Politics of Poverty

A second look at the Somali remittance assessment

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Remittances to Somalia amount to approximately $1.3 billion a year, 16 percent of which comes from the United States. Photo: http://bit.ly/1skat6C

The FSNAU study has its limitations, but policymakers would do well to focus on what the study does tell us, rather than what it doesn’t.

Scott Paul is a Senior Humanitarian Policy Advisor at Oxfam America. 

Matt Collin recently published a critique of my earlier post on the recent FSNAU Somali remittance study on the Center for Global Development blog. Matt’s critique, in brief, is that since FSNAU asked Somalis whether they experienced a decline in remittances but didn’t ask whether they experienced an increase, we have no way of knowing whether remittances declined in total. Statistically, he’s absolutely right. If 35 percent of Somalis living in cities outside Mogadishu reported a decline, 65 percent reported no decline. But we know little about those whose remittances didn’t decline. For all we know, statistically speaking, 65 percent could have reported an increase.

In retrospect, I wish I’d titled my blog, New Assessment Indicates Major Drop in Remittances to Somalia (instead of “confirms). Still, I’d argue that it’s less wrong than the title of his, which is: New Study of Somali Remittance Flows Does Not Actually Tell Us Much About Somali Remittance Flows. In fact, the survey tells us a great deal.

What does the survey actually show? First of all, it shows that weaknesses in the money transfer system are standing in the way of a significant number of people’s ability to send and receive money.  30 percent of Somalis who reported receiving less these past six months said the reason was that money transfer services were unavailable in the countries where their friends and relatives live.

And that’s just the floor: an additional 52 percent of those who received less money said it was because their contacts abroad decided to send less. That’s an extremely broad category. Those contacts might have sent less for any number of reasons relating to their financial and familial circumstances. But they also could have sent less because sending money became more inconvenient or expensive – which are the main manifestations of the banking problems we’ve seen in the US. So the survey proves that at least 30 percent, and likely more, of those who received fewer remittances in the last six months  have the money transfer system to blame.

Taking that into account, Matt’s hypothetical, in which as many Somali remitters sent more money as sent less, looks extremely unlikely. For remittances to not have fallen off, lots of Somalis in the diaspora would have to have sent more money – not only enough to offset those who chose to send less, but enough to additionally offset the significant number who couldn’t send money due to outages in the money transfer system.  So while the survey doesn’t statistically prove remittances have declined, you’d have to work pretty hard to avoid reasonable inferences to not come to that conclusion.

Unfortunately, the FSNAU survey doesn’t tell us whether remittances are declining from any particular country, or what the challenges in the money transfer system might be. More and better data are critical to support policy interventions. But to focus on the study’s lack of conclusive evidence at the expense of its valuable indicative evidence is a critical error. It’s just that sort of mistake that enables US officials to plod on with their long-term approach and dismiss calls for immediate action.

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