the Americans also
suspect of complicity in financing terrorism, have had their
assets, totalling $43 million, seized.
Yusuf Garad, the head of the BBC Somali service, which along with
other international organisations like the United Nations use the
hawalad system to pay their staff in Somalia, said Wednesday's
decision represented a "big setback for the Somali community". He
said even if Al-Barakat had been "misused by terrorists", it seemed
unfair to close down its entire operation on which so many people
depended. "If a terrorist uses a certain phone company to arrange
a terrorist attack would it be just to then close down that
company?"
But whatever the impact on Somali communities overseas it is back
in Somalia itself that the impact of yesterday's action by US
authorities would be felt with full force. Ubaho Farah, a 63
year-old grandmother and Mogadishu resident, told IRIN she and 12
members of her extended family were living on the $150 a month one
of her sons remitted to Somalia each month.
"We survive on this money, and if it stops we have no other means
of survival. We would be forced to either beg or steal," she said.
*************************************************************
UN Office for the Coordination of Humanitarian Affairs (OCHA)
Integrated Regional Information Network (IRIN)
SOMALIA: Widespread dismay over Barakaat closure
NAIROBI, 12 November (IRIN) - Somalis from every walk of life have
been reacting with dismay, anger and fear to the decision last week
by the US government to order the closure the Al-Barakaat money
transfer company, one of Somalia's biggest, which is also the only
source of income for tens of thousands of destitute Somalis.
Scores of people reportedly took to the streets in protest against
the decision, according to Somali media sources, coinciding with
independent statements of regret being issued by the interim
president and a council of elders. "One is innocent until proved
otherwise," said the interim president, Abdiqassim Salad Hassan, on
Sunday, reflecting a commonly held belief that the US decision to
shut down Al-Barakaat was taken with insufficient evidence.
The US government last week ordered the closure of Al-Barakaat's
offices in the US, and seized all its assets, claiming that its
money transfer network was being used to channel funds to prime
terror suspect Osama bin Laden and his Al-Qaeda (Al-Qa'idah)
network. Representatives and the management of Al-Barakaat have
vigorously denied the claims, arguing that their books are open to
scrutiny, and that any investigation would vindicate them.
Abdiqassim said on Sunday that the US should have produced evidence
of Al-Barakaat's alleged support for terrorist groups before
ordering its shutdown. Tens of thousands of expatriate Somalis use
the money transfer system every month as the only means of sending
remittances to family members living in Somalia, many of whom are
entirely dependent on these remittances for their survival.
"It was a surprise to all Somali people in general and for the
government to hear from US President George Bush that Barakaat was
included in the list of organisations linked to Al-Qaeda,"
Abdiqassim said on Sunday night. "There are thousands of Somali
families, especially poor ones, who survive on remittances from
relatives."
Meanwhile, Somali elders met in the capital Mogadishu on Sunday to
defend the role Al-Barakaat plays in Somalia, AFP reported on
Sunday. They appealed to the US administration to launch a fair and
thorough investigation.
[ENDS]
**************************************************************
The Role of Remittances on Economy in Somalia
Report for the ILO Mission, June 1998
[full text available on-line in Maroodi Jeex (Summer 1999) at
http://www.anaserve.com/~mbali/remit.htm]
2. Historical Background of Remittance on Somalia
Remittances from Somali emigrants and workers abroad have always
been a historical part of the country's economy since a large
number of Somali nationals have emigrated to other countries in
search of better education, trading or employment opportunities.
The bulk of the migration started in late 1960's when thousand of
truck drivers and youngsters emigrated to the central, eastern and
south eastern countries of Africa ; they were attracted by the
gainful employment opportunities offered to them by several Somali
transport companies who had a constant fleet of trucks operating in
those countries.
Another large scale migration resulted from the oil boom in the
Arab Gulf States during the early 1970s.
From 1982 to early 1988, due to the political instability, the
regime at the time placed restrictions, threats, harassment's and
even killings to the people in general and particularly in the
northern and north-eastern parts of the country that resulted in
factional and clan political armed conflicts among the people and
the government. Thousands of the affected fled to various countries
such as Gulf States, Western Europe, North America and to some
African countries such as Kenya, Ethiopia, Djibouti and Uganda.
Finally, with the collapse of the Somali state in early 1991 and
the subsequent civil war, hundreds of thousands of Somali nationals
fled the country. ...
3.2 Purposes
In line with Somali culture, the relationship between people is
based on deep kinship ties, clan networks and the extended family
system. In the urban areas, the ties are broadened and include
neighbours and friends at schools and workplaces. The networks
perform many socio-economic functions and have a great impact on
family and household businesses.
Families with low incomes rely on remittances sent by their family
members, relatives or friends living abroad.
Therefore if a member of the family succeeds in emigrating he/she
has the duty of providing assistance to members of the extended
family or close friends who are living in Somalia.
According to the information obtained from most of the households
interviewed, the remittances from Somali migrants abroad are mostly
used for:
* Household consumption (food);
* Children's education;
* Family events such as weddings, births or funerals; and
* Establishment of micro and small-enterprise such as shops,
kiosks etc.
The transfer of remittances, is meant to sustain relatives and/or
families and the amount remitted depends on the income level of the
provider. ...
The exact number of Somalis abroad, their earnings and the amount
repatriated is not available. In the absence of such data, the
alternative is to make educated guess estimates. Due to the absence
of formal statistics or accurate information on financial markets
all data should be cautiously regarded.
Table I: Estimate of Somali nationals living abroad
Country Number of Somali Migrants
Gulf Countries 120,000
Italy 20,000
Britain 20,000
Denmark 10,000
Germany 9,000
Holland 25,000
Sweden 12,000
Norway 3,000
Switzerland 4,825
Canada 70,000
USA 50,000
Australia 3,000
Total 321,825
...
Remittances from abroad are transferred via satellite
telecommunication systems (i.e. telephone/fax) to local
headquarters of financial intermediaries or companies at the
country level, money is transferred from region to region using HF
radio message transmitters (see Annex C).
Today, financial brokers number in the hundreds; these can be
classified into three categories in terms of their size, areas of
operation, capital as well as technological facilities.
1. The first and most important category of financial brokers are
those with large amount of operating capital, approximately
1,000,000 US$ or more, and who have branches and representatives in
many parts of the world. This category also provide other services
such as telecommunication, temporary savings and some times advance
payments t their clients. Besides these, they have radio
communication stations within the country for transferring money to
remote areas.
2. The second category of Brokers are small scale enterprises.
Their primary goal is to import goods such as food items (rice,
pasta, edible oil, etc.), construction materials (cement, iron,
galvanized sheets, etc.), clothes, and spare parts, while on the
other hand they export livestock on hoof, hides and skins, fish
etc. The money transfer business is only to support their trading
activities.
3. The third category of Brokers include those whose main
activities is the provision of inter-country telecommunication
services using HF radios formerly used by the Military and Police
institutions. This group makes currency transfer only in Somali
shillings, in addition they serve the first and second group of
brokers to transfer remittances to the inland after converting the
hard currency received into the local shillings.
...
The largest proportion of the remittance transfer business is
handled by the three major companies listed below:
Barakat Bank of Somalia
Dahab-shil Ltd
Amal Express Ltd
...
The provider of the remittance presents the amount of money to be
transferred to the financial broker and obtains a receipt which
details the amount of money transferred, the name of the recipient,
the currency paid, the full address of the recipient (town,
village, telephone available, people who know the recipient and ins
some cases the clan of the recipient)
The financial broker sends a fax or a telephone message within 24
hours to his representative or branch office in the recipient's
town; the representative then locates the recipient by contacting
him personally or by telephone.
The recipient goes personally to the financial broker's
representative; he needs to provide sufficient information of his
identity. In addition to providing personal documents such as
passport with visas or an old ID in case of doubt of the identity,
he must provide the full name of the sender, county of residence,
house telephone number, clan name, nick-name or code name. When
this has been completed the recipient signs a receipt and obtains
his/her money.
If the recipient is not in a main town where the financial broker
has a representative, he/she will be contacted by radio at his own
village or town and will be informed about the arrival of his
money; he/she will then be requested to travel to the nearest
branch office where the broker will pay him directly or through
his/her representative. 4.3 Time Spent and Frequency of Transfer
The transfer of money only begins after the representative office
at the supply point receives the money from the customer. On the
same day, the payment order is sent by fax or telephone to the
headquarters of the company. At the head quarters the payment
orders received from different area representatives are processed,
classified and filed according to their destinations in Somalia.
This process usually occurs within 24 hours. Thereafter, the list
is sent by fax or telephone; where no fax service is available, the
names of senders, beneficiaries and their addresses, clan-line and
residence area are transmitted through radio stations in every
local representative office.
According to the customers and the companies, the problems
associated with security, bureaucracy, fraudulence and general
pitfalls are absolutely minimum if not negligible. ...
4.4 Service Charges
The merchant bankers charge a service fee for the transfer of
remittances. This fee ranges between 1% to 8 % depending on the
geographical origin of the remittance and the remoteness of its
destination. ...
...
ANNEX C:
COMPANY PROFILES
1. Barakat Bank
Company name Barakat Bank
Year of establishment 1991
Headquarters Dubai "UAE"
President Ahmed Ali Jumale
Ownership Sole proprietor
Main representation Offices: Europe 33, USA 9, Canada 5, Middle
East 6, Far East 3, Africa 13, Somalia 44
Total 113
2. Dahab-Shil Company
Company Name Dahab-shil
Year of Establishment 1988
Headquarters Hargeisa "Somalia"
President Mohamed Said Duale
Ownership Sole Proprietor
Main representation Offices: Australia 7, New Zealand 3, USA 10,
Canada 6, Africa 10, Middle East 19, Somalia 39
Total 87
3. Amal Express Company
Company Name Amal Express
Year of establishment 1997
Headquarters Nairobi "Kenya"
President Ali Yasin Farah
Ownership Private Limited Company
Main representation offices Europe 43, USA 31, Canada 11, Africa 1,
Middle East 4, Somalia 25
Total 115
************************************************************
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