With five million Somalians left acutely food insecure after five consecutive failed rainy seasons, the Somali diaspora in Canada is trying to raise awareness of their homeland’s plight—and pointing to a financial policy that has made it costlier to send aid to their loved ones.
“Somalia’s ongoing record drought may have killed as many as 43,000 people last year, and half of them were children under the age of five,” reports Al Jazeera, citing a report released last week by the country’s government, UNICEF, and the World Health Organization.
And things are poised to get far worse this spring, with “nearly two million children at risk of malnutrition.”
Led by the London School of Hygiene and Tropical Medicine, the report warns that the rate of fatalities could rise in the first half of 2023, projecting a death toll of 18,100 to 34,200 people.
“These results present a grim picture of the devastation brought on children and their families by the drought,” UNICEF’s Wafaa Saeed said, as he presented the report in Somalia’s capital, Mogadishu.
In Canada, members of the Somali diaspora are responding as best they can, increasing the financial contributions they send back to their families. These funds have long been the lifeblood of the country’s economy, growing ever more essential as Somalia’s civil war enters its 31st year. Remittances from the Somali diaspora now account for between 25% and 40% of the country’s GDP, reports CBC News.
Hassan Mowlid Yasin, 31, whose degree in public health was funded by remittances sent to his grandmother, said war and famine have been sending rural families streaming into cities like Mogadishu, where he lives. The result is soaring food prices, with food inflation standing at 17.5% in the city, and rents similarly skyrocketing.
This arduous struggle for Somalian families, many of whom have lost their livelihoods, was well under way last year, when the country was already suffering its “worst drought crisis in a decade.” Al Jazeera reported at the time that nearly 700,000 camels, goats, sheep, and cattle had died from drought-related causes over a two-month period in 2021.
Such losses would have been a hammer blow to the economy. Yasin told CBC that until recently, livestock accounted for “half of Somalia’s export earnings and another 40% of its GDP.”
Climate the ‘Ultimate Culprit’
“The ultimate culprit is climate change,” Mohamud Mohamed, Save the Children’s country director in Somalia, said in a statement last year. “Somalia has always had droughts, and Somalis have always known how to deal with them—they struggle, they lose livestock, they count their losses, and then they bounce back.”
But now, “the gaps between droughts are shrinking. It’s a killer cycle and it’s robbing Somali children of their future,” he added.
Hibaq Warsame, a project coordinator at Toronto’s Midaynta Community Services for Somali Canadians, said she hears the worry in her relatives’ voices as they struggle to put food on the table.
“[Many] are being contacted by family back home, saying, ‘We’re not able to afford food,'” Warsame said. “It’s not even on a month-to-month basis. It’s a day-to-day basis.”
And members of the diaspora are feeling the drought in their own bank accounts. Warsame’s family used to send remittances of US$150 per month. Now they send $350. Four others working at Midaynta said they’ve also increased their monthly remittance spending for Somali relatives, CBC says.
A controversy over how these remittances are paid is compounding the suffering, said Jibril Ibrahim, president of the Somali Canadian Cultural Society of Edmonton, who now sends as much as $500 per month to his family in Somalia.
As Canadian law currently stands, “money-transfer businesses registered with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) are the only method for legally sending funds abroad,” CBC explains. The so-called MSB process is often slow, with expensive fees attached, neither of which are ideal in an emergency.
One effective method to save time and cost is hawala, Ibrahim said. Also referred to as “underground” or “shadow” banking, in the hawala system the sender gives a local broker the remittances along with the recipient’s name and location. The local hawala broker contacts a counterpart broker at the specified location, who then gives the money to the recipient.
Hawala has been used throughout South Asia and North Africa since the eighth century, and unlike typical systems based on promissory notes or other debt instruments, it relies solely on an honour system between brokers. The system used written correspondence in the Middle Ages, but today payments can be arranged over the phone within minutes, said Ibrahim.
But since it doesn’t require the physical movement of money or a paper trail, hawala has faced controversy as a vehicle to fund extremist groups like al-Shabaab in Somalia, and illegal markets.
Policy Creates ‘Additional Cost’
During the pandemic, several Edmonton-based MSBs and bank accounts used for sending remittances to Somalia were closed due to their affiliations with hawala vendors, even though they’d undergone and passed FINTRAC audits, Ibrahim said.
When assistant finance minister and Edmonton-area MP Randy Boissonault was asked for comment, a press secretary said financial institutions have “the discretion to close accounts or refuse to do business with MSBs.” He added the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act mandates client identities and certain transaction records that are not required in the hawala system.
Ibrahim said he understands the government’s position but questioned the blanket illegality of hawala in Canada.
“We’re not sending $10,000 or $20,000. We’re talking about $100 from individuals to their loved ones,” he said. “How is that going to help terrorist groups?”
Registered MSBs still deliver remittances to the right place, he added. But between their substantial fees and cost of living increases in Canada, “there’s an additional cost that we [Somali Canadians] have to sustain as a result of government policy.”
Meanwhile, Midaynta has raised $7,000 through two events since September. This year, one of the organization’s goals is to bring the issues around remittances to local politicians and Toronto’s immigrant community at large.
“We’re constantly in contact with our family and friends back home. We’re getting first-hand information,” said Warsame. But she said awareness of the severity of Somalia’s drought, its impact on so many facets of life, and the resulting onus on the diaspora community “isn’t as widespread in Canada as we’d like it to be.”
