Garissa Attack: Kenya Shuts Down Somalia’s Remittance Systems

Garissa Attack: Kenya Shuts Down Somalia’s Remittance Systems

geeskaafrika.com

The Kenyan government  has closed a dozen Somalia-liked money transfer firms, known as hawalas, based in the capital Nairobi in the wake of one of the worst Al Shabaab militants attack that killed 148 people at a University in Garissa,  a town in the north eastern part of the country, last week.

The hawala system is the only money transfer system that many of the Somalians living abroad due to a decade long civil war in the home country depend on to send money back home. There are almost a million Somalis living in Kenya.

War-torn Somalia has only six licensed commercial banks. Most of the banking in the horn of Africa country is done through informal money transfer firms, known as hawalas.

“Last night we simply received a notice, without discussion and without informing us [beforehand],”an owner of one Somali money transfer company told Reuters. “This is not the way to fight terrorists.”

According to Somali Current, the Kenyan government ordered the immediate closure of 13 Somali Hawalas informal money transfer on ground that the they help fund Al Qaed-linked Al Shabaab group, which has launched several terror attacks in the East Africa’s largest economy since 2011.

The Kenyan government has also frozen 86 individual accounts and suspended 13 Forex exchange bureau working in the country.

The Somalia’s informal money transfer systems came under pressure in February after US banks stopped operating in the country due to strict regulations set by the Office of the Comptroller of the Currency over concerns of money laundering and funding for terrorist organizations.

This left many Somalis, who depend on the $1.2 billion remittance sent annually by their relatives abroad, without critical financial support. Remittances  is the country’s largest revenue source, larger than even foreign aid and investments combined.