Dr. Omer said Somalia was at a critical juncture: with Al Qaeda and its affiliate Al-Shabaab “on the back foot”, and the economy was rebounding with thousands of Somali-Americans returning and making significant investments.
The foundation for Somalia’s recent economic and security gains, he said, was members of its Diaspora, who send remittances to support their families. These remittances were also the lifeline of the Somali people, running into hundreds of millions of dollars, and accounting for more than Somalia receives in humanitarian and development assistance and foreign direct investment combined.
Nearly half of the population “depends on them to meet their most basic needs like food, shelter, healthcare and school fees.” Major banks say transmitting funds to Somalia is not profitable enough in face of US government concerns; and smaller banks say they are unable to bear the costs of compliance with US government regulation.
The principal American bank facilitating remittances to Somalia, Merchants Bank of California, has now closed the accounts of the Somali-American remittance companies. Without bank accounts, remittance companies are unable to send money in a way that is transparent and secure.
Soon, said Dr. Omer, they may not be able to send money at all, and “a perfectly legal and functioning industry critical to Somali livelihoods will soon be transformed into an unregulated, underground system that will that is highly susceptible to abuse and risks the survival of many of Somalia’s most vulnerable families.”
Dr. Omer pointed out that Somali remittance companies were licensed and regulated by federal and state authorities; they paid taxes and sent money not just to Somalia but to countries around the world. They provided a marked alternative to underground networks that would surely take their place if they were forced to close.
Dr. Omer said he hoped remittance companies would soon be able to find alternative banking arrangements. The problem, he stressed, needed urgent US government intervention. Without it, the result could be an unparalleled catastrophe for millions of people in Somalia.
There was a real necessity for the U.S. government to institute a stop-gap solution in order to avert the imminent crisis, as well as assist in setting up a payment gateway to Somalia in the medium term in order to facilitate the kind of transparency that banks and regulators need. The free flow of remittances to Somalia, he said, was nothing less than a national security priority for the Federal Government.