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Finding Gold in the Labour Migration; A look at Cash Remittance

A large percentage of the productive population may have left the country, but, a survey reveals their commercial potential.

TSIM Writer

Officially, as per the figures released by the Somali National Bureau of Statistics, close to a billion US dollars was received at home as cash remittance sent by members of the Somali diaspora in 2019. This money was sent to various households both in urban centers and in rural areas; unofficially, a lot more money than this was sent back home from abroad.

The phenomenon of labor loss, occasioned by Somalia’s productive population leaving the country to seek higher education, to seek work, or to pursue other personal goals abroad is a regular topic of discussion. Often, conversations around migration from the country are centered and built around humanitarian circumstances and the effects of labor loss on existing industries and the general national professional skills incapacitation due to this migration.

Like many African countries, Somalia experiences labor force loss when its productive population, the working-age population – the educated youth and experienced entrepreneurs- leave the country.

Labor migration in the country has been happening for years. However, as mentioned previously, migration has mostly been viewed from a humanitarian point of view, and often, the perspective of ‘what does the country lose from labor migration?’.

For the first time, in a report released on the 10th of September this year, the Somalia National Bureau of Statistics (SNBS) sought to quantify the gains arising from labor migration. The report, a product of a 2019 survey, breaks down the financial benefits of labor migration by studying monthly, quarterly, and yearly cash remittances from various points across the globe by Somalis living out there who send money to their family members and business partners who are back at home.

Annual remittance estimated at 865 million US dollars

“Overall, most of the remittances were received from a brother (23.0 percent), followed by ‘other relative’ (21.8 percent), sister (12.6 percent), and son (11.7 percent). In urban residences, ‘other relative’ was the most frequent source of remittances (at 23.0 percent), while in rural households the most frequent source was a brother – at 26.1 percent,”

The Somali National Bureau of Statistics Labour Force Survey Report 2019.

The annual remittance received by all households in Somalia was estimated at 865 million US dollars during the duration of the survey (2019). A large percentage of this money – 93.3 percent – went to urban households/ urban residents while only 6.7 percent of the total remittance went to rural households.

According to the report, as of 2019, there were 1.3 million households in Somalia. 28.82 percent of these households received remittances and most of the households (83.7 percent) received their cash monthly.

“Overall, most of the remittances were received from a brother (23.0 percent), followed by ‘other relative’ (21.8 percent), sister (12.6 percent), and son (11.7 percent). In urban residences, ‘other relative’ was the most frequent source of remittances (at 23.0 percent), while in rural households the most frequent source was a brother – at 26.1 percent,” SNBS Labour Force Survey Report 2019.

Urban residents received money frequently and regularly

From the survey, there seem to be wide variations in the receipts among the households in terms of location/ area of residence. Urban residents received money frequently and regularly compared to rural folk. Whether it is monthly, quarterly, yearly, or occasionally, the report indicates that the urban population received more at every level compared to their rural counterparts.

This can be attributed to a variety of factors like the high concentration of money transfer services companies in urban centers compared to the villages, the fact that urban centers are commercially active (compared to rural areas), the existence of a large population of Somalis living in urban centers (both families and entrepreneurs engaged in vibrant commercial enterprises), and finally, the large presence of the working-age population in urban centers (compared to the passive rural population).

Further interrogation of the frequency of cash receipts suggests that households receiving monthly or quarterly remittances possibly use their cash to run either their household affairs or to augment their business/ commercial finances in order to keep their companies or their business establishments running month in and month out.

Cash transfer schemes

The households receiving cash from cash transfer schemes were mapped out by area of residence. Cash transfer schemes are instruments used by international humanitarian organizations and sometimes by the government as an intervention mechanism aimed at alleviating a humanitarian need such as hunger or famine or drought or homelessness.

The survey findings indicate that as of 2019, at least 7.7 percent of households reported that they were in some form of a cash transfer scheme or the other. The area of residence/ location of recipient differences were not very large and ranged from 6.6 percent for urban to 12.6 percent for rural.

This is to be expected, seeing as most urban residents tend to be in some form of gainful employment/ undertaking that offers them financial benefits and cushions them from the effects of humanitarian and disaster events like floods or famine or breakouts of conflict. These events have a much higher impact on those living in rural areas, hence the high percentage of rural households relying on or receiving cash from humanitarian cash transfer schemes.

Why they migrate and how frequently they migrate

Another finding from the survey was the frequency of relocation/ migration of the Somali population at home. Based on the survey, a significant percentage of Somali families at home (both in urban centers and rural areas) have settled into a static/ permanent life.

Respondents were asked if they had moved from one area of residence to another in the last 5 years. On average only 8.1 percent of the respondents had moved. Urban residents had the largest share of respondents who reported moving at 8.9 percent. Those in rural areas, as expected, reported a fairly stable and static population with only 4.1 percent reporting that they had moved in the 5 years prior.

This could have been indicative of the stability in the country at the point of the survey and the confidence that the public had in the future and in the promise of that stability holding.

In the case of the households that had migrated from one place to another, natural disasters and insecurity were by far the most prevalent reasons for migration among those surveyed in urban areas, accounting for more than half (or 56.1 percent) of their migration. This suggests that natural disasters and insecurity were major disruptive phenomena for urban residents. The other reasons for relocation include; job transfers, looking for better agricultural land for farming (mostly rural population), business opportunities, looking for paid work, joining the spouse in marriage/ joining the family, and attending school/ seeking higher education.

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