The economic impact of the Somali diaspora on their country of origin.

Diasporas, particularly those from developing countries, are believed to play a part in increasing the economy of their origin countries. This paper will take the Somali diaspora as a case study to critically analyse their impact on their homeland, when it comes to economic side. The paper will argue that, although the Somali diaspora has faced many challenges in abroad, they have played a major role for shaping the fragile economy of their homeland. Firstly, the paper will mention the places that the Somali diaspora mostly resided; then it will present brief history of their journey to overseas. For instance, the reason behind the Somalis exodus. Then, the paper will look at the different mechanisms, such as remittances, that the Somali diaspora implemented to enhance the economy and the standard of life of their families, relatives and friends at home.

Due to lack of stability, famine and ongoing conflicts, a big number of Somalis had fled from their homeland to overseas (Healy and Sheikh, 2009). Although they are far from their homeland, most of them have remained engaged in the process of rebuilding of their origin country through economic and political processes (Abdile, Feyyisa, and Hoehne, 2011).

Although the exact number of the population of Somalia is not known, due to the absence of a functioning government, nearly one million of Somalis are believed to live in abroad (Healy and sheikh, 2009), and still the Somalis are on move due to the unreliable situation in their country. Although most of them live in Europe, North America and the Gulf states, there is also a large number of Somali refugees in Kenya and Yemen (Healy and Sheikh, 2009). In Europe, the largest Somali community lives in UK, while the largest diasporas in North America are based in Minneapolis, Ohio and Toronto(Healy and Sheikh 2009); considerable number of Somalis are also present in countries like Sweden, Finland, Germany, Denmark and Norway (Healey and Sheikh, 2009). Because of the different places that the Somalis resided in the last few decades, Menkus (2009) labelled Somalia ‘a truly globalized nation’.

The history of Somali Diaspora dated back to the late 19th century, when the first Somali seamen voyaged from their homeland. In 1880, the first Somali community was established in Cardiff, Wales,and that community has laid the foundations of the first Somali communities that grew up and still flourish in the UK’s major cities like London, Birmingham, Bristol, Leicester, Liverpool and Manchester (Healy and Sheikh, 2009).

Although the intention of the Somali seamen was not, by any means, to become residents in aboard, in some reasons, some of them had found themselves in places far away from their nomadic life in home. Then in 1970, the waves of Somali migrants started afterwards, bringing a big number of Somalis in the Gulf countries mainly for job opportunities,and other places in Western countries for education purposes (Healy and Sheikh, 2009). While some Somalis still seek to leave their country due to economic opportunities, at the present time they do so mainly as migrant workers or as part of family reunification programmes (Gundel, 2002).

There are different reasons behind the Somalis exudes to overseas, but namely: Civil war, famine, searching for better life, education and job opportunities (Healy and Sheikh, 2009). Although the biggest move of the Somalis had happened after the central government collapsed more than 20 years ago, smaller waves of economically driven migration had processed afterwards (Healy and Sheikh, 2009).

After the central government of Somalia had totally collapsed in 1990, Somalia has faced huge economic, social and developmental challenges. In addition to that, Saudi Arabia has regularly imposed livestock bans on Somalia, and that makes the situation much worse (Gudel, 2002). According to Gudel (2002) the main reasons behind the Saudi’s ban was related ''most often health issues, but some sources say that in recent years the bans are related to Saudi commercial involvement in Australian and New Zealand sheep farms,'' (Gudel, 2002, p.24). Whatever the reason was, this has worsened the Somalis economy and left the export of the country in an unpredictable situation. Thus, the only hope for the people became the diaspora who live in abroad, particularly those in developed countries.

Although a study suggested that the ''poverty- and refugee-related migration are less prone to have developmental effects in countries of origin, as women and children tend to settle in the country of destination for good (Gudel, 2002, p.23), the Somali migrants, in somehow, overcame the challenges that the overseas life had posed on them. For instance, language  barrier, cultural and religion differences, and lack of skills. Although all those challenges had an impact of the Somalis life, they had never prevented them to contribute the economy of their country and help those who been left at home. This determination is well described by Menkhaus (2008): “Few countries in the world possess Diasporas with as much economic and political importance to their homeland as does Somalia”  (Menkhaus, 2008)

However, the Somali diaspora took their share of responsibility, and, arguably more, to safeguard the economy of their homeland. They  played a major role in determining the basis for livelihood support, in capital investments as well as in the development of social services, civil society and social welfare organizations and businesses in the country (Kent et al., 2004)..

From the start of the first Somali migrant workers in 1970, the Somali diaspora has been financially crucial for the people in their homeland (Gudel, 2002). Using the franco-valuta system, the Somali diaspora, particularly those who migrated to the Gulf countries in 1970^th, managed to remit around $300 million back to their families in home (Gudel, 2002).

That money has helped the economy of the country to recover as the regime government at that time was struggling to stable the economy of the country due to financial crises (Gudel, 2002). The government banned the Franco system in mid 1980 after it suspected the system is used to fund the opposition rebels, for instance, the SNM (Somali National Movement) who were fighting against the regime of Siad Barre (Gudel, 2002). However, the contribution of the Somali diaspora, particularly the much needed support that they were offering to their families, continued afterwards. 

The Somali diaspora engagement primarily takes place through different forms. For instance, through economic, social and political (Abdile, Feyyisa, and Hoehne,2011). The diaspora are the ‘’major investor in the country and provided 80% of the start-up capital for small and medium enterprises (SMEs)’’ (Healy and Sheikh, 2009, p.3). In addition to that, they also hugely contributed to livelihoods of Somalis through remittance to household survival (Healy and Sheikh, 2009). 

According to surveys made by the International Labour Organization  in1985, the 165,000 to 200,000 Somali diaspora in the Middle East made $700 million dollars a year (Gudel, 2002). Nearly 30 per cent of that money ($280 to $370 million dollars), as Gudel (2002) noted was sent back to Somalia (Gudel, 2002).

Today, although there are different studies presenting different estimations due to the informal system that the Somalis largely use to remit money, the Somali diaspora annually remit to their country a considerable amount of money. For instance: “Economically, the US$500 million to US$1 billion that the Somali diaspora remits annually to relatives in Somalia dwarfs all other sources of revenue in Somalia and essentially floats an otherwise dysfunctional economy.” (Menkhaus, 2009, p.189). Therefore, the financial remittances from the Somali diaspora are perhaps the outstanding feature and one of the most important pillars of the Somali economy, for remittances have long been crucial to the economy of the country (Gudel, 2002).

In other words, the remittance is a lifeline for millions of Somalis. Recent study shows, although as mentioned above there is very limit data from the ground due to the continuing instability, that the remittance that the Somalis remit to their home represents approximately 23 percent of the Somalis household income, while, at the same time, 40 percent of Somali households receive some sort of assistance from their relatives and friends in abroad (Sheikh and Healey, 2009). From that point, one can understand how vital the remittance is for the vulnerable economy of the country.

Thus, it is much believed that the remittance have been more important for livelihood in Somalia than development aid and humanitarian assistance combined (Gundel, 2002). The remittance that the Somali diaspora remit to their families at home fall between $50 to $200 monthly in every household, although it increases sometimes depending on the situations on the ground (UNDP Somalia, 2001); for instance, in times of economic stress, droughts, or in response to inter-clan warfare the diaspora remit more money than usual.  (UNDP Somalia, 2001).

However, as Gundel (2002) mentioned, ''today, it is clear that remittances have become a dominant feature of the Somali economy, and are crucial for household livelihoods’’, (Gundel, 2002, p.17). Remitters are typically known low-wage earners, although there are some diaspora who own big business in overseas, who tend to send a large percentage of their income to their families and relatives i Somalia (Kent et al., 2004). Surprisingly, a study has shown that the Somali prisoners have even been known to remit a portion of their very meagre prison earnings to their families (Kent et al,2004). Thus, one can understand how the Somalis are determined to help each other.

Nevertheless, in the previous times, as Gundel (2002) noted, remittances have been used to finance consumption, marriages, housing, trade, and to arm clan militias (Gundel, 2002). But recent observations show that the remittance’s pattern has changed. For instance, some studies shown that the remittance money is currently invested in small businesses or real estates (Gundel, 2002; Healy and Sheikh, 2009). And that investment had slightly increased the job opportunities available in the country (Healy and Sheikh, 2009).

Moreover, as a recent study shows, the Somali diaspora also provide nearly 80 percent of the start-up capital for small and medium enterprises (Healyand Sheikh, 2009). Mostly, this investment is carried out by the diaspora returnees. Those who decided to create business at home. However, this can not be interpreted that 80% of the capital is coming from the permanent returnees

Although most of the diaspora returnees are much aware of the fragile security of the country, a big number had decided to return permanently and make an investment of millions of dollars in their country (Healy and Sheikh, 2009).  Once the diaspora return, they focus to establish businesses individually or as a group and pool resources or manage business at the executive level (Healy and Sheikh, 2009).

Meanwhile, the investment of the diaspora mainly spread over various sub-sectors such as small scale industries, telecommunication, remittances and trade (Healy and Sheikh, 2009). For instance, the biggest Hotels in Hargeysa city, Ambassador Hotel and Mansoor Hotel, were built by the diaspora who recently returned from abroad. This diaspora investment had increased the life standard of the people at home by creating job opportunities, particularly for their families, relatives and friends; and also, at the same time, creating a seasonal economy that injects significant amounts of money into local service industry (Menkhaus, 2008).

On top of that, when the diaspora return to their homeland they can also be a substantial force for development and reconstruction of their home, in terms of the financial, human and social capital they bring home with them (Kent et al, 2008). Recent study shows that the most Somali returnees are the ones who have either skills or financial capital (Healy and Sheikh), and, in one way or another, they could increase the productivity of the country. 

Let alone in Somaliland, there are nearly 15,000 Somali-Canadian-citizens who resided in Hargeysa (Healy and Sheikh, 2009). There is also large number of returnees in Mogadisho, the capital of Somalia. The areas that diaspora mostly contribute when they return are: Universities, where they become lecturers, working with the local or National NGOs, and also working for the governments (Gundel, 2002), while some of them also provide trainings to the government stuff. One example of how the diaspora contributed on the social service is a private school called Blooming School in Somaliland, the school has been started by a member of the diaspora in Somaliland, opened in 1999 by a returnee family from Canada ( www.bloomingschool.com) 

Furthermore, the support of the diaspora has also an impact for the security and instability of the country. For instance, if we take an example for Somaliland, an unrecognised fragile country, without the financial contribution that its diaspora sent to their families, it would have been difficult the state to survive from civil war and conflicts that erupted in mid 1990 (Hoehne, 2010). The Somaliland diaspora have also significantly played a major role for the rebuilding of their country, after it was badly destroyed by the regime forces and then the civil war. Therefore, the Somali community when it comes to economic fits well with the idea of a ‘’moral community, promoting development in Somalia’’ (Kliest, 2008, p.321 ).

The diaspora also support and pay the education fees for the children of their relatives in home (Abdile, Feyyisa, Hoehne, 2011), while others sponsor orphans and poor families’ children. They also contribute to the local charities (Healy and Sheikh, 2009).

Nevertheless, Because of the absence of economically strong government in the country, in somehow, the Somali diaspora have filled the gap, and they generously contributed to their country, economically and socially (Abdile, Feyyisa, and Hoehne, 2011).

Conclusion.

The diasporas from poor countries are crucial and a lifeline for their countries of origin. This paper have critically analysed the economic impact of the Somali diaspora on their country of origin. Starting from the history of their exodus, the paper has shown how the Somali diaspora created and how they have expanded in different places.

Somalis are regarded as one of the most displaced people across the globe. One of the main reasons of their displacement is regarded the absence of functioning central government in their homeland. The paper has presented the big number of Somalis in the globe as a diaspora. At least one million of Somalis are believed to become diasporas in many countries, from the neighbouring countries to North America. This paper has demonstrated the different mechanisms that the Somalis have used in order to have an economic impact on their origin country.

As the paper covered, the remittance that the Somalis remit every year to their families and friends at home is a lifeline and it has a good effect on the economy of the country.  The Somali diaspora remit an estimation of millions of dollars annually back to their home. Due to the informal system that the Somalis use to remit money, it is not clear the real amount of money they remit, but studies have shown that the Somalis remit around hundreds of millions of dollars every year. The paper has shown that this huge amount of money has financially helped the people in the country, and generally played a role for the economy of the country.

Moreover, the paper has also demonstrated on the other ways that the Somali diaspora implemented  in order to contribute economically to their country of origin. The considerable amount of diaspora returnees who left the overseas with money and skills have also helped the economy of the country and the well being of the people at home. They make investments, creating small scale business and creating job opportunities for the local people, particularly their families and relatives. Yes, there is, at the same time, some rising inequality within the community, but there was a conscious effort to support vulnerable groups (orphans, children of poor families).   

Mostly, the diaspora returnees invest the telecommunication and hospitality industries. Overall, their contribution on their country, when they remit money from overseas and when they return to home, is a vital and lifeline for the people in the country, and they considerably contributed to the fragile economy of their country of origin.

References

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WWW.Bloomingschool.com (Accessed on December 29, 2015)



By Mohamed Adan (Sammo).

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