Mogadishu — The World Bank and the Federal Government of Somalia are working together 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. Remittances in 2015 were estimated to reach a total of US$1.4 billion in Somalia and support 23% of the GDP.
Over the past two years, many banks in the United States, United Kingdom, Canada and Australia have closed the bank accounts of Somali remittance companies purportedly due to the perceived high risks of money laundering and potential links to terrorism.
The World Bank has been working alongside the Central Bank of Somalia (CBS) to implement a number of activities aimed at tackling key deficiencies in the Somali financial sector affecting remittance flows to the country.
In this context, the World Bank has selected and appointed "Abyrint AS" to act as the "Trusted Agent" to the CBS and assist the authorities in comprehensively regulating and supervising money transfer businesses. Abyrint has been selected through a publicly advertised and competitive process, in line with World Bank procedures, and has already commenced activities on the ground in Mogadishu. The "Trusted Agent", in collaboration with the CBS, will conduct joint on-site and off-site supervision with CBS staff on registered and licensed money transfer businesses as well as work to build capacity within the CBS's Licensing and Supervision Department.
"The deployment of the Trusted Agent is a critical step toward improving supervision and formalizing the money transfer business sector in Somalia," said Bella Bird, World Bank Country Director for Somalia, Tanzania, Burundi and Malawi. "Money transfer companies have provided a lifeline for millions of Somalis through years of exclusion from the formal financial sector, and will continue to play an important role in the longer term."
In addition to the contracting of the "Trusted Agent", the World Bank has been assisting the CBS in drafting and implementing new regulations and guidelines for the money transfer business sector within the new regulatory regime established under the AML/CTF Bill, passed in April 2016.
The World Bank began working with the UK last year to develop mechanisms, in case of severe disruption of remittance flows between the UK and Somalia. This work has since evolved to address fundamental issues affecting remittance flows to the country. The current activities are focused on improving the formalization, transparency, and compliance of the money transfer business sector in Somalia.
"Ensuring that the diaspora is able to safely and cost-effectively send money home to families remains vitally important, given the lifeline that money represents for many in Somalia. Abyrint, as Trusted Agent, will play a vital role in supporting CBS efforts to improve remittance services." said Phil Evans, Head of the United Kingdom Department for International Development (DfiD) Somalia.
The World Bank's work in Somalia is being generously supported by the donors to the Somalia Multi Partner Fund (MPF). In total, donors have committed US$185 million to the MPF. Donors contributing to the MPF include the European Union, the Royal Norwegian Embassy, the Swedish International Development Cooperation Agency, the Swiss Agency for Development Co-operation, the UK Department for International Development, Italian Ministry of Foreign Affairs and International Cooperation, Denmark Ministry of Foreign Affairs , Finnish Ministry of Foreign Affairs, and the World Bank's State and Peace-building Fund.