IslamicFinance.de

Since there are no banks in some parts of Somaliland, the money-transfer industry in the Horn of Africa is important due to its pragmatic versatility. Remittances to the Somali region alone are estimated at $1.3 billion each year. But these transfers now risk becoming impossible: Long-standing Western worries that remittance flows serve as a cover for money laundering and the funding of armed Islamist groups mean the taps could soon be turned off. Somaliland's uneasy transition from informal coping mechanisms to the formal systems of a conventional state remains deeply incomplete. This is one reason for the absence of an internationally recognized banking sector, which makes Somaliland particularly reliant on remittances.