October 18, 2010 / 1:21 PM / 9 years ago

Somali militants ban mobile money transfers

MOGADISHU (Reuters) - A Somali rebel group has banned the transfer and receipt of cash by mobile phone, a move the government said would stifle the economy and hurt entrepreneurs in a country where few hold bank accounts.

Islamist Al-Shabaab fighters patrol on the outskirts of Mogadishu, June 22, 2009. REUTERS/Omar Faruk

The al Shabaab group, which professes loyalty to al Qaeda, said mobile money transfers (MMT) helped feed Western capitalism and were turning Somalia’s Muslims against Islamic banking practices.

“The use of the MMT service will be discontinued in all parts of Somalia — and the companies that offer these services, specifically Hormuud, Telesom and Golis, must stop dealing with this service,” al Shabaab said in a statement on Sunday.

In a country that has lacked an effective central government for almost two decades and where the banking sector remains under-developed with little outreach outside the main urban centres, mobile transfers have become a popular means of moving money.

Somalis use the service to purchase goods, pay bills and buy phone credit as well as disburse remittances from relatives abroad among family members.

Remittances are a leading source of foreign exchange in the lawless Horn of Africa country. Inflows from Somalis living abroad are estimated at around $1 billion a year, helping keep many Somali families alive. Money transfer firms are a pillar of economy.

The government condemned the ban, which it said would put a stranglehold on the economy.

“The extremists are against innovation, entrepreneurship and economic development of the country. They contribute nothing to the local business but destruction, extortion, and political and economic isolation,” Treasury Minister Abdullahi Mohamed Ali said in a statement.

Al Shabaab warned other telecoms firms to refrain from entering the mobile money industry.

“We emphasise to the Muslims in Somalia that they must liberate themselves from the dependency and subjugation to the West and to search for other legal and safer alternatives, such as factories, exporting local produce,” the insurgents said.

The heavily armed al Shabaab controls much of south and central Somalia, including much of the capital Mogadishu, and courts run by its clerics have ordered executions, floggings and amputations in recent months.

It has also banned movies, dancing at wedding ceremonies and playing or watching soccer in the areas under it control.

Al Shabaab and a second, smaller group, Hizbul Islam, have waged a three-year insurgency to topple the U.N.-backed interim government they consider a stooge of the West.

On Sunday, the government said its troops had recaptured Beled-Hawa district, in the southwestern Gedo region bordering Kenya in fighting that killed 11 al Shabaab fighters and one soldier.

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