IGAD Council of Ministers called for comprehensive solution to Somali remittance problemsSeptember 17, 2013 // admin1 // News in English
IGAD’s 49th Extraordinary Meeting of the Council of Ministers was held in Brussels on the sidelines of the Somalia New Deal Conference. It was attended by Foreign Minister Dr. Tedros Adhanom of Ethiopia; Mohamoud Ali Youssouf of Djibouti; Fowzia Yusuf Haji Adan of Somalia, Ahmed Kharti Mohamed of the Sudan; and Benjamin Barnaba Marial of South Sudan. The main items on the agenda were the threatened cutting off of remittances announced by Barclays Bank and on ways to implement the New Deal for Somalia. The Council of Ministers noted the enormous sacrifices paid by AMISOM forces and Ethiopian Defense forces. With reference to the security and political situation in Somalia, the Council recognized the urgency of forming local government and security structures in areas freed from Al-Shabaab, noted the substantial progress the Somali government and its regional partner’s allies have made to reduce the threat and influence of terrorist groups in the country and expressed its concern over the decision by Barclays’ Bank to close accounts of regulated and legitimate Somali Money Serviced Businesses by September 30. In the communiqué following the meeting, the IGAD Council of Ministers noted that the flow of remittances are indispensable to the region and especially to the security and economy of Somalia where more than 40% of the population of Somalia would lose an estimated $1.2 billion a year in remittance income, nearly $500 million from the UK alone, if this lifeline was cut. The IGAD Ministers noted that the decision of the Bank posed serious humanitarian and security risks since Somalia lacks any formal banking system and is dependent on remittances. They welcomed the recognition by the Government of the UK and of the international community on the role of the Diaspora in the reconstruction of Somalia and noted that Barclays’s decision is against the spirit of the New Deal Conference and would have unintended consequences for the fragile economic and humanitarian situation in Somalia. The IGAD Ministers also underlined that the decision would “strangulate at birth” the objectives of the New Deal for Somalia. It would block the inflow of Diaspora finance which is channeled through Somali MSBs. This is vital to Somalia’s reconstruction and development and it is recognized that these channels must remain open to promote growth. The Ministers endorsed the recommendations put forward by the Somali Money Services Association (SOMSA), including the establishment of a special support facility for the Somali remittance industry, and called upon all parties to look into the need for a comprehensive solution to the problem facing the Somali remittance industry and provide for the introduction of practical measures to address the concerns of the banks and regulators while ensuring that Somali MSBs will continue serving the region without interruption. The IGAD Council of Ministers also urged the UK Government, Barclays Bank and regulators to work together with the Somali remittance industry to find both short and long-term solutions. It further urged the international development community, especially the African Development and World Bank, to lead the search for solutions. The Council recognized the difficult situation that western banks find themselves in because of the uncertain regulatory environment but urged Barclays to give the Somali Money Service Businesses 12 months to find alternative solutions.