Ahmed Aliubaxle, freight forwarder: 'Without Dahabshiil … the only way would be to fly to China with a suitcase full of dollars'
Monday, September 16, 2013
Many Somalis rely on money sent from family in Britain, but the tap may be turned off.
Shamis Abokor was once Somalia’s hottest pop singer, belting out love songs in front of thousands of adoring fans.
Then she suffered a disastrous stoke and for the past 16
years she has been confined to her tiny concrete home, cared for by
relatives. Today, aged 78, she is bedridden and semi-paralysed. She
survives with dignity thanks to her daughter in the UK, who sends her
hundreds of pounds every month via a Somali money transfer operator
(MTO) called Dahabshiil.
A few streets away in his tidy,
windowless office, Ahmed Aliubaxle is a symbol of why Somaliland, the
self-declared independent republic in the north-west, is so different
from Mogadishu and points south, still racked by civil war. His father
emigrated to Birmingham, made some money in property and sent it home,
where Ahmed used it to import used vehicles from Dubai and re-selling
them. He is now the boss of a major freight forwarding company, moving
everything from wheelchairs to construction equipment across the world.
But
Somaliland, like the rest of the country, has no banks, so he depends
on Dahabshiil for his firm’s growth. “Without Dahabshiil I would have no
way to get cars from Dubai or a generator from China,” he explains.
“The only way would be to fly to China with a suitcase full of dollars.”
Across
town, Alima Abdi’s little grocery shop is no more than a window in a
stone wall, but it helps feed her and her five children. It was set up
with the help of her sister who works in London, and still sends $200 a
month.
Ms Abokor, Mr Ahmed and Ms Abdi are just three of
the millions of Somalis who owe their survival to “the economy of
compassion” – the relatives abroad who send regular sums month after
month and year after year. The total remitted annually is believed to be
about $1.3bn (£830m), or half of Somalia’s national income, and dwarfs
international aid. At least 40 per cent of Somalis depend on these
payments: the true figure may be much higher, because the remittances
are often divided among numerous relatives. Somalis in the UK alone
remit some $500m a year.
With a federal government
shakily holding on to power in Mogadishu and violence significantly
reduced, Somalia and the EU co-host a conference of international donors
in Brussels today, intended to chart a new course to peace and
prosperity.
But on 30 September, those hopeful prospects
will be thrown into jeopardy when Barclays closes the accounts of 250
Somali MTOs, including Dahabshiil, which is much the biggest of the lot.
Barclays
initially announced, in a letter to Dahabshiil and others dated 8 May,
that the accounts would be closed on 30 July. It wrote: “Acceptance and
eligibility criteria have been amended for customers in this sector,
which unfortunately means we will no longer be able to provide banking
services to businesses that fall outside of these.”
For
everyone involved in helping to haul Somalia back from the brink after
its years of civil war and famine, the disastrous implications were
immediately clear. Simon Levine of the Overseas Development Institute
said: “The famine of 2011 is largely over, so we’re back to the
situation where one in seven young children are so skinny that they are
classified as ‘acutely malnourished’… If Barclays pull out of Somalia
and there is no way to send money, what happens when families whose kids
are already malnourished lose a quarter of their income? And what
happens to the economy, to jobs, to investment when a quarter of the
money just disappears? There is a risk that the consequences could be
even worse and much longer-lasting than the 2011 famine itself.”
For the international aid community, the severing of the
remittance pipeline threatens to spark a new Somali emergency. And the
effect on the agencies is even more direct than that, because in the
absence of banks, they depend on the MTOs to funnel aid money to their
Somali projects. The vast majority of them, including Oxfam, Care
International and World Vision, use Dahabshiil, as does the United
Nations.Founded in 1970 in Burao, near Hargeisa,
Dahabshiil’s head office is in Whitechapel in east London, while in
Somalia it has 268 agencies across the country. Inside Somaliland, where
its dominance is overwhelming, it describes itself as a bank and
fulfils all of a bank’s normal functions.
With 5,000
employees spread across 150 countries, this family-owned company has
become big and profitable enough to keep abreast of the ever-changing
regulations of the banking sector in Europe and the US. During a 15-year
relationship, Barclays has regularly acknowledged that Dahabshiil is
fully compliant with industry regulations.
As a UK
banking industry insider confirmed, it is US not British regulators that
are setting the pace in the crackdown, following the massive fines
imposed last year on HSBC ($1.9bn) and Standard Chartered ($330m) for
facilitating money-laundering. “The main pressure is from the US
regulator,” he said. “They are the ones on the hunt.”
The
irony is that, just one month before Barclays’ announcement, Dahabshiil
received a ringing endorsement in the US. Seeking a solution to
transparency problems with Somali MTOs, a US Bankcorp spokesman said:
“We are pleased that we may have recently found a solution with one
remitter – Dahabshiil… We are currently in discussions with this
remitter to ensure all parties understand the terms and requirements
necessary.”
The Barclays bombshell provoked a storm of
protest and concern, and Barclays responded by extending the deadline to
30 September. But it has so far refused to contemplate a U-turn.
Writing to Oxfam, Anthony Jenkins, the Barclays chief executive, said:
“There are a number of serious concerns about the operation [of MTOs],
with the sector at particular risk of being used for the transmission of
the proceeds of crime, for money laundering, and for terrorist
financing. This risk is exacerbated by a lack of transparency on who the
remitters and end-receivers are in transactions.”
In
Nairobi last week, Abdirashid Duale, Dahabshiil’s chief executive, said:
“It’s all to do with fear. The banks are worried about Somalia because
all they read is bad news about piracy, Al-Shabaab [the militant
Al-Qa’ida offshoot] and so on – but they never go to Somalia to see for
themselves. They fear that some day, something might happen, and ever
since 9/11 Somalia has been harassed and stigmatised because of that
fear. But the fact is that all the 9/11 terrorists used Western banking
institutions… We are not asking any favours. If any company broke the
law, they should face the law.”
Mr Duale has drafted a
set of proposals to address the banks’ fears: improving the
institutional capacity of the MTOs in technology and compliance systems,
setting up third-party monitoring and certification inside Somalia,
helping the Somali government to introduce biometric scanning to remove
uncertainty about the identity of recipients, and setting up a fund
which would effectively insure the Western banks against financial
penalties. He also agrees on the need for greater collaboration between
Somali MTOs. “We Somalis need to work together, or we will die
together,” he said.
But so far there is no indication
that Barclays will grant the MTOs a year of grace, as Oxfam and others
have demanded. So what solutions are open to Somalis who want to
maintain the lifeline to their families?
The obvious
answer is to go back to the old-fashioned, unregulated,
hole-in-the-corner hawala firms, which rely on the trust between members
of the same Somali clans. “Somalis will find a way,” said Ed Pomfret,
Oxfam’s campaigns and policy manager in Somalia. “We’re asking Somalis
to pack suitcases with cash and carry it to Mogadishu. For a government
dedicated to fighting money laundering, that doesn’t make any sense.”
Killing the patient to cure the disease...
$1.3bn
Total remitted to Somalia annually, about half of its national income
40
Percentage of Somalis relying on remittances
250
MTOs who will have their UK accounts closed