Somalia President and Prime Minister have warned the shutting down of remittances will be a major hindrance on the efforts of stabilizing and state-building process of the country.
In a joint statement released on Wednesday, both leaders announced that a new initiative is underway that will control the regulation and protect Somali remittances.
The new system which is a multi-agency Special Task Force on Remittances (STFR), will enable the formation of a financial sector to find a sustainable solution and a national financial infrastructure that will play a vital role in development.
President Hassan Sheikh Mohamoud said that the Task force’s main priorities will be to explain a detailed strategy with a consultative implementation plan on how to rebuild Somalia’s formal financial sector.
In February, U.S banks closed the accounts of remittances that used to transfer money to Somalia sent by the Diasporas, supporting their families and friends back at home.
Each year, Somali citizens across the world send about $1.3 billion back home. These flows represent a significant share of Somalia’s economy and help to reduce Somalia’s reliance on assistance from foreign governments and international organizations.
However, Somali Prime Minister said that the closure of remittances account will have an impact on the efforts to stabilize rather than blocking the militants to get funds.
‘’Constraining remittances will hurt the poorest in a Somalia where we have no social security system and at least 40% of our population depends on this indispensable resource to pay for education, health, housing, and to run businesses which in turn create jobs and provide income.
‘’The biggest battle in the war on war on terror will be waged on the creation and fair management of resources and on the employment front. Our people, especially the youth, have to see us and our international partners cooperating in securing livelihoods and stability for Somalis at home and abroad,” said the Prime Minister.
The new initiative revealed by the Somali Federal government leaders will be a new move to rebuild the country’s financial sector while the war-ravaged nation lacks an international banking system following the collapse of the Central government in 1991.