In a letter to Anthony Jenkins, the Chief Executive of Barclays, ODI Director Kevin Watkins, cites new research demonstrating that it is possible to maintain cash transfers to Somalia while maintaining due diligence.
The research draws on ODI's work in helping to develop a $90m cash transfer scheme in response to the 2011 famine. Detailed monitoring during the second phase of the project, which benefited almost 1 million people, found that the local money transfer system was highly efficient, and that agencies were able to avoid diversion of funds.
The bank’s decision threatens to cut off a pipeline to the Somali economy which delivers over $1.3 billion a year in remittances to families across the country many of whom use the cash to cover food and school costs.
Simon Levine, Research Fellow in the Humanitarian Policy Group at the ODI said:
“The famine of 2011 is largely over, so we’re back to the situation where one in seven young children are so skinny that they are classified as ‘acutely malnourished’. Remittances make up over a quarter of the economy of Somalia - so, if Barclays pull out of Somalia and there is no way to send money, what happens when families whose kids are already malnourished lose a quarter of their income? And what happens to the economy, to jobs, to investment when a quarter of its money just disappears? There is a risk that the consequences could be even worse and much longer lasting than the 2011 famine itself.”
The introduction of strict anti-money laundering laws in the US has been cited as a reason for Barclays’ decision, with HSBC having faced a fine of upwards of $1 billion for falling foul of the legislation through their operations in Mexico.
Mr Watkins said:
“There is a world of difference between providing banking services to drug barons in Mexico and delivering a service that pays for health, education, food, housing materials and small enterprises in Somalia. If aid agencies can find a way to operate efficiently in Somalia then surely it’s not beyond the capability of Barclays.”
Letter to Barclays Bank - "No winners from the closure of Barclays’ Somali accounts"