Somali communities face dropping remittances and wider economic impact amid COVID-19 crisis

A warning from activists, aid workers & academia
Roughly half of all Somali households rely on remittances to cover basic needs such as
food, water and basic health care. According to Somali money transfer operators
(MTOs), remittances have already declined substantially since the onset of COVID-19
due to economic pressures on members of the Somali diaspora. This is a global
phenomenon, with the World Bank projecting that remittances will drop 20% in 2020
due to the COVID-19 crisis, and Somali communities will feel this acutely, with
communities that are already vulnerable, who rely so centrally to remittance flows, and
who are already facing many barriers to their delivery.
The potentially huge economic impact of reduced remittances on vulnerable
communities in Somalia/Somaliland comes amidst other ongoing crises, which taken
together could lead to famine, according to the UN’s World Food Programme. The UN
estimates that in 2020, 4.1 million Somalis are food insecure, 2.6 million are internally
displaced and over a third do not have enough water to cover their daily needs.
The climate crisis has contributed to persistent droughts, flash floods and more recently
a locust infestation, all amidst ongoing conflicts between government and clan actors
and insurgent groups, most significantly Al Shabaab. The above average Gu rainy season
predicted – normally a boon for most of the country in the medium term – could in the
shorter term precipitate floods and will exacerbate the spread of locust swarms
affecting some 360,000 hectares, which the FAO says are continuing to breed in the
Somali territories. New swarms are expected to form in the coming weeks.
Many members of the Somali diaspora have lost their jobs and are unable to send as
much, or any money at all to their relatives. In countries where no salary compensation
schemes are in place – such as the Gulf countries – these losses are even greater. As
women are increasing having to stay home to care for sick family members and children
out of school remittances are often the only funds that female caregivers are able to
access and control, making them a vital tool for women’s economic empowerment.
Even where people have the ability to remit, sending money in the time of coronavirus
is proving more difficult for many due to social distancing measures and existing
financial barriers, just as the effects of the pandemic begin to be felt on the receiving
end of the remittance chain. As the virus forces many storefront MTO agents in diaspora
countries to suspend operations and discourages consumers from leaving their homes,
the remittance options for Somalis are becoming more limited. Some senders have been
able to shift to sending payments through online systems, but not all senders have the
technical skills or are willing to do so. Some MTOs have had their bank accounts closed
due to bank concerns about falling afoul of counter-terrorism and de-risking anti-money
laundering regulation; this prevents them from conducting online services. Moreover,
some Somali MTOs working are not able to reach remote communities, including IDP
and refugee settlements and other places where the most vulnerable live.
MTOs not only provide the only viable mechanism to legally and transparently send
money to Somalia/Somaliland, they also serve a dual function in terms of providing
letters of credit to Somali traders who come to Dubai, Djibouti and other international
hubs to purchase essential food and nonfood items for sale inside Somalia/Somaliland.
With the shutdown of commercial air travel in and out of the UAE, there is a shortage of
available hard currency in the trading hubs and a buildup of local currency domestically.
This may drive prices up as traders find it more difficult to purchase essential items for
import into Somali territories. For the most vulnerable Somali communities, these
shortages and price rises will be disastrous.
The lack of access to foreign currency could also complicate the efforts of humanitarian
organizations and governments to implement existing humanitarian programs and scale
up the COVID-19 response through the purchase of medical supplies.
The onset of COVID-19 is also likely to contribute to reduced trade between
Somalia/Somaliland and its regional partners – perhaps most clearly manifested by the
possible cancellation of the Hajj by Saudi Arabia. Live animal export and other trade
during the Hajj each year is vital for the Somali economy, contributing 85% of export
earnings and 30% of the GDP and directly and indirectly employing 70% of the
population. The sector has been boosted recently by the reopening of markets in Saudi
Arabia, but this essential income would vanish if the Hajj later this year is cancelled.
Those who will feel the effects most acutely will be poor Somalis all throughout the
supply chains.
Somalia is in the early stages of exposure to the COVID19 pandemic. The dynamics we
describe here can be expected to take place regardless of the trajectory of the virus in
Somali areas. Steps being taken to institute social distancing include school and retail
business closures, curfews, and restrictions on gathering. All of these steps are
important to slowing the progression of the virus, but they also have economic costs,
which include loss of household income, increased costs for care for those who are sick,
and reduced income for government. Without the vital source of remittance income,
many will have even less of an option to stay home as they will need to earn a living and
meet their families’ urgent needs for food, medicine and more. Sadly, many of these
forces are the same as those being faced by the senders of remittances – feeling the
same restrictions and barriers on both ends of the relationship and transaction.
Recommendations
We, a collective of Somali and international NGOs and academics, urge :
1. The US and European governments to facilitate urgent wiring or other payment
settlement mechanisms for Somali MTOs:
A. The US government to take urgent action to ensure that Somali
remittance lifelines remains intact. The US Treasury Department and
banking agencies can facilitate emergency transfers from the US and
help create an enabling environment globally for Somali MTOs to access
banking services.
B. Treasuries in the US and European countries and banking agencies to
clarify that a) banks are not discouraged from offering services to
customers they regard as “high-risk,” and b) banks are encouraged to
open accounts and offer wiring services to Somali MTOs, as they are
able, on a humanitarian basis.
2. International banks to work in collaboration with Somali MTOs, governments,
and civil society leaders to offer wiring services on a nondiscriminatory basis.
3. Somali MTOs to develop and encourage the use of online remittance services
for their customers in the diaspora and to expand their reach into more remote
and vulnerable communities
4. Somali officials to facilitate an enabling environment for mobile money transfer
systems and online remittance platforms, both into the country and out of the
country so that essential goods can be imported.
5. The UN and international NGOs to work to ease the liquidity and potential price
inflation crisis by paying for goods and services to be delivered in Somali
communities through payments to the foreign currency accounts of providers.
6. Somali officials and donor governments – in collaboration with UN agencies
and local and international NGOs:
A. to scale up and prioritize social security policies such as cash and
voucher transfer programmes, feeding programmes for vulnerable
children who are unable to take advantage of school feeding
programmes due to school closure, herd destocking as necessary,
and provision of health and water services to the most needy.
B. to monitor remittance flows carefully and to address the impact of
reduced remittances in their humanitarian needs planning and
responses by programming additional funds for the activities given
in point 6A above.

Endorsements of this warning
By Activists, aid workers & academia
1 Oxfam
2 Nexus (http://nexusom.org/)
3 African Development Solutions (Adeso)
4 African Community Housing and Development(Hamdi Abdulle WA)
5 Laura Hammond, Professor, School of Oriental and African Studies (SOAS)
6 Nisar Majid, London School of Economics (LSE)
7 Centre for Peace and Democracy (CPD)
8 Save Somali Women and Children (SSWC)
9 Gargaar Relief and Development Organization (GREDO)
10 Wajir South Development Association (WASDA)
11 Taakulo Somaliland Community (TASCO)
12 Dan Maxwell, Professor, Feinstein International Centre (Tufts University)
13 Peter Hailey, Centre for Humanitarian Change (CHC)
14 Trocaire
15 Social-life and Agricultural Development Organization (SADO)
16 NAGAAD Women’s Network
17 Forum Syd
18 Norwegian Refugee Council
19 Marja Tiilikainen, Senior Researcher, Migration Institute of Finland
20 Michael Walls, Professor, Development Planning Unit, University College
London (UCL).
21 Aid Vision
22 Ismaaciil C Ubax, Author/Activist, Codka Ubax
23 African Community Housing and Development(Hamdi Abdulle WA)
24 Abdulkadir Aden Mohamud(Jangeli) Seattle WA
25 Nimo-ilhan Ali, Teaching Fellow, Development Planning Unit, University
College London (UCL)
26 Abdishakur Ahmed (Brandeis University)
27 Tirsit Yetbarek, Research Coordinator, Hargeysa Cultural Center
Somaliland
28 SAMUEL HALL (http://www.samuelhall.org)
29 Nassim Majidi, Samuel Hall (Tufts University and Wits University)
30 Hervé Nicolle, Samuel Hall
31 Jama Musse Jama, Director, Hargeysa Cultural Centre, Somaliland
32 Redsea Cutural Foundation, Hargeysa, Somaliland
33 Adam Matan OBE, Director of the Anti-Tribalism Movement
34 Anti-Tribalism Movement, London
35 Shobha Das, Freelance humanitarian/ human rights consultant, India
36 Kavita Datta, Professor in Development Geography, Queen Mary
University of London.
37 Abdirashid Ismail, Senior Researcher, Migration Institute of Finland
38 Hodan Osman Abdi, Assistant Professor, Institute of Afrcian Studies at
Zhejiang Normal University.
39 Siham Rayale, Lecturer, University of Toronto at Scarborough
40 FCA
41 World Concern Development Organization(WCDO)
42 Matt Bryden, Sahan Research
43 Candlelight for Environment, Education and Health (Candlelight)
44 International Aid Services
45 Concern Worldwide
46 Norwegian Church Aid
47 American Refugee Committee (ARC)
48 Philippe Gourdin, Independent Consultant
49 Anna Lindley, Senior Lecturer, SOAS, University of London
50 International Rescue Committee (IRC)
51 Sustainable Development and Peacebuilding Initiatives (SYPD)
52 Somali Lifeline Organization (SOLO)
53 KAALO AID and Development Organization
54 Puntlaand State University Garowe
55 American Friends Service Committee (AFSC)
56 Finnish Somalia Network (FSN)
57 Human Appeal Somalia
58 Oliver Bakewell, Senior Lecturer, Global Development Institute, University
of Manchester
59 ZamZam Foundation
60 International Solidarity Foundation (ISF)
61 Jawaahir Daahir, Founder & CEO of Somali Development Services and
Chair of Somali Global Diaspora Board
62 Somali Development Services
63 Global Somali Diaspora (GSD)
64 Horn of Africa Voluntary Youth Committee (HAVOYOCO)
65 Puntland Non-State Actors Association (PUNSAA)
66 Asal Consulting
67 New Horizon
68 Cesvi
69 Somaliland National Youth Umbrella (SONYO)
70 Solidarity Youth voluntary organisation ( SOYVO)
71 Somaliland Y-PEER
72 Kayd Somali Arts and Culture
73 Ayan Mahamoud Mahamed MBE, Former Somaliland Representative to
the UK
74 Edna Adan Ismail, Edna Adan University Hospital, Hargeisa
75 Edna Adan Foundation, UK Registered Charity
76 Farah Adan, fundraiser, Edna Adan Foundation
77 Ian Fenwick, Trustee, Edna Adan Foundation UK
78 African Foundation for Development (AFFORD UK)
79 Anglo-Somaliland Resources Ltd.
80 ALR Projects Ltd.
81 Twin Group Ltd.
82 Kim Fenwick, volunteer at Edna Aden Maternity Hospital
83 Hollie Puttock, volunteer at Edna Aden Maternity Hospital
84 Rebecca Novis, volunteer at Edna Aden Maternity Hospital
85 World Vision Somalia
86 Agricultural Development Organization -ADO
87 SONSAF (Somaliland Non-State Actors Forum)
88 Rhoda Ibrahim – Director, SAAFI CIC and (EAF) Edna Adan Foundation
Trustee
89 Sahra Ahmed Mohamoud,Director, Hido-Dhawr Cultural Center,
Somaliland
90 Fouzia Ismail, Director, Somaliland Nursing and Midwifery Association
(SLNMA)
91 Somaliland Nursing and Midwifery Association (SLNMA)
92 Social Research and Development Institute (SORADI)
93 Somali American Council Of Oregon (SACOO)
94 Guleid Osman Mohamed CEO Somali Bankers Association
95 Louisa Brain, School of Oriental and African Studies (SOAS)
96 Nauja Kleist, senior researcher, DIIS (Principal Investigator, Somali
Diaspora Humanitarianism in Complex Crises)
97 Ahmed M. Musa, Postdoc, Somali Diaspora Humanitarianism in Complex
Crises
98 Somaliland Youth Development and Voluntary Organizations (SOYDAVO)
99 Yassmin Mohamed, Projects Manager, Rift Valley Institute
100 Salman Hassan, researcher, LSE Conflict Research Programme (Somalia)
101 Khalif Abdirahman, Senior Researcher, LSE Conflict Research Programme
(Somalia)
102 Mark Bradbury, Executive Director, Rift Valley Institute
103 Jethro Norman, Postdoc, Somali Diaspora Humanitarianism in Complex
Crises, DIIS.
104 Judith Gardener, Independent Consultant.
105 Guhad Adan, Independent Consultant.
106 Abdirahman Edle Ali, PhD Candidate, Diaspora Humanitarianism in
Complex Crises (D-Hum), University of Nairobi & University of
Copenhagen.
107 Mohamed Aden Hassan, Director Rako Research and Communication
Centre
108 Nancy Balfour, Director, Centre for Humanitarian Change
109 Danish Refugee Council (DRC)
110 DEMAC

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