Searching for a solution to the Somali remittance crisis

Somali-Americans met to discuss solutions to the remittance crisis at the New Holly gathering hall on March 31st. (Photo by Jama Abdirahman)
Somali-Americans met to discuss solutions to the remittance crisis at the New Holly gathering hall on March 31st. (Photo by Jama Abdirahman)

Shukri Olow is worried about a 15-year-old relative in Somalia. He is target-recruiting age for the al-Qaida affiliate al-Shabab, the militant group behind the horrific attack in Kenya this week. She says the best way to ensure he stays out of their hands is to keep him in school. Problem is, her family here in Seattle can’t figure out a direct way to send him money for the school fees.

“[My aunt] is going to send money to his uncle in the UK, who is going to send it to an uncle in Nairobi, who is then going to send it to an uncle in Mogadishu,” says Olow, who goes on to explain that the convoluted process is worth it. “It’s…$200 to save a kids future, you know?”

Olow’s family is only one of thousands of Somali-American families in Washington State and across the country that are struggling to find ways to get money, also called “remittances,” back to loved ones in Somalia.

Shukri Olow is looking for a way to resolve remittance restrictions so that she can help keep her nephew in Somalia in school and out of al-Shabab. (Photo by Jama Abdirahman)
Shukri Olow is looking for a way to resolve remittance restrictions so that she can help keep her nephew in Somalia in school and out of al-Shabab. (Photo by Jama Abdirahman)

In the past Money Transfer Operations (or “MTOs”) here in the US worked with counterparts in Somalia (a country with no formal banking system) to move funds. This system required an American bank that helped settle accounts between the two MTOs by regularly wiring money to the country (which has no money transfer services like Western Union).

But this method, often referred to as hawala, or “transfer” in Arabic, has all but disintegrated over the years. The system has been used by a few to send funds to al-Shabab (there was one such case in Kent last summer). Resulting federal restrictions have spooked U.S. banks that fear they can’t comply. One, by one, banks have announced an end to money transfer services to Somalia — essentially cutting off a crucial lifeline to this fragile nation.

I wrote about this a year and a half ago when Barclays bank declared they would no longer provide transfer services between MTO’s and again in February when one of the last banks providing this service in Washington state — Merchants Bank of California — also decided to call it quits.

Panel member Abdihakim Hashi, of Itin Hawala speaks about his struggles as a owner of a remittance business in Seattle. (Photo by Jama Abdirahman)
Panel member Abdihakim Hashi, of Itin Hawala speaks about his struggles as a owner of a remittance business in Seattle. (Photo by Jama Abdirahman)

Now, a little over a month after the Merchants Bank announcement, spotty MTO service continues for the moment. According to Oxfam America, a non-profit working on this issue, some banks are still doing money transfers to Somalia—though only in small amounts.

But a permanent solution ensuring a secure, transparent system for sending remittances to Somalia (which by Oxfam’s estimate accounts for between 25-45% of the country’s economy) was what people were looking for on Tuesday night at a town hall style meeting between the Somali community and local officials.

It literally impacts everyone that I know,” said Olow who was at the crowded New Holly Gathering Hall in the Rainier Valley neighborhood offering her testimonial alongside others who spoke of remittances that pay for medical bills, education and basic living expenses.

Rich Stolz of One America speaks on the issue of remittances at New Holly Gathering Hall on Tuesday. (Photo by Jama Abdirahman)
Rich Stolz of One America speaks on the issue of remittances at New Holly Gathering Hall on Tuesday. (Photo by Jama Abdirahman)

Elected officials at the meeting — which was organized by immigrant rights group OneAmerica — expressed their support but made clear that a solution must be found at a federal level, where international banking policies are decided.

“It’s a frustrating situation,” says Congressman Adam Smith, who represents the 9th District (an area with many Somali-American residents) and has done much in recent months to push the remittance issue in DC, “They’re still not addressing it and all you can do is keep pushing it.”

Smith — who says he has met with the Department of the Treasury, the Department of State and the National Security Council — says the key is linking the Somali remittance crisis to national security.

Rep. Adam Smith (second from right) represents the Somali-heavy 9th district and promised to do all he can in Washington, D.C to advocate for a fix to the problem. (Photo by Jama Abdirahman)
Rep. Adam Smith (second from right) represents the Somali-heavy 9th district and promised to do all he can in Washington, D.C to advocate for a fix to the problem. (Photo by Jama Abdirahman)

He argues that hawala system doesn’t support terrorism, but instead helps to defeat it by providing resources and support to a vulnerable population beset by poverty and conflict.

“Why don’t we stabilize Somalia so there aren’t any bad guys in Somalia?” says Smith.

Olow agrees that remittances help stabilize her home country but worries solutions won’t come fast enough.

“There isn’t tons of time…” says Olow, “The next al-Shabab member could be a ten year old who doesn’t have basic necessities or education anymore because he doesn’t have that [remittance] money.”

Washington D.C. may not care about that, but it should.

Sarah Stuteville

Sarah Stuteville is a print and multimedia journalist. She’s a cofounder of The Seattle Globalist. Stuteville won the 2011 Sigma Delta Chi Award for magazine writing. She writes a weekly column on our region’s international connections that is shared by the Seattle Globalist and The Seattle Times and funded with a grant from Seattle International Foundation. Reach Sarah at sarah@seattleglobalist.com.
Sarah Stuteville

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