Yet there is one kind of shop that seems to thrive in the chaos that is in Somalia: money transfers agencies. If you walk down a major street in the country’s capital for long enough, you’re sure to find a number of places to send and, more importantly, receive money.
These agencies have become Somalia’s lifeline. Thanks to decades of war, extreme poverty and violent instability, the country barely has an economy to speak of. Almost half of Somalia’s population lives on less than a dollar a day, so for many, the money they receive from family abroad is their only means of survival.
Two-thirds of the country’s urban population relies on foreign cash. As a whole, Somalia receives upwards of $1 billion in remittance every year. That’s one-fifth of its entire GDP.
For those who receive them, these payments are critical. They can mean the difference between eating and not eating, or between having shelter and being homeless. For the luckiest few, they can even mean saving a tiny sum of money for the future.
In other words, Somalia’s diaspora is helping to keep the country afloat.
The same can be said of other developing nations around the world, where countless people regularly receive money from family members who have left in search of a better life. These migrant transfers, through banks, Western Union and other less formal means, are so extensive that they’ve become a powerful tool for staving off poverty.
Just this year, developing countries have received more than US$280 billion in foreign remittance. That’s nearly three times more than what they were given in official foreign aid.
Western Union alone has more than 312,000 locations in 200 countries worldwide, including nearly 30 in Baghdad alone.
In places where there are no Western Unions, people can still receive money from their relatives abroad through extensive family and community networks that connect people in the remotest parts of the world. In Somalia, this unofficial money transfer system is called hawala.
Many of these transfers go unrecorded, meaning the actual amount of cash migrants send home is even higher than what’s estimated.
India, Mexico and China lead the way, all receiving more than $20 billion in remittance this year. Individual transfers are usually made up of just a few hundred dollars each, but are invaluable to those who receive them.
Like everything else though, these transfers are already feeling the pinch of the looming global recession. Last month the World Bank reported that, after years of massive growth, the rate of foreign remittance has begun to slow. In 2009, money sent home by migrants is even expected to drop by as much as six per cent.
This could prove to be dire for countries like Tajikistan, where foreign cash makes up nearly half the country’s GDP. Even in more stable developing economies, the poorest and most vulnerable segments of the population will suffer dearly if their transfers dwindle under the weight of the credit crunch.
And while there’s no danger of foreign remittance drying up altogether, for struggling families across the globe, every dollar counts. Even the smallest decline could have large consequences on their ability to meet their daily needs.
Back in Mogadishu, there’s no telling what will happen if Somalis abroad can no longer afford to send home as much money as they usually do. Most locals already have far too much to worry about.
One thing is for certain though. Recession or not, millions of people there—and around the world—will continue turning up at their local hawala agencies, hoping for the distant helping hand they so desperately need.
Chris Mallinos is a Toronto-based journalist whose work has appeared on six continents and in seven languages. You can reach him at www.chrismallinos.com .
