Barclays vs Dahabshiil: when a Somali money transfer company takes on a banking giant

The Somali money transfer service Dahabshiil has won an injunction against Barclays, which had been threatening to cut off services to the company.

Yesterday, the Somali money transfer service Dahabshiil won an injunction against Barclays, which had been threatening to cut off services to the company over money-laundering fears. It’s hard to underestimate how significant this decision will prove for ordinary Somalis. Every year, British Somalis send around ₤500m home to relative and friends, and for many in Somalia, this is their primary source of income.

Overall the Somali diaspora send around $1.3bn home annually, and as years of civil conflict have left the country’s economy and banking sector in tatters, remittances are worth around 50 per cent of Somalia’s economy.

The main money transfer companies, like Western Union, which in 2012 was responsible for global money transfers of $72bn, do not operate in Somalia. Barclays is the only bank still offering services to small operators like Dahabshiil. If Barclays had been allowed to sever ties with Dahabshiil the effect for ordinary Somalis would be much greater than the cutting of all UK aid to Somalia: DfID pledged to deliver 63m in aid in 2012/13. No wonder the campaign to preserve this Somali lifeline has attracted high-profile supporters, including Mo Farah.

If Barclays had succeeded in cutting its relationship with Dahabshiil, this might have absolved it of responsibility to implement tough money-laundering checks, but it wouldn’t have stopped money flowing from the UK to groups like Al-Shabab. Removing formal channels would only force Somalis to rely on more expensive, less reliable informal money transfer agents. British-Somalis would find it harder to send money home, and UK authorities would struggle to monitor cash flows into Somalia.

Unfortunately, Dahabshiil was only granted extra time, and next year there will be new hearings to determine if it can still use Barclay’s services. Millions of Somalis may breathe a sigh of relief, but this problem isn't over yet.
 

A Somali money changer. Remittances from abroad make up half of the country's economy. Photo: Getty.

Sophie McBain is a freelance writer based in Cairo. She was previously an assistant editor at the New Statesman.

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Benn vs McDonnell: how Brexit has exposed the fight over Labour's party machine

In the wake of Brexit, should Labour MPs listen more closely to voters, or their own party members?

Two Labour MPs on primetime TV. Two prominent politicians ruling themselves out of a Labour leadership contest. But that was as far as the similarity went.

Hilary Benn was speaking hours after he resigned - or was sacked - from the Shadow Cabinet. He described Jeremy Corbyn as a "good and decent man" but not a leader.

Framing his overnight removal as a matter of conscience, Benn told the BBC's Andrew Marr: "I no longer have confidence in him [Corbyn] and I think the right thing to do would be for him to take that decision."

In Benn's view, diehard leftie pin ups do not go down well in the real world, or on the ballot papers of middle England. 

But while Benn may be drawing on a New Labour truism, this in turn rests on the assumption that voters matter more than the party members when it comes to winning elections.

That assumption was contested moments later by Shadow Chancellor John McDonnell.

Dismissive of the personal appeal of Shadow Cabinet ministers - "we can replace them" - McDonnell's message was that Labour under Corbyn had rejuvenated its electoral machine.

Pointing to success in by-elections and the London mayoral election, McDonnell warned would-be rebels: "Who is sovereign in our party? The people who are soverign are the party members. 

"I'm saying respect the party members. And in that way we can hold together and win the next election."

Indeed, nearly a year on from Corbyn's surprise election to the Labour leadership, it is worth remembering he captured nearly 60% of the 400,000 votes cast. Momentum, the grassroots organisation formed in the wake of his success, now has more than 50 branches around the country.

Come the next election, it will be these grassroots members who will knock on doors, hand out leaflets and perhaps even threaten to deselect MPs.

The question for wavering Labour MPs will be whether what they trust more - their own connection with voters, or this potentially unbiddable party machine.