Oxfam, CARE and seven other aid agencies on Monday called on Barclays Bank to scrap plans to close several money transfer accounts
that provide a lifeline to millions of Somalis who depend on remittances to survive.
Barclays had planned to close a number of accounts used by Somali transfer firms in the U.K. on Tuesday because of fears the funds might end up in the hands of groups branded as terrorists, such as the al Qaeda-linked al Shabaab.
The bank said on Monday afternoon it would postpone the closure of the accounts until September 30, a delay Oxfam said amounted to no more than “a short stay of execution.”
Diaspora remittances are the biggest foreign currency earner for Somalia, which is slowly emerging from two decades of civil conflict and recurrent drought. An estimated 600,000 to 800,000 Somalis living abroad send home about $1.3 billion a year to their relatives.
Somalis are finding it increasingly difficult to make these transfers because banks worry they will be held responsible if the money falls into the hands of militants. Virtually all major US banks have stopped offering remittance services to Somalia and Barclays is the only U.K. bank still doing so.
“The banking rules are illogical, cold hearted and counter-productive. It leaves families already struggling to make ends meet to go without,” said Mark Goldring, Oxfam’s chief executive.
“Somalia will find it hard to work its way out of poverty and instability while its people are needlessly denied the financial support from thei loved ones abroad.”
Last month, a senior United Nations official spoke out against Barclays’ plans, saying it would have a direct humanitarian impact on Somalia, where several regions of the country have barely emerged from famine.
The Overseas Development Institute, a British think-tank, warned that cutting remittances “could be even worse and much longer lasting than the 2011 famine”, which killed some 260,000 people.
Somalis in the U.K. send over $157 million a year to friends and families in Somalia, where the averag income is about $300 a year.
It is impossible to send money from the West to Somalia via bank transfers because Somalia’s commercial banking system collapsed in the 1990s after the fall of dictator Siad Barre.
Instead, money is sent using money transfer operators, such as Dahabshiil, whose bank accounts gradually are being closed down.
Aid agencies said Barclays should delay plans to shut down the accounts for at least a year so that governments and banks can agree on regulations to enable money transfers to continue while addressing money laundering concerns.