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In August, Oxfam America’s Scott Paul traveled to Somaliland to research a money transfer system that helps support countless families in the region. A senior humanitarian policy advisor, Paul discusses how remittances provide a lifeline to Somalilanders and people all across the Somali region. This is the first in a series of three blogs on the topic.
Years ago, as a student working a summer job in Moscow, I came to the stark realization that I didn’t have enough money in my account to move into my summer digs. With no small amount of embarrassment, I called home to my parents and asked if they would send cash to help me cover my security deposit and initial rent payment until I received my first paycheck. Sure enough, the next day I found cash waiting for me in my bank account.
I forgot this entire experience until August when I traveled to Hargeisa, a city in Somaliland that might be appropriately called the remittance capital of the world. Of course, Somalilanders don’t receive money transfers just to cover a month’s rent until the next paycheck comes in. For many families, money transfers are the next paycheck.
A self-declared independent republic northeast of Ethiopia, Somaliland is viewed by many as an autonomous region of Somalia, not as an independent state. Somalis in Minneapolis, London, Nairobi, Dubai, and all over the world send money to their relatives, friends and their broader kin there, and in Somalia, to cover everything from basic needs like food and shelter to investments in small businesses.
The Somaliland Ministry of Planning and Development estimates that remittances reach more than 40 percent of Somaliland households and account for a staggering 25 percent of its gross domestic product. In South and Central Somalia, where drought, armed conflict and human rights abuses have created arguably the world’s worst humanitarian crisis, the numbers may be even higher.
That’s why “Fast Money Transfer You Can Trust,” the slogan of the Hargeisa-based money transfer company Dahabshiil, is more common on billboards than “Just Do It” or even the classic “Always Coca-Cola.” And it’s why everyone I talked to in Hargeisa – women’s groups, government officials, youth leaders and others – made clear that remittances are nothing less than a lifeline to the Somali people.
In December, 2011 – in the midst of this century’s worst famine – that lifeline was nearly cut off when a key bank in the United States decided to stop doing business with the Somali money transfer companies. Oxfam’s partner organizations in Somalia sounded the alarm, urging us to help persuade banks and policymakers to find a way to keep the money flowing to Somalia.
But to do that properly, first we had to understand exactly how the Somali remittance system works. That’s how I found myself going through the time-honored tradition in Somalia of receiving a money transfer from America.