Oxfam raises alarm over Somali remittance lifeline

Photo:Sahra is responsible for the management of the water distribution point of the Eilmidgan village where Oxfam has set up a water desalination plant. Photo by Pablo Tosco/Oxfam.

Oxfam is joining over 100 NGOs, activists and academics to raise the alarm and call for action in a joint brief as remittances to Somalia drop precipitously amid the COVID-19 crisis.

Nearly half of all Somali households rely on remittances to cover basic needs like food, water, health care and education costs, but as their family members and organizations abroad struggle to earn and send money in the COVID-19 economic downturn, this vital lifeline is now being cut. This is part of a reported 20% global decrease in remittances, as recently estimated by the World Bank.

Somali money transfer operators (MTOs) report that remittances have already dropped substantially since the onset of COVID-19, due to economic pressures on members of the Somali diaspora. As unemployment and underemployment figures soar in the US and elsewhere, including in the Somali diaspora, that economic crunch is then being felt in Somali households that depend on regular payments from their families abroad, just as they need it most. As women are increasing having to stay home to care for sick family members and children out of school remittances are often the only funds that female caregivers are able to access and control, making them a vital tool for women’s economic empowerment.

In countries where no salary compensation schemes are in place – like the Gulf countries – these economic losses are being felt even more acutely. The social safety net in the US has proven to be weak or nonexistent to many communities, particularly those made up of immigrants, and those in more informal jobs.

“The majority of Somalis are out of work, so people are having difficulties sending money,” says Ubah Haji Mahammed, a Somali woman who has been living in the UK since the 1980s. “A lot of people, like bus drivers, are shutting their shops - even those who are working in permanent positions, are only getting paid 80%.” She is worried about people in Somalia getting food and says that “people are panicking.” A family member in Somalia was telling Ubah that his money will not last as long as the food prices are rising.

Not only do many Somali diaspora have less money to send, but many are still unable to send home even the reduced amounts they can afford due to preexisting and prohibitive banking restrictions. The aggressive approach of governments, particularly the United States, has left banks unwilling or unable to shoulder the risk to support MTOs who are sending money to what are deemed “high risk” places. Regulations which do have important intentions, have had unintended consequences, and have Somali families as collateral damage. Oxfam has called on governments to address these barriers in the past, and now their failure to act has exacerbated this crisis.

Oxfam and the co-signers give recommendations to the US and European governments, the international banking sector, Somali MTOs and more. Specifically, Oxfam calls for the US Treasury Department and banking agencies to facilitate emergency transfers from the US, and to finally take action to encourage banks to help Somalis send money home.

Scott Paul, Oxfam America’s Humanitarian Policy Lead, said, “Across the US and around the globe, Somalis are working hard to support their families back home. Sadly, many have fewer resources to share today, and because of the US government’s irresponsible approach to bank regulation, banks have been scared away from helping Somalis send what they can. Now more than ever, the Treasury Department in the US and governments elsewhere need to take urgent action so Somali families can pay for rent, food, medicine and school fees as COVID-19 spreads.”

Of course, families should not have to rely on international payments from family alone, especially in the midst of a global health crisis. State-run cash and voucher programs, feeding programs for vulnerable children and provision of health and water services to the most vulnerable are key measures to protect Somali communities – not only in times of COVID-19.

“The COVID-19 crisis is laying bare and exacerbating inequalities and serves as a reminder that too many among us are living on the brink”, says Amjad Ali, Oxfam in Somalia/Somaliland’s Country Director, “We now need to see leaders step up to support vulnerable communities with the social protection they need and deserve, while also easing the way for families to support each other through hard work and remittance payments.”

The decline in remittances and its disastrous effects on vulnerable Somali communities comes at a time when there are other ongoing crises, which taken together could lead to famine, according to the UN’s World Food Programme. The UN estimates that in 2020, 4.1 million Somalis are food insecure, 2.6 million are internally displaced and over a third do not have enough water to cover their daily needs.

The global pandemic is hitting Somalia as an additional layer of challenge, as it already faces extreme climate crises like droughts, flash floods, locust infestations that are predicted to return 20 times worse than before. All of this is in the context of ongoing conflicts between government, clan actors and insurgent groups.

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Note to Editors:

Oxfam is working with local partners to respond to COVID-19 in Somalia/Somaliland by raising awareness, supporting public health actions and tackling the economic impacts of the epidemic. Oxfam has been working in Somalia/Somaliland for over 40 years with local communities, civil society and local authorities, delivering humanitarian assistance and longer-term development initiatives, including inaugural and sustained support for civil society organisations that have now become some of the most prominent and influential in Somalia. Our vision is of a transformed politically peaceful and equitable Somalia.

Oxfam previously published the policy paper: Hanging by a Thread: The ongoing threat to Somalia's remittance lifeline.

Statement: Somali communities face dropping remittances and wider economic impact amid COVID-19 crisis A warning from activists, aid workers & academia.