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London court ruling offers Dahabshiil new lease of life

BUSINESS
By ALLY JAMAH | Nov 17th 2013 | 4 min read
By ALLY JAMAH | November 17th 2013
BUSINESS

By ALLY JAMAH

 The uncertainty over huge inflow of cash from the diaspora and humanitarian organisations into East and Horn of Africa has reduced. This after the High Court in Britain intervened.

The London court’s action is a sigh of relief to a simmering dispute between Barclays Bank and one of the largest money transfer firms in Africa, Dahabshiil.

The court rejected the plan by Barclays directing that Dahabshiil’s account be kept open for the foreseable future until the dispute is fully resolved when the case goes to full trial, probably next year.

 Barclays Bank in the UK had sought to stop giving banking services to Dahabshiil.

The move has jeopardised the smooth transfer of hundreds of billions of shillings to millions of people in the East and Horn of Africa, denting their fragile economies

 “This is not just a victory for Dahabshiil. It is a victory for the millions of people in East Africa and the Horn region, many of whose livelihoods depend on our services,” said Dahabshiil Chief Executive Officer Abdirashid Duale in London. This was in response to the major court ruling.

The move had also affected international  humanitarian agencies across the region.

Accounts targetted

 Barclays was the last major bank providing remittance services to money transfer firms. But it announced in May this year that it will shut down the accounts to about 250 money-transfer businesses.

 Dahabshiil went to court to oppose the move.

 According to Dahabshiil’s Regional Spokesman Ahmed Abdi Elmi, who is based in Nairobi, millions of people across East and the Horn of Africa receive money from relatives abroad through Dahabshiil.

 “We are an international money transfer firm just like any other in the field. We do legitimate business and everything is done above board. More people are beginning to understand that as they interact with the services we offer,” he says.

 Nairobi-based economic expert Dr Daud Kibwanga observed that Somali-owned money transfer companies such as Dahabshiil inject vibrancy into the regional economies by delivering money to people who would have otherwise be too poor to participate meaningfully in the economy.

“Money sent by those in Western countries to their relatives in East Africa and the Horn of Africa region is even more than the aid we get from donors,” he said.

“It also has a far higher impact on reducing poverty and stimulating the local economies through increased buying and selling of goods and services.”

Dahbashil has strong presence not only in Somalia but also in Sudan, South Sudan, Uganda, Kenya and Rwanda.

Amina Yusuf, a 34 year single mother of four, living in Somalia expressed relief that the Sh30,000 she receives monthly from her brother in the UK will continue flowing uninterrupted thanks to court decision in the UK.

“Without that money, it would be impossible to sustain myself since I’m jobless. My previous business of selling clothes collapsed due to shortage of capital. The money I receive is for rent, food and school fees for my children,” she says.

Ochol Ogut , a Sudanese national who regularly receives cash from his elder sister in the US via Dahabshiil also expressed disappointment when he first heard of possible closure of the accounts of the money transfer firm he uses most.

“If there are concerns about money reaching criminals or illegal groups, the solution is not to shut down money transfer. That would be punishing everyone unnecessarily, he said.

“The solution is to find how to seal loopholes in the system, if any, to lock out the bad guys. I don’t want to be forced to use other money transfer companies that are far more expensive and unreliable,” he said.

 Currently, Dahabshiil has gone on overdrive to reassure jittery clients that its services will not be terminated any time soon or in the future  and that their money is safe with them.

“We are confident in the strength of our systems. Our strong compliance record is reflected in the fact that we are a trusted partner to the United Nations and other international NGOs and development agencies who transfer funds through us to reach millions of needy people in the region,” said Dahabshiil chief executive during a recent visit to Nairobi.

He said Dahabshiil’s campaign to keep its accounts with Barclays open  in order to continue operating the money transfer services was actively  backed by humanitarian organisations operating in the East and Horn of Africa region.

 He said that even the British government was supportive of Dahabshiil on the grounds that it delivers money to millions of people in the horn of Africa, helping to sustain livelihoods and economies.

UK recently announced it was setting up an Action Group on Cross-Border Remittances and undertaking a pilot project to develop secure remittance channels to Somalia.

“It is also important to remember that we are not just a business. We provide a lifeline service to Somalia and other African countries to buy food, medicine and to pay for education,” argued Dahabshiil’s lawyers.

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