Update on Barclays' decision to close Somalia money transfer accounts
Oxfam reaction to Barclays' decision to delay closure of Somalia money transfer accounts until 30 September
Barclays Bank had previously announced it would be closing three Somalia money transfer accounts on Tuesday 10 September. The bank has now said that it will delay the closure of those accounts until 30 September. In response to the delayed closure Mark Goldring, Oxfam's Chief Executive said:
"It is a welcome sign that Barclays is reconsidering its decision to close accounts but a 20 days grace period is just a short stay of execution. What is needed is a comprehensive solution and there is clearly not enough time for the banks and the government to produce this by the end of the month. People in Somalia who rely on money sent to them from loved ones in the UK to pay for the very basics of life need some guarantee that this financial lifeline is kept open. The Government and the bank do have come together and agree a workable solution."
Original press release 9 September
Banking regulation undermining UK Government policy on Somalia
Nine aid agencies today called on Barclays Bank to scrap plans to sever money transfer accounts. The Bank has threatened to close several accounts tomorrow (Tuesday 10 September), that risks depriving many thousands of poor families in Somalia of cash sent by loved ones from abroad.
Somalis living in the United Kingdom send over £100m a year to friends and families. Total global remittances to Somalia are approximately £860m ($1.3bn) a year which amounts to nearly a quarter of the country's economy and dwarfs the level of humanitarian aid to the country.
The agencies, which include Oxfam, CARE and World Vision, said that Barclays needs to put on hold for a year its decision to close accounts. This will give time for governments and banks to agree appropriate regulations to keep open a lifeline to ordinary families while addressing concerns relating to money laundering.
"The banking rules are illogical, cold hearted and counter-productive. It leaves families already struggling to make ends meet to go without. Closing money transfer companies' bank accounts is likely to drive the money transfer business underground making it even more difficult to regulate. It will also hit the Somali economy hard just when the country is trying to get back on its feet," said Mark Goldring, Chief Executive, Oxfam.
Somalia is one of the poorest countries in the world and slowly recovering from a famine that struck two years ago. Nearly half the population live on less than $1 a day and more than two million people have had to flee their homes due to fighting and food shortages, living in camps or makeshift shelters.
Though the total amount of money sent to Somalia is large, individual transfers are usually less than £200, and often as little as £25. With average incomes in Somalia under £200 a year, this is a vital source of income. Families depend on the money for basic costs such as food, schooling and healthcare. A recent report by the UN Food and Agricultural Organisation shows that up to 40 per cent of families in the northern areas of Somaliland and Puntland receive some form of remittance, and that the money is integral to their survival.
Somalia has no formal banking system and money transfer operators provide the services people in the UK would expect from a bank. Barclays is currently the only bank in the UK still providing the money transfer service to Somalia.
The agencies also called on the UK government to work with the banks and money transfer agencies to find a long term comprehensive solution. Failing to do so undermines the Government's commitment to help efforts to build a stable Somalia.
"The Government's position flies in the face of the UK's policy on Somalia. Britain has shown a genuine commitment to help Somalia rebuild itself and move beyond its "failed state" label, but is not doing enough to address this failed state of anti-terror banking rules. Somalia will find it hard to work its way out of poverty and instability while its people are needlessly denied the financial support from their loved ones abroad," said Goldring.
The nine agencies involved are:
Adeso (African Development Solutions)
The Humanitarian Forum
Muslim Charities Forum
The Somali Relief and Development Forum