Imagine a mother in Mogadishu receiving a few hundred dollars from her son living in London, or a young entrepreneur in Hargeisa using remittance money from an uncle in Dubai to open a small grocery store. These are not isolated stories; they are everyday realities for countless families across Somalia. Remittances are a lifeline, keeping households afloat and giving hope to those who dare to dream of a better future. In a country that has faced decades of conflict, instability, and limited job opportunities, these financial transfers play an essential role in sustaining lives and driving economic growth.
Every year, the Somali diaspora—stretching from the United States to the United Arab Emirates—sends home billions of dollars. For many families, these remittances cover essentials like food, rent, healthcare, and education. But their impact goes beyond daily survival. Remittances have become a catalyst for change, supporting local businesses, empowering communities, and contributing significantly to Somalia’s GDP. They build resilience, help families cope with crises, and enable economic mobility. In short, they are not just about survival; they are about creating opportunities.
Fueling Dreams and Entrepreneurship
One of the most transformative impacts of remittances is how they inspire entrepreneurship. Imagine Fatima, a young woman in Baidoa, who uses remittance money to set up a small tailoring shop. She not only supports her own family but also employs three other women from her community. Across Somalia, stories like Fatima’s are common. Diaspora funds are often the seed capital for microbusinesses—small shops, transport services, or food stalls—that create jobs and reduce dependency on traditional livelihoods like pastoralism.
In cities like Mogadishu and Kismayo, many restaurants and retail stores owe their existence to remittances. This entrepreneurial spirit, fueled by diaspora support, is helping transform urban centers into vibrant commercial hubs. In Hargeisa, young tech-savvy entrepreneurs are leveraging remittance funds to launch digital startups, providing services like mobile money solutions and online retail. This thriving small business ecosystem is not only diversifying the economy but also creating a culture of innovation and self-reliance.
Bridging Financial Gaps with Mobile Money
Remittances have revolutionized Somalia’s financial landscape, particularly through the rise of mobile money. Platforms like Somtel E-Dahab and Hormuud’s EVC Plus make it easy for families to receive money instantly, even in remote areas. For people like Ahmed, a livestock trader in Galkayo, mobile money means he can buy feed and supplies without traveling long distances with cash. It also means his customers can pay him quickly and securely, reducing the risks of theft.
This digital transformation is a game-changer for financial inclusion, especially for women and rural communities. Instead of relying on cash that can be lost or stolen, families are using mobile wallets to save, invest, and plan for the future. The increased accessibility to financial services empowers people to think beyond daily survival, fostering a sense of economic stability.
Strengthening Agriculture and Food Security
In rural Somalia, where agriculture and livestock are the backbone of the economy, remittances have a profound impact. When drought hits, families like Hassan’s in the Lower Shabelle region use remittance money to buy fodder and maintain their herds. This support ensures that pastoralist communities can survive through tough seasons, maintaining their source of income and food security.
Remittances also support modern farming practices. In the fertile areas of the Jubaland region, diaspora funds have been used to install small-scale irrigation systems, enabling farmers to grow crops even during dry spells. This type of investment not only sustains families but also contributes to local food production, reducing dependency on imported goods.
Building Urban Futures
As more Somalis move to cities like Mogadishu and Garowe, remittances are playing a crucial role in urban development. They fund residential buildings, schools, and small shops that shape the cityscape. In Mogadishu, entire neighborhoods owe their transformation to diaspora investments. These urban projects not only provide much-needed housing but also create jobs in construction and retail.
However, this rapid growth also brings challenges. Traffic congestion, unplanned housing, and stretched public services highlight the need for thoughtful urban planning. By directing remittance flows towards sustainable infrastructure projects, Somalia can better manage urban expansion while creating resilient, livable cities.
A Lifeline Amid Challenges
Despite the undeniable positive impact, relying heavily on remittances also poses risks. High transaction fees can reduce the amount families receive. Additionally, political instability and global financial regulations can disrupt money transfers, leaving families vulnerable. Addressing these challenges requires better regulatory frameworks, lower transaction costs, and more secure financial systems.
A Vision for the Future
To fully harness the power of remittances, Somalia needs a strategic approach. Imagine if remittance funds were pooled into a national investment fund to support infrastructure, healthcare, and education projects. Or if mobile money providers partnered with the government to enhance digital financial literacy. Such initiatives could transform remittances from mere survival funds into drivers of lasting economic growth.
Remittances are not just money—they are hope, dreams, and lifelines. As Somalia continues its journey towards stability and development, fostering a supportive environment for diaspora investment will ensure that these lifelines continue to empower families and build a prosperous future.
Muna Mohamed Sodal, Researcher
