NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, June 22, 2015

Most of us are familiar with the argument that bitcoin could help the unbanked, but Ben Parker, co-founder and former director of humanitarian news service IRIN, has seen firsthand how the digital currency could play a crucial role in fragile states.

In 2013, Parker was director of communications for the United Nations (UN) in Somalia, and in 2012, he led the UN Office for the Coordination of Humanitarian Affairs for Syria in Damascus. Parker was also posted in Sudan as a UN communications officer from 2003 to 2006 and was closely involved with raising the alarm about the war in the Darfur region.

Having worked in humanitarian affairs and on the ground in conflict zones for the last 20 years, Parker provides a unique perspective on how bitcoin could succeed where it’s perhaps needed most – in struggling developing nations.
Parker told CoinDesk:

“I’ve seen how countries struggle when they don’t have formal banking systems and I’ve seen also the huge growth of the M-Pesa mobile money system in Kenya. Most recently, I was working in Somalia, which actually has been cut off from formal banking in many ways for 20 years.”

Somalia provides an interesting case study for bitcoin.

Having been caught up in state of civil war – of varying intensity – since 1991, the East African nation was heavily hit by anti-money laundering (AML) regulation in the aftermath of the 9/11 terrorist attacks.

To add injury, in May 2013, Barclays, the last major bank to provide remittance services to the country, announced plans to shut down approximately 250 money transfer businesses.

Somalis have been using Hawalas – an informal value transfer system run by brokers – to remit funds home, but they too came under scrutiny. In April this year, Kenya’s government shut down13 Somali money transfer businesses – or Hawalas – after the al-Shabaab militant group claimed responsibility for the attack on Garissa University which resulted in the deaths of approximately 150 people.

Although the hawalas are still operating – with bank accounts in Dubai and Australia – it is fair to say that the Somali remittance market is suffering the consequences of lost relationships overseas, primarily in the UK and the US – both of which have relatively big Somali communities.

“They [Somalis] have a huge diaspora community. They are very connected to home and send a lot of money in remittances […] the remittance market is bigger than aid,” Parker said.