Hawala and Somali money transfer companies

What they are

A money transfer company takes money from a sender in one country and pays it to a receiver in another, through its own network of agents. Somalis call this xawaalad (hawala). In Somalia these companies are licensed as money transfer businesses. In December 2025 the Central Bank had licensed 14 of them (Central Bank of Somalia, Annual Report 2025).

How a transfer works

The Rift Valley Institute describes the system this way (Rift Valley Institute, March 2014):

1. A sender abroad gives cash and the receiver's details to an agent.
2. The agent sends the details through the company's central hub to an agent near the receiver in Somalia, who pays out, usually within hours.
3. The debt between the two agents is settled later. Agents abroad gather deposits and send them to the company's bank account. The money then goes to a clearing house, usually in the United Arab Emirates, which pays Somali traders to buy imports. The traders refill the local agent's cash in Somalia.

Cash rarely crosses borders. The system works because it runs on trust. The same report notes that the companies first built their agent networks on clan ties, and the larger companies later built networks that cut across clan lines, which let them serve everyone (same source).

How they grew

Before 1991, Somalis abroad already sent money home. When the state and the banks collapsed in 1991, demand for other ways to move money grew fast (Rift Valley Institute). With no banks, transfer companies also held deposits for families, businesses and aid agencies, and delivered cash for relief, including during the 2011 famine (same source).

By 2012, remittances were at least $1.2 billion a year, more than aid (about $800 million), exports ($500 million) or foreign investment ($100 million) (same source).

The main companies

• Dahabshiil is the largest and longest-established. In 2014 it was estimated to hold 40 to 60 percent of the market (Rift Valley Institute). It says it has worked for about 50 years and serves more than 100 countries, and it is regulated in the UK, Sweden and Canada (Dahabshiil).
• Al-Barakaat was the largest company until late 2001, when the United States shut it down on suspicion of links to terrorism, which the company denied (The East African). The US 9/11 Commission later found the attackers' money had moved through a US bank, not a Somali transfer company (Africa Research Institute).

Somali financial services are led by business groups that each include a bank and a money transfer company, according to the US International Trade Administration. Dahabshil International Bank and Amal Bank are among the largest banks (US International Trade Administration, January 2024).

Cost

Sending £120 from the UK to Somalia cost 5.65 percent in late 2013, cheaper than sending to Nigeria (7.36 percent), Ethiopia (8.29 percent) or Kenya (9.77 percent) (Rift Valley Institute). Fees are lower for large amounts and during Ramadan (same source).

The bank account closures

Transfer companies abroad need bank accounts. In 2013 Barclays said it would close the accounts of most UK money transfer companies. Dahabshiil won a court order delaying the closure of its account, and Somali campaigners, supported by Oxfam, won several delays (Oxfam; COMPAS, University of Oxford). Similar closures happened in the United States (Rift Valley Institute).

Rules today

The Central Bank licenses and supervises money transfer businesses. The number licensed rose from seven in early 2024 (US International Trade Administration) to 14 in December 2025. In 2025 the Central Bank amended its anti-money-laundering rules and made a national ID compulsory for new accounts, checked through the Hubiye eKYC platform (Central Bank of Somalia, Annual Report 2025).

Today's numbers

In 2025 money transfer businesses carried $3,077 million into Somalia. $2,141 million of that, about 70 percent, was money sent by individuals to their families (Central Bank of Somalia, Annual Report 2025). In the 2022 household survey, 55.4 percent of families who received money from abroad got it through hawala (SNBS, SIHBS 2022). See Remittances in numbers.