Westpac Bank’s decision to end remittances to Somalia could see vulnerable Somalis struggle even more to access basic necessities like food, water and shelter, according to Oxfam.
Westpac has confirmed that all banking services to remittance companies will close on 31 March, citing increasing risk concerns and tightening interpretation of international and domestic regulations. Westpac is the only major Australian bank offering banking services to remittance companies.
Remittances sent through banks like Westpac in Australia provide a vital lifeline to Somalia with 40 per cent of Somalis relying on remittances from family and friends from overseas to meet their basic needs.
In 2014, it is estimated that Somali money transfer operators sent more than $33 million back to Somalia from Australia – more than double the $15 million Australia gave in aid to Somalia in the same period.
Oxfam Chief Executive Helen Szoke said the impact of the bank account closures on remittances could be devastating given the impoverished nation lacks a functioning banking system.
“Somalis living and working in Australia rely on Somali money transfer operators as the only safe and legal means to send money home to family for basic needs such as food, water, health care and education,” Dr Szoke said.
“Oxfam urges Westpac to reconsider its decision to close these remittance-company accounts.”
Dr Szoke welcomed the Australian Government’s efforts to date on remittances but said in the face of tomorrow’s imminent closures, more urgent action was needed to accelerate progress on longer-term solutions that address banks’ risk concerns while ensuring the long term sustainability of remittance flows.
“While Australian aid has a vital role to play in helping people in countries like Somalia, the money transfers from Australians to Somalia last year significantly outweighed aid at a rate of more than 2 to 1,” she said.
“The vital service provided by Westpac to enable these transfers demonstrates the kind of role the Australian private sector can play in facilitating funds transfers that help to tackle poverty around the world, as Foreign Minister Julie Bishop has so passionately advocated.”
It is estimated that each year, Somalia receives $1.3 billion in remittances globally, accounting for 25 to 40 per cent of the impoverished country’s gross domestic product.
“Oxfam also urges Australia to continue to push for action through the G20 and Financial Action Task Force to address the international regulatory challenges that impact remittance flows,” Dr Szoke said.
“The challenges facing the remittance industry are international, and any sustainable solution will require strong action both in Australia and globally.”
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