Public Disclosure Authorized Remittances and Vulnerability in Somalia Assessing sources, uses and delivery mechanisms Public Disclosure Authorized Rift Valley Institute Public Disclosure Authorized Nisar Majid, with Khalif Abdirahman and Shamsa Hassan. November 2017 Public Disclosure Authorized i Table of Contents 1 Introduction .......................................................................................................................................... 1 1.1 Study objectives ............................................................................................................................ 1 1.2 Structure of the report .................................................................................................................. 1 2 Methodology ......................................................................................................................................... 2 3 Somalia context ..................................................................................................................................... 6 3.1 Poverty, food security and vulnerability ....................................................................................... 6 3.2 Governance, legal and regulatory environment ....................................................................... 110 4 Social protection ................................................................................................................................. 13 4.1 Social protection in East Africa ................................................................................................... 13 4.2 Cash-based humanitarian programming in Somalia ................................................................... 14 5 Study findings ...................................................................................................................................... 16 5.1 Remittance flows and patterns ................................................................................................... 16 5.2 Role, use and impact of remittances .......................................................................................... 24 5.3 Investment and asset protection ................................................................................................ 32 5.4 Remittances and social status ..................................................................................................... 34 5.5 Remittance monitoring and control ........................................................................................... 35 5.6 Dependence on remittances ....................................................................................................... 36 5.7 How remittances are sent—from hawala to mobile money transfers ...................................... 38 5.8 Accountability and trust: Engaging the diaspora ........................................................................ 44 6 Conclusions and recommendations .................................................................................................... 50 6.1 Conclusions ................................................................................................................................. 50 6.2 Recommendations ...................................................................................................................... 51 References .................................................................................................................................................. 57 ii List of Tables Table 1: Household interviews in Somalia/Somaliland ................................................................................. 4 Table 2: Diaspora interviews ......................................................................................................................... 4 Table 3: Key informant interviews ................................................................................................................ 5 Table 4: Minimum Expenditure Basket (MEB) and remittances by region................................................. 22 Table 5: Family size ..................................................................................................................................... 24 Table 6: Responses: ‘Have you any other source of income?’ ................................................................... 39 List of Figures Figure 1: Frequency of responses—remittance sending countries ............................................................ 20 Figure 2: Frequency of responses—remittance sources by region ............................................................ 20 Figure 3: Frequency of receipt of remittance ............................................................................................. 22 Figure 4: Ranking remittance uses .............................................................................................................. 25 Figure 5: Overall use of remittance by household type .............................................................................. 26 Figure 6: Remittance use ranking by geographic area ................................................................................ 29 List of Boxes Box 1: Drought, famine and vulnerability in Somalia (2011 and 2017) ........................................................ 8 Box 2: Marginalization and minorities in Somalia ......................................... 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Box 3: Qaraan ............................................................................................................................................. 18 Box 4: Disruptions to remittance flows ...................................................................................................... 21 Box 5: Quotes on remittance and social status .......................................................................................... 35 Box 6: Focus on remittances for pastoralists .............................................................................................. 39 Box 7: The SCOPE platform ......................................................................................................................... 42 Box 8: The Islamic principle of zakat........................................................................................................... 48 List of Maps Map 1: Map of Somalia/Somaliland ............................................................................................................. v Map 2: Map of Somalia/Somaliland showing the main research hubs ........................................................ 3 Map 3: Location of livelihood zones in Somalia/Somaliland ........................................................................ 7 Map 4: Map of Somalia/Somaliland showing level of access to humanitarian and development resources ...................................................................................................................................................................... 9 iii Acknowledgements This report is based on research undertaken by Nisar Majid, Khalif Abdurahman and Shamsa Hassan. Additional support and input was provided by Yassmin Mohamed and Adan Abokor of the Rift Valley Institute (RVI). We wish to thank the large number of people who contributed to this report but who are far too many to name. We are particularly grateful to Sophie Dunn for critical input and advice. Much appreciation also goes to Laura Hammond, Mark Bradbury and Cedric Barnes of the RVI for their contributions. We also express our sincere gratitude to all of the respondents who gave their time and input to the study, including local people and key informants throughout Somalia, as well as members of the diaspora. The team is also extremely grateful to all of the respondents from international agencies working in Somalia, especially to Degan Ali and Deqa Saleh of Adeso, and Abdullahi Khalif of the Swiss Agency for Development and Cooperation (SADC), for their insights and advice, and who wear multiple hats as Somalis, members of the diaspora and experienced staff of international agencies. iv Map 1: Map of Somalia/Somaliland v Summary This study presents the findings of a World Bank funded research on remittances and vulnerability in Somalia. The study is implemented by the Rift Valley Institute (RVI) and is part of the World Bank’s ongoing work related to social protection in Somalia. The purpose of the study is to better understand the role that remittances play as a social safety net for families in Somalia. The study considers Somali processes of resource mobilization, distribution and support (focused on remittances) in order to inform policy and practice in relation to social protection and social safety nets in Somalia/Somaliland.1 The study primarily covers an eight-month period, from October 2016 to May 2017, when field work, analysis and report writing was undertaken, and draws on available literature on remittances and vulnerability in Somalia/Somaliland. It is also based on input from 237 household interviews, 50 key informant discussions and 38 focus groups discussions conducted in different areas of Somalia/Somaliland, including members of the Somali diaspora and experts and aid agencies in Nairobi, Kenya. Previous research in relation to remittances largely focuses on Somaliland and Puntland and urban areas. This study contributes to existing knowledge of remittances in these areas. It also contributes new findings from southern Somalia and pastoralist groups in