Somalia Dahabshiil battles UK’s Barclays Bank

Wednesday, October 02, 2013

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As the closure of Somalia’s largest remittance company Dahabshiil from the British bank Barclays seemed inevitable, an injunction has been issued against Barclays' decision to close the Somali bank accounts.

The injunction will see Barclays continue to offer services to the remittance company until 16th of October. Analysts say that half of the Somali people rely on the informal system that serves as a financial lifeline.

It is approximated that $1.2 - $2 billion is sent to Somalia by expatriates using the Hawala system, an informal money transfer system that is used to send money even to the most remote regions of Somalia.

Those who will be the most affected by the Barclays decision are families that rely on the service for survival. They say the decision in ending the service is going to deny them their basic needs.

However, economists say that Barclay’s monopoly can only end with a strong financial regulation system and creation of formal banking institutions in the country. Barclays argues that most money transfer systems don’t have the necessary systems in place to spot criminal activity.

The court injunction presented to the UK high court by Somalia’s leading money transfer system Dahabshiil against Barclays Bank is among the many battles that the money transfer system is likely to face in the future for its survival in the complex financial institutions.

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