At the end of September, Barclays Bank is due to announce its decision on whether to go ahead with the closure of accounts of about 250 money transfer agencies in Somalia. If it does, it is expected to lead to a huge hole in a system that delivers over $1.3 billion in remittances annually, a lifeline on which almost half of all Somalis depend.
Before making the decision, it is hoped senior executives at Barclays read new evidence published last week by the Humanitarian Policy Group (HPG) and Unicef.
This research outlines a highly detailed analysis of a $90 million aid programme that supported nearly one million Somalis through the 2011 famine by sending cash. This study proves that large quantities of cash can be distributed in Somalia with very few problems.
Increased worldwide attention to the ways in which huge international money transfers can facilitate organised crime, the drugs trade and international terrorism have led to legislation in the US that leaves banks wondering just where their responsibility for “due diligence” ends.
There’s nothing like the $1.9 billon fine recently given to HSBC for helping to concentrate minds and scare banks all over the world.
But as always, those caught in the crossfire are the people with no voice, who provide no one with any serious business interests. Transfers to hungry families are hardly what the legislators were worried about.
If Barclays goes ahead with closing down the accounts in Somalia, the poor will have become collateral damage in a struggle that has nothing to do with them.
The monitoring of the cash transfer programme involved designing good feedback mechanisms, holding thorough consultations with the communities who were targeted, and training independent monitors in how to ask the right questions to get the real story.
Of course, there were difficulties that were not glossed over; giving emergency aid in a war torn country is always difficult. However, the report presents strong evidence of the enormous difference that even very small sums of cash — as little as $3 per week per person — can make to famine-affected people.
Cash helped families buy food and enabled children to eat more nutritiously and frequently. Without the aid, many young children ate only once a day.
Families were able to use the money to rebuild their lives – repaying debts that if left unpaid would remove their chance of getting credit again in the future. People were able to regain their status as full members of their communities by giving tiny sums as alms to those who were worse off.
The cash injections also helped to keep alive the businesses of small food traders on whom the future of the local economy relies.
For Somalia, the lessons of the report are more poignant. The impact of cash does not depend on where it comes from. If $90 million of aid can have such an effect on the lives of a million people, imagine the importance of the remittance pipeline in keeping millions of people alive and self-reliant.
At a time when the world is concerned about supporting the resilience of people prone to crises, it would be a sad irony if Barclays closed down the very system that has been proved to be successful in keeping communities alive.
Surely it is possible to design a system for banking control that prevents major abuses of money laundering or financing terrorism, but allows the small transfers that families send and receive — and does not hold a bank or money transfer agent unreasonably responsible for how money transferred is eventually spent.
If Somalia’s only financial systems are shut down because no-one cared enough to work out a solution, it would be worse than sad — it would be unforgivable.
Simon Levine spent many years working for NGOs in Mozambique, Cambodia, Tanzania and Burundi, before working as a consultant based in Uganda for nine years. He is currently a research fellow with the Humanitarian Policy Group