Pardee-CFLP-Remittances-TF-Report

(Fagen and Bump 2006). Somali money transfer companies have also helpedforge ties between different development actors and facilitate diversified servicesinvolving deposit, microfinance, and investment functions (Lindley 2009, 537).However, the prolonged lack of state administration has had some negativeeffects on the Somali remittance environment. The lack of a central bankcoordinating the country’s financial affairs has left it up to the remittance agentsto ensure the security of their transactions in a context of profound instability.Insufficient national regulatory institutions to unify operational and reportingmechanisms of remittance transfers in an environment of growing internationaldemands for greater transparency poses a disadvantage for Somali financial networks(Omer and El Koury 2005). On the whole, however, the rapid developmentof Somali remittance infrastructure demonstrates the relevance of local initiativein conflict-affected situations: “On the surface, the landscape is one of poverty andanarchy, but underneath, it is the true entrepreneurial spirit and unification ofprivate industry that prevails” (238).Informal value transfer systems like hawala are often used by internationaldevelopment agencies and non-governmental organizations (NGOs) to transferfunds for post-conflict reconstruction efforts. As formal financial infrastructureoften has been severely damaged, informal transfer options remain the onlymeans to transport large amounts of cash among the regions in need (Hariharan2012, 290). In Afghanistan, hawala has been used by international developmentactors for efficient and reliable transportation of funds across the country sincethe fall of the Taliban (Maimbo 2003). Such transfers have amounted to severalhundreds of millions of US dollars in reconstruction and relief funding, and tensof thousands of dollars are transmitted daily by various NGOs within the country(4). The process is fast, with international transfers taking about 6–12 hours, aswell as cost-effective, with transfer fees at around 1–2 percent; the internationalNGOs interviewed reported “general satisfaction with the delivery of funds” (5).The local hawaladars enable local NGOs necessary liquidity and develop checksand other financial products to assist NGOs in their transactions with suppliersand shopkeepers in the area (13).The Hybrid Nature of Modern HawalaThe complex remittance environments described above also highlight certainarbitrariness in the formal/informal dichotomy. Despite a chronic lack of centralizedstate administration, Somali remittance networks are more centralizedand transnationally regulated than hawala arrangements in many other parts ofRemittance Flows to Post-Conflict States: Perspectives on Human Security and Development 29