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Since the April 2 deadly attack on a Kenya university, Kenya’s central bank suspended the licenses of 13 money remittance providers in an effort to stem the flow of funds to armed militias in the region. Banks in the U.S., U.K., and Australia have also curtailed financial transfers to Somalia.

Aid agencies say the money transfer companies should not be closed wholesale, but instead be vetted individually.

With the closure of money remittance providers, Somali families are losing their only formal, transparent, and regulated channel through which to send and receive money.

In addition, a consortium of aid agencies that work in Somalia says that some could lose their only means of transferring money to sustain their operations.

While recognizing Kenya’s need to address security threats, the aid agencies say disrupting flows of remittances to Somalia could prove costly, cause inefficiencies, and force them to close operations.

Francois Batalingaya, World Vision country director for Somalia, says the closing of remittance providers could have a “massive impact” on aid delivery.

Overseas lifeline

Every year, Somali expatriates send home approximately US$1.3 billion to support families and friends. This represents up to 25 to 45 percent of Somalia’s gross domestic product—more than the combined value of all foreign aid and investment in the country.

One out of three Somali families say they would not be able to pay for food, school, or basic healthcare if they did not receive remittances, aid agencies say. 

Somalia is still suffering from long-term drought three years after a famine and hunger crisis killed 258,000 people. World Vision assists families in south central Somalia and Puntland, providing services that include water and sanitation, health care, food and nutrition, and restoring agriculture and livestock.