NGOs critical of Kenya cutting cash transfers to Somalia

Somali men walk in front of a branch of Dahabshiil, Somalia's largest remittance company, in Mogadishu, Somalia. (AP Photo/Farah Abdi Warsameh)

A group of nongovernmental organizations have come out against a decision by the Kenyan government to close accounts with money transfer operators in Somalia after the deadly university attack. An open letter from 15 NGOs – including Oxfam, Mercy Corps, CARE and World Vision Somalia – warned of the negative consequences for people in Somalia and the NGOs themselves.

“[A] disruption to flows of genuine remittances to Somalia should be avoided. If sustained, these closures could prove costly, cause inefficiencies, and at worse force some aid agencies to close their operations,” says the letter.

The decision to close accounts follows the April 2 attack on university students in the town of Garissa by Somali Islamist extremist group al-Shabab. The assault left at least 148 students dead. The Central Bank of Kenya announced five days later that it would revoke licenses for 13 remittance agencies in Nairobi. The ban also target individuals, including Mohammed Kuno, the man Kenya says is the mastermind of the Garissa attack.

The government defends the decision, saying it is necessary to improve its national security. Kenya’s president, Uhuru Kenyatta, has come under increasing scrutiny following the university attacks, the attack on the Westgate Mall in September 2013 and other incidents. There is also concern about overly harsh responses, with a report from Al Jazeera published late last year that uncovered the targeting of Muslims and extrajudicial killings carried out by Kenyan security forces.

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The move aims to keep Kenyan money out of terrorist hands – between $70 million and $100 million is sent from Kenya to Somalia each year – but the majority of the money goes to average Somalis who rely on family members living abroad.

Somalis living throughout the world send home about $1.3 billion each year, according to the NGOs. Estimates put that total anywhere between 24 percent and 45 percent of the gross domestic product of Somalia. It well outstrips aid to the country and is easily its most significant lifeline.

As concerns grow about terrorism and money laundering, more countries are limiting or closing accounts to Somalia. Banks in the United Kingdom have closed accounts. Merchants Bank of California shut down accounts, significantly disrupting remittance flows from the United States this year.

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“Somali families are losing their only formal, transparent and regulated channel through which to send and receive money,” says the letter.

The decision in Kenya hurts the NGOs, too. For security reasons aid groups working in Somalia often set up their headquarters in Nairobi and use cash transfers to support staff working in Somalia. The closure of the operators makes sending money to aid workers even harder, warned the groups.

“Other nations are taking their cues from the United States on regulating remittances to Somalia,” wrote Washington Post’s Karen Attiah about Kenya’s actions. “Unfortunately for Somalis, if Kenya and the rest of the world continues to follow Washington’s lead in shutting down financial lifelines to the country, we could very well be setting the stage for a slow burning humanitarian and political disaster in Somalia.”

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Tom Murphy

Tom Murphy is a New Hampshire-based reporter for Humanosphere. Before joining Humanosphere, Tom founded and edited the aid blog A View From the Cave. His work has appeared in Foreign Policy, the Huffington Post, the Guardian, GlobalPost and Christian Science Monitor. He tweets at @viewfromthecave. Contact him at tmurphy[at]humanosphere.org.