by Heikal I. Kenneded
Monday, July 24, 2017
President Farmajo came to office scarcely five months ago. His election was a transformational moment for Somalia has rarely appeared more united than when he was elected as a president. He campaigned to eradicate corruption from the ranks of government and more importantly to either bring the Al-Shabab terrorists into the fold or wipe them out. Yet he had many more challenges awaiting him, inheriting a country in disarray, politically deadlocked and financially strained, not to mention a dismal state of insecurity. The biggest single problem for the president, however, has been the fight against corruption as a broader strategy against terrorism. Nonetheless, his recent declaration of waging war against the Al-Shabab terrorists while dressed in military fatigues and the subsequent flawed disarmament of the capital’s remnant warlords from illegal arms were a bit misplaced and rather naïve. The real culprit sustaining the intransigent Al-Shabab terrorists in the country is the shadowy and unregulated finance methods based on mobile money-transfer system that they use to finance their deadly attacks. Unless the government goes after the illegal resources funding these terrorists, their efforts will be futile. The fight against corruption as a first-order national security priority must be able to follow the trail of the money. The government has to find a way to completely take control of the flow of money inside the country and that will mean reining in the elusive mobile money-transfer system, while revitalizing the traditional formal banking system. Categorically, mobile payment system has become the bank of choice for the terrorists, which is firmly controlled by rogue businessmen who neither care about country nor freedom, but President Farmajo’s government should strive to reverse this risky finance system.
If President Farmajo wishes to be more pragmatic than his predecessors in prioritizing the security and financial transparency of the country, then he needs to be very careful not to get caught up in a trap of his predecessors’ making by succumbing to the country’s Big Business entrapments. Though, a government like Somalia with a fledgling economy is bound to find itself at the mercy of local Big Businesses for loans and financial support. But alos at the same time to come hard against their butter and bread that’s a delicate balancing act. In fact, how President Farmajo handles that very balancing act may determine the future success or failure of his government. In other words, fighting terrorism and corruption without alienating Big Businesses is a very tricky balance. Most experts on terrorism agree that long gone are the days of trying to defeat terrorists by waging a war, but disrupting their supply of finance should be the most critical target. On the other hand, those arguing how the services provided by the telecom industry and Big Businesses’ economic contribution to the development of the country in general to outweigh the security of the country are merely hardened capitalists who care nothing about peace and the safety of generations to come.
The President still has time to learn from the mistakes by his predecessors; unless he’s too squeamish to stand up to these rogue capitalists and see them in their true color – war profiteers. For the moment, the President is moving cautiously in the direction of financial reform as his administration reprints the country’s first Somali Shilling notes in more than a quarter century, while trying to collect local taxes. The most astonishing aspect of Al-Shabab’s resilience for the last decade is despite under severe pressure, they still manage to wreak havoc on Somali societies most vulnerable. More fundamentally, these terrorist are increasingly financing themselves and disrupting their supply of finance is a critical issue. Hence, the efforts to clamper money-laundering and counter-terrorism through the digital system should go hand in hand and the government will be able to kill two birds with one stone. Of course, the country’s very powerful telecom companies will surely retaliate and resist such necessary regulatory changes that will most likely strangulate their businesses. What form could such regulations take? First, instead of asking telecom and wire-transfer companies to self-regulate, ask them to get in sync with the country’s telecommunication and banking regulatory framework and become accountable to the country’s laws. Because if these companies are allowed to continue in their current lazes faire trend, they are bound to run the country to the ground.
It’s no coincidence that mobile money-transfer systems are most prevalent in countries with feeble financial laws and failed states like Somalia with either little or no enforcement against financial fraud and money-laundering schemes. The sole reason that customers regularly need not to prove their true identity is what draws terrorists to launder their illicit finances through the mobile money-transfer system. The fact is that, the entire mobile money transfer process often circumvents a country’s financial reporting system, which makes it almost impossible for government authorities to take a stock of these subtle digital transactions. The government has every right to track and trace all digital financial transactions in relation to terrorism and money-laundering. This will require, however, the Somali government to first seek assistance with the formidable technological know-how necessary to detecting and monitoring these elusive transactions.
The Dilemma
Since the collapse of the Somali nation-state, coupled with the disappearance of the federal financial banking system, money laundering and terrorism have thrived with the advance of using mobile money transfer system. It’s a high time that the new Somali government administration shift its gears to monitoring the flow of digital funds that finances terrorism. Since these transactions are made through mobile phones and text messages, there’s naturally no way to trace them, let alone secure proof for prosecutions. The current federal government should incorporate a concrete financial instrument of national power in their efforts to combat terrorism and corruption. Unscrupulous money laundering throughout the country and mafia style of levying businesses illicit taxation that foster terrorism finance measures have significantly hamstrung the current struggle to uproot terrorism in Somalia.
During the past decade, Al-Shabab operatives have mainly financed their terrorist operations and supported their networks by borrowing a page from the Mafia-style shakedowns of local businesses that pay monthly “zakat” donations for protection. In fact, it’s no secret that most of Mogadishu’s major businesses that recent years became major targets for terrorist attacks were the ones who either delayed or declined their monthly extortions levied by the Al-Shabab for whom threats, intimidation, extortion and violence have become a modus operandi. Similarly, reigning on the hawala wire transfer system, as most developed countries have carried out recently is worth duplicating. In other words, following the money trail and surveillance of facilitators, like the telecom industry and hawala wire transfer companies in their involvement efforts to move and shelter money for terrorist and criminal groups, it will produce critical financial intelligence that will lead to the weakening of illicit actors such as Al Shabab and other corruption agents.
Although mobile money transfers system has provided Somalis with a lifeline to remittances from around the globe, not to mention with unprecedented access to goods, services, capital and information – better, faster, and cheaper. In fact, greater efficiency in wiring money has sustained the country’s fragile economy during the past quarter century. Millions of Somalis now use their mobile phones to manage their finances and their numbers are growing daily. Despite all the great benefits resulting from a better access to capital, the dark side of mobile money transfer concurrently has sanctioned and empowered terrorism, crime, and corruption around the country. In other words, while mobile money transfer promotes greater access to capital and livelihood, on the same vein it sponsors illicit activities that render impossible for traditional investigative tools like “following the money trail” for the government to better understand, detect, disrupt and dismantle these illicit networks that eventually sponsor terrorism. Thus, closely auditing the digital financial flows around the country should be paramount in fighting against the intransigent Al-Shabab terrorism.
Dozens of street-corner shops in Mogadishu sell hundreds of thousands of mobile-phone airtime and thus having a strong command of the county’s hard currency, and yet not accountable to any government regulations. It’s no secret that these telecom companies have made unholy alliances with the Al-Shabab terrorists for protection. Since annually an estimated $1.4 billion of Somalia’s GDP out of $6 billion of imports comes from in the form of remittances from Somalis living in the diaspora, there’s a huge risk of falling into the hands of terrorists. Since customers trade cash for virtual charge that goes into their phone, which becomes an electronic account. These customers can then pay bills, buy essentials, transfer funds and more importantly receive credit on their phones. Besides being easy to use, it’s usually virtually way less transparent than traditional money-transfer services. Thus, it’s no wonder that the Al-Shabab terrorists found a safe-haven in these impersonalized financial transactions to run their extortion businesses that finances their deadly attacks. In lieu of this risk, the current Somali government has to do broad consultations with both the private and public sectors in order to assure investors on what this will mean for trade and business.
The ultimate question is whether anything can be done to curb the telecom companies that collude and facilitate terrorist activities. The answer is surely yes. The previous governments have obviously underestimated the potential threat presented by these unregulated telecom companies and their dangerous involvement with the terrorists than many have realized, and it is high time to confront them with the urgency, intensity, and resources they deserve. In doing so, President Farmajo can help rebuild a Somali society that is not only more transparent and accountable, but also more secure and safe from the existential threat of terrorism.
Finally, President Farmajo’s government faces a stark choice to either appease the country’s strong Big Business, including telecom companies like Hormud and Dahabshil, or to honestly curb the horrible atrocities daily visited on Mogadishu’s residents by Al-Shabab, by any means necessary. These resilient terrorists have proven time and time again they cannot be easily dislodged from their hideouts by the muzzle of the gun or intense drone attacks to root them out. A paradigm shift is needed from the current Somali government to fight terrorism and there’s no better place to start with reigning in the country’s incorrigible telecom companies. Telecom companies to be in compliance they need to closely work with the federal telecommunication ministry, the National Bank and other financial regulators to review the systems and regulations in place to ensure they meet the highest national financial standards. The same strict regulatory standards should be imposed on remittance wiring companies like the hawala for international funds transfers in order to control any potential illicit wiring to terrorists.
Heikal I. Kenneded
[email protected]
Washington D.C.