World Bank support remittance flows to Somalia

The World Bank said Thursday it has taken a crucial step to help support the flow of remittances to Somalia, to ensure they continue to reach people who depend upon them as a critical source of income.

Bella Bird, World Bank Country Director for Tanzania, Burundi, Malawi and Somalia, said in partnership with the Central Bank of Somalia (CBS), the lender is initiating a process to build the capacity of the Supervision Department, to ensure effective oversight of licensed money transfer businesses in Somalia.

“This is a very important initial step toward improving supervision and formalizing the money transfer business sector in Somalia,” Bird said in a statement issued in Nairobi.

“We anticipate these measures will build confidence in the international community with regard to the Somali financial sector,” Bird added.

About 40 percent of Somali families depend on remittances to meet their most basic needs, including food, health care and education, and 80 percent of the capital for start-up businesses comes from the Diaspora.

Money transfer businesses in Somalia in the past 18 months have faced difficulty in maintaining access to bank accounts to continue their business operations.

The World Bank has been working alongside the CBS to implement a number of activities aimed at tackling key deficiencies in the Somali financial sector affecting remittance flows to the country.

Bird said the World Bank is seeking applications from potential firms to apply to become the “Trusted Agent” to the CBK to assist the authorities in comprehensively regulating and supervising money transfer businesses.

In addition to the contracting of a “Trusted Agent”, the World Bank has been assisting the CBS in drafting and implementing new regulations and guidelines for the money transfer business sector.

Each year, Somalis living abroad send approximately 1.3 billion U.S. dollars back to Somalia in an incredible show of solidarity to help friends and relatives meet their immediate needs, including water, food, shelter, and medicine.

These remittance payments also help supports numerous businesses and represent more than all foreign aid and investment in Somalia combined. Experts estimate that over 200 million dollars is at stake with this decision.

Xinhua