On an historic visit, the US Secretary of States might have no answers to remittances ban that’s thwarting Mogadishu’s economy.
Scott Paul is a senior humanitarian policy advisor at Oxfam America.
Secretary of State John Kerry has just made history as the first American Secretary of State to travel to Somalia. The trip demonstrates extraordinary courage on the part of Secretary Kerry. After landing in the heavily fortified Mogadishu airport, he spent three and a half hours speaking with Somali leaders guarded by the Ugandan soldiers of the African Union Mission in Somalia before departing.
Though his staff may have been worried about his physical security, Secretary Kerry’s chief cause for concern should have been that he arrived without answers to the question on the tip of so many Somali tongues: why is the US government keeping our families abroad from sending us the money we need to survive? Of course, the US government has no desire to disrupt the remittance flows that nearly half of the country’s population depend on to meet their basic needs, but that is cold comfort to the Somali family that cannot pay rent or afford basic healthcare because Somali remittance companies couldn’t get the money through this month.
The situation is getting worse. Since Somali money transfer operators (MTOs) lost their accounts at Merchants Bank of California in early February, they have struggled to find reliable ways to send money to Somalia. Some of them have relied on smaller, local banks to handle some of the cash flow. Many have limited the amount of money each customer can send. Others have shut down some of their locations, leaving Somali-Americans in small diaspora communities in the US without any service. In desperation, some Somali MTOs have begun transporting cash abroad in person (a legal, but horrifically insecure and expensive option). This week, First American Bank in Chicago will close its few Somali MTO accounts as well, putting what is left of the industry on life support.
US anti-money laundering law isn’t the sole cause of the problem, but it is a significant cause – and it’s having effects all over the world. Since most transfers to Somalia are handled in US dollars, US banks generally play a small role in the transfers, which they’re less and less willing to do. In 2013, Barclays Bank closed Somali (and many other) MTO accounts under pressure. In Australia, Westpac Bank did the same – leaving MTOs there with no alternative. In a different tact, the government of Kenya simply froze the entire Somali money transfer industry in response to the horrific attacks in Garissa, perhaps in an attempt to follow what is (inaccurately) viewed as a deliberately hard line from the US government.
Somali government leaders, up to and including President Hassan Sheikh Mohamoud, have publicly and privately pleaded for the US government to reverse this trend. Until recently, these pleas have fallen on entirely deaf ears – and while US policymakers are now more engaged, likely due to a strong push from Members of Congress, they still have no answers.
Somali government officials likely had a lot to cover in Secretary Kerry’s brief visit, with security assistance and election plans at the top of the list. Given the multiple Somali delegations to Washington this year devoted primarily to securing remittance flows, it’s impossible to imagine that Somali leaders didn’t ask Secretary Kerry what is being done to ease money transfers.
Had he ventured out of the airport into the heart of Mogadishu, where public protests against MTO bank account closures took place just months ago, the questions would have been louder and accompanied by heartbreaking stories of hardship, perseverance, and survival. “How would you feel if your mom was sick and you cannot provide the medicine and food she needs?” Mohamed Hassan once asked me in Minneapolis. It’s a brave Secretary of State who visits Somalia without any answers.