Thousands of businesses in Nairobi’s East-leigh estate as together with a huge number of households who rely on remittances from Somalia and other countries received a sigh of relief after Kenya re-allowed 13 money transfer services shut down in April.
Kenyan financial authorities last week gave back business licenses to the Money Remittance Providers (MRPs) whose licenses were suspended after the Garissa University Terror attack in April.
Kenya Forex Bureaus and Remittance Association (KFBA) said the move was a major boost to the businesses and families who had been largely affected by the 11 weeks closure by Central Bank of Kenya.
KFBA Chief Executive Anthony Wachira said the Forex dealers will work together with Kenya’s financial regulators to curb money laundering and any suspected terrorism support.
“We are going to ensure that Kenya’s money remittance regulations are strictly followed to avoid such conveniences never happen. No forex dealer was shut down for illegal operations because all our members have licenses and those who were targeted were the unlicensed informal dealers like the ones found near the border points,” Mr Wachira said.
The government suspended 85 entities including the MRPs and a number of bus companies after the April 2nd Garissa University terror attacks suspecting them to be supporting terrorism activities.
The Money transfer services were particularly suspected of funneling money to al-Shabab, the Somalia terrorist group who claimed responsibility for the Garissa attack and others in the regions.
The services which are concentrated in the largely Somali residential estate of Eastleigh in Eastern Nairobi is a major lifeline to the families in the estate. They use the services to contribute to the development of Somalia where conventional banking services are still not well established.
More money gets in to Somalia from remittances each year, than from humanitarian aid according to some unofficial statistics. It accounts for as much as 45 per cent of the economy.
The freezing of cash transfer systems is said to have taken a huge bite out of business in Somalia and other countries which are hosting large number of Somalis including Nairobi’s Eastleigh district.
” We have had millions in losses per day and it is not just about those sending and receiving money who suffer, the effect has been translated to many other business including those outside Eastleigh. Some families have not been able to pay rent or buy clothes extending the loss to many other entrepreneurs here. I am sure the government lost a lot in taxes and domestic remittances as well,” said a member of the Eastleigh Business Community who spoke TSI in confidence.
The government had also frozen bank accounts belonging to the affected entities.
Dahabshiil Kenya which accounts for over 90 per cent of the money transfer services to and from Somalia were first to go public about the good news of their business come back.
The Remittance Service Provider’s Director Ahmed Elmi dispatched a press release immediately to announce the reopening. When contacted for comments, he could not hide his joy.
“We are happy to have our licenses back from Central Bank of Kenya this afternoon and reopened all our branches. We can now continue business but let me clarify that it is not based on the appeal we lodged after we were shut down. CBK just did their investigation and found us innocent,” Mr Elmi said on a telephone interview.
Dahabshiil even committed to start using the Kenyan Ministry of Interior’s new Integrated Population Registration Services database in their subsequent business to curb any chances of misuse.
In April, Inspector-General of Police Joseph Boinett published a special gazette notice that listed 85 entities suspected to have links with the terrorist group.
The Firm’s director could however not send the latter from CBK not give details on the impact the 11 weeks closure had on their business. CBK had neither updated its website with the information nor answered email enquiries by the time of going to press.
Dahabshiil Group Chief Executive Officer Abdirashid Duale emphasised the advantage to have them back in operations as a major source of income for many people both in Kenya And Somalia.
“It is important for us to have resumed business in Kenya. Our network operates in 126 countries, including Kenya, the UK and the USA, and we respect and comply with the laws of each and every country. Our services provide a vital lifeline for people to feed, educate and otherwise help their families and loved ones, and to run businesses,” Mr Duale said.
The reopening of the 13 MTPs now leaves lose to seventy other entities still closed out of business through the April directive.
According to the UN’s High Commissioner for Refugees (UNHCR), there are currently 423,153 registered Somali refugees in Kenya after fleeing the civil war that broke out in Somalia in 1991.
Many enterprising Somali refugees have since set up shops in the Eastleigh district, selling food and clothing to electronics and jewelry. Eastleigh is said to transact more than USD100 million in businesses each month.
Most of the businesses are started with money sent from relatives leaving abroad including Europe and America. The Diaspora Somalis and their dependants who were the most affected by the shut down may have a reason to celebrate after the reopening.
Major US banks stopped wiring money to Somalia years ago but California-based Merchant bank continued remitting to Somalia until recently when it decided to stop fearing potential penalties.
Such sanctions present a big blow to the rising economy of Somalia after years of conflict and underdevelopment as most aid organizations receive funds through the MTPs.