The need for #dedollarization: a thread ๐งต on Somalia's $ dollar based economy: The collapse of Somalia's economy in December 2001 following the 9/11 attacks in the US after the US gov accused Al-Barakaat remittance company of terrorism freezing its accounts worldwide. #Somalia
The freezing of Al-Barakaat's assets worldwide led to collapse of the economic activities in Somalia as hundreds of remittance branches were forced to close & the unemployment of thousands of workers. The US sanctions also led to one of the worst food crisis in #Somalia in 2002.
After the collapse of the Somali Central Bank in 1991, remittance firms through telecommunications companies became an informal banking system for over 80% of the Somali population. Albarakaat was the biggest of all handling more than $500 million in global remittances that time.
Asset freezes resulted in the loss of 80% of all $ US dollar assets held by Somali individuals. Stable food prices rose by 50% at the end of 2001. Before the asset freezes, one kg of rice was priced at 2,500 Somali shillings and by late December the cost was at 8,000 shillings.
Somalia was in 2001 just beginning its recovery from civil wars a time where many Somalis were hopeful for the internationally recognized government of Somalia that was formed in 2000 (The Transitional National Government TNG) & crippled from the insecurities of asset freezes.
Al-Barakat had international remittance branches in over 40 countries, and was the country's largest employer in remittance services & telecommunications. By order of US/UN 90% of Al-Barakaat's assets were frozen in the United Arab Emirates, the rest in the US, UK & Saudi Arabia.
Somalis relied on remittances sent by relatives. Somalia's business imports also relied on Dubai-based remittance transfer channels for Somali businesspeople in China/India/Brazil who would import goods/foods through Kenya ports then ferry them to Somalia with Somali owned ships.
In 2006, the US withdrew its $dollar based asset freeze on Al-Barakaat after finding no evidence that the company was involved in financing terrorism activities. It was proven that Al-Barakaat had no link to terrorism forcing the US & the UN to remove the firm from the blacklist.
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