Capital flows: case studies

Where is Somalia?

The horn of Africa

Borders Kenya and Ethiopia

Close sea link to Middle East

What are the 4 top countries in the Somali diaspora and how many immigrants do they each have?

Kenya- 490 000

Ethiopia- 440 000

Yemen- 250 000

US- 150 000

What are the 3 top countries in terms of remittance sent back to Somalia and what amount do they each send annually?

USA $200 000 000

UK $160 000 000

Germany $100 000 000

How can the trends in remittances be described?

A steady climb- they are the most reliable capital flow.

What type of countries receive the largest amounts in remittances?

Developing countries, NEEs and war-torn countries.

What countries have the highest remittance outflows?

Developed countries, or those which are oil rich.

For 2018:

US $68.5B

Saudi Arabia $33.6B

Switzerland $26.7B

Germany $25.4B

Which countries had the highest percentage of their GDP made up by remittances in 2019?

Tonga 38.5%

Haiti 34.3%

Nepal 29.9%

What is the process of remittances being processed for Somali immigrants?

• A Somali migrant registers with an agent in their country of residence and gives the agent money

• The agent takes a fee (5%) and deposits the money

• The bank wires the money to another bank (often in Dubai)

• A correspondent agent can access the money in this bank

• The correspondent agent distributes the money to paying agents throughout Somalia

• The recipient visits the paying agent, confirms their identity and takes cash

Negatives of the remittances process for Somalia:

Many parties along the way can take a large fee- bargaining on this may be difficult for the Somali worker

Due to the number of steps in the process, the money can easily be subject to stealing or black market involvement

What is the estimated amount of money sent home annually by Somali migrants?

$1.6B

What percent of Somalis receive remittances and why?

40%, mostly for basic needs.

Why are remittances increasingly being used for investment?

They are growing in stability.

Why are remittances the only way for Somali migrants to fund their families back home?

Somalia has no functioning banking system.

What natural disaster do remittances play a key role in and how?

Droughts- international aid agencies use remittances in cash for food programmes.

The remittance dilemma- Somalia 2013: